AGREEMENT AND PLAN OF MERGER
among:
VERTEX PHARMACEUTICALS INCORPORATED,
a Massachusetts corporation;
AHAB ACQUISITION SUB, INC.,
a Delaware corporation; and
AURORA BIOSCIENCES CORPORATION,
a Delaware corporation.
---------------------------
Dated as of April 29, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER......................................................................................1
Section 1.1 MERGER OF MERGER SUB INTO THE COMPANY..................................................1
Section 1.2 EFFECT OF THE MERGER...................................................................1
Section 1.3 CLOSING; EFFECTIVE TIME................................................................2
Section 1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS........................2
Section 1.5 CONVERSION OF SECURITIES...............................................................2
Section 1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS................................................3
Section 1.7 EXCHANGE OF CERTIFICATES...............................................................4
Section 1.8 TAX CONSEQUENCES.......................................................................5
Section 1.9 ACCOUNTING CONSEQUENCES................................................................5
Section 1.10 FURTHER ACTION.........................................................................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................6
Section 2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC....................................................6
Section 2.2 CERTIFICATE OF INCORPORATION AND BYLAWS................................................6
Section 2.3 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING NATURE OF
AGREEMENT..............................................................................7
Section 2.4 CAPITALIZATION, ETC....................................................................7
Section 2.5 SEC FILINGS; FINANCIAL STATEMENTS......................................................9
Section 2.6 NON-CONTRAVENTION; CONSENTS............................................................9
Section 2.7 ABSENCE OF CHANGES....................................................................11
Section 2.8 TITLE TO ASSETS.......................................................................13
Section 2.9 RECEIVABLES; EMPLOYEE LOANS; CUSTOMERS................................................13
Section 2.10 REAL PROPERTY; EQUIPMENT; LEASEHOLD...................................................13
Section 2.11 INTELLECTUAL PROPERTY.................................................................14
Section 2.12 CONTRACTS.............................................................................16
Section 2.13 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.............................................19
Section 2.14 LIABILITIES...........................................................................19
Section 2.15 COMPLIANCE WITH LEGAL REQUIREMENTS....................................................20
Section 2.16 CERTAIN BUSINESS PRACTICES............................................................20
Section 2.17 GOVERNMENTAL AUTHORIZATIONS...........................................................20
Section 2.18 TAX MATTERS...........................................................................20
Section 2.19 Employee and Labor Matters; Benefit Plans.............................................21
Section 2.20 ENVIRONMENTAL MATTERS.................................................................25
Section 2.21 INSURANCE.............................................................................26
Section 2.22 TRANSACTIONS WITH AFFILIATES..........................................................26
Section 2.23 LEGAL PROCEEDINGS; ORDERS.............................................................26
Section 2.24 NO EXISTING DISCUSSIONS...............................................................27
Section 2.25 ACCOUNTING MATTERS....................................................................27
Section 2.26 VOTE REQUIRED.........................................................................27
Section 2.27 SECTION 203 OF THE DGCL NOT APPLICABLE................................................27
Section 2.28 FAIRNESS OPINION......................................................................27
Section 2.29 FINANCIAL ADVISOR.....................................................................27
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Section 2.30 FULL DISCLOSURE.......................................................................28
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................28
Section 3.1 DUE ORGANIZATION; SUBSIDIARIES; ETC...................................................28
Section 3.2 ARTICLES OF ORGANIZATION AND BYLAWS...................................................28
Section 3.3 AUTHORITY; BINDING NATURE OF AGREEMENT................................................28
Section 3.4 CAPITALIZATION, ETC...................................................................29
Section 3.5 SEC FILINGS; FINANCIAL STATEMENTS.....................................................30
Section 3.6 NON-CONTRAVENTION; CONSENTS...........................................................30
Section 3.7 Absence of Changes....................................................................32
Section 3.8 Products; Government Compliance.......................................................32
Section 3.9 Intellectual Property.................................................................33
Section 3.10 LIABILITIES...........................................................................34
Section 3.11 COMPLIANCE WITH LEGAL REQUIREMENTS....................................................34
Section 3.12 GOVERNMENTAL AUTHORIZATIONS...........................................................35
Section 3.13 LEGAL PROCEEDINGS; ORDERS.............................................................35
Section 3.14 NO EXISTING DISCUSSIONS...............................................................35
Section 3.15 ACCOUNTING MATTERS....................................................................35
Section 3.16 VOTE REQUIRED.........................................................................36
Section 3.17 FAIRNESS OPINION......................................................................36
Section 3.18 VALID ISSUANCE........................................................................36
Section 3.19 MERGER SUB............................................................................36
Section 3.20 FULL DISCLOSURE.......................................................................36
Section 3.21 Taxes.................................................................................36
ARTICLE 4 Certain Covenants of the Company and Parent....................................................37
Section 4.1 ACCESS AND INVESTIGATION..............................................................37
Section 4.2 OPERATION OF THE COMPANY'S BUSINESS...................................................38
Section 4.3 Operation of Parent's Business........................................................42
Section 4.4 No Solicitation.......................................................................43
ARTICLE 5 Additional Covenants of the Parties............................................................44
Section 5.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT.........................................44
Section 5.2 COMPANY STOCKHOLDERS'MEETING..........................................................46
Section 5.3 Parent Stockholders'Meeting...........................................................46
Section 5.4 REGULATORY APPROVALS..................................................................47
Section 5.5 STOCK OPTIONS.........................................................................48
Section 5.6 EMPLOYEE BENEFITS.....................................................................49
Section 5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.............................................50
Section 5.8 POOLING OF INTERESTS..................................................................51
Section 5.9 DISCLOSURE............................................................................51
Section 5.10 AFFILIATE AGREEMENTS..................................................................52
Section 5.11 TAX MATTERS...........................................................................52
Section 5.12 LETTER OF THE COMPANY'S ACCOUNTANTS...................................................53
Section 5.13 LISTING...............................................................................53
Section 5.14 SECTION 16B-3.........................................................................53
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RIGHTS AGREEMENTS 53
TERMINATION OF CHANGE IN CONTROL BONUS PLAN.............................................................54
ARTICLE 6 Conditions Precedent to Obligations of Each Party..............................................54
Section 6.1 EFFECTIVENESS OF FORM S-4 REGISTRATION STATEMENT......................................54
Section 6.2 STOCKHOLDER APPROVAL..................................................................54
Section 6.3 HSR ACT...............................................................................54
Section 6.4 LISTING...............................................................................54
Section 6.5 NO RESTRAINTS; LEGALITY...............................................................54
Section 6.6 REGULATORY MATTERS....................................................................55
Section 6.7 TAX OPINIONS..........................................................................55
ARTICLE 7 Conditions Precedent to Obligations of Parent and Merger Sub...................................55
Section 7.1 ACCURACY OF REPRESENTATIONS...........................................................55
Section 7.2 PERFORMANCE OF COVENANTS..............................................................56
Section 7.3 CONSENTS..............................................................................56
Section 7.4 NO MATERIAL ADVERSE EFFECT............................................................56
Section 7.5 AGREEMENTS AND DOCUMENTS..............................................................56
ARTICLE 8 Conditions Precedent to Obligation of the Company..............................................57
Section 8.1 ACCURACY OF REPRESENTATIONS...........................................................57
Section 8.2 PERFORMANCE OF COVENANTS..............................................................57
Section 8.3 NO MATERIAL ADVERSE EFFECT............................................................58
ARTICLE 9 Termination....................................................................................58
Section 9.1 TERMINATION...........................................................................58
Section 9.2 EFFECT OF TERMINATION.................................................................60
Section 9.3 Expenses; Termination Fees............................................................60
ARTICLE 10 Miscellaneous Provisions.......................................................................61
Section 10.1 AMENDMENT.............................................................................61
Section 10.2 WAIVER................................................................................62
Section 10.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........................................62
Section 10.4 ENTIRE AGREEMENT; COUNTERPARTS........................................................62
Section 10.5 APPLICABLE LAW; JURISDICTION..........................................................62
Section 10.6 DISCLOSURE SCHEDULE...................................................................62
Section 10.7 ATTORNEYS'FEES........................................................................63
Section 10.8 ASSIGNABILITY.........................................................................63
Section 10.9 NOTICES...............................................................................63
Section 10.10 COOPERATION...........................................................................64
Section 10.11 CONSTRUCTION..........................................................................64
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EXHIBITS
Exhibit A Certain Definitions
Exhibit B Form of Affiliate Agreement
Exhibit C Form of Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of April 29, 2001, by and among: VERTEX PHARMACEUTICALS INCORPORATED, a
Massachusetts corporation ("Parent"); AHAB ACQUISITION SUB, INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and AURORA
BIOSCIENCES Corporation, a Delaware corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in EXHIBIT A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger (the
"Merger") of Merger Sub into the Company in accordance with this Agreement and
the Delaware General Corporation Law (the "DGCL"). Upon consummation of the
Merger, Merger Sub will cease to exist, and the Company will become a wholly
owned subsidiary of Parent.
B. It is intended that the Merger qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). For financial reporting purposes, it is intended that the Merger
be accounted for as a "pooling of interests."
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved this Agreement and the Merger and Parent, acting as the
sole stockholder of Merger Sub, has approved this Agreement and the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
ARTICLE 1
THE MERGER
SECTION 1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject to
the conditions set forth in this Agreement and the DGCL, at the Effective Time
(as defined in Section 1.3), Merger Sub shall be merged with and into the
Company, and the separate existence of Merger Sub shall cease. Following the
Effective Time, the Company shall continue as the surviving corporation (the
"Surviving Corporation").
SECTION 1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall continue with, or vest in, as the case may be, the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall continue to be, or become, as the case may be, the debts, liabilities and
duties of the Surviving Corporation. As of the Effective Time, the Surviving
Corporation shall be a direct subsidiary of Parent.
SECTION 1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, Xxx Xxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, at 10:00 a.m. on a date to be designated by Parent and
the Company (the "Closing Date"), which shall be no later than the fifth
business day after the satisfaction or waiver of the last to be satisfied or
waived of the conditions set forth in Articles 6, 7 and 8 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions). Subject to the provisions of
this Agreement, a certificate of merger satisfying the applicable requirements
of the DGCL (the "Certificate of Merger") shall be duly executed by the Company
and, simultaneously with or as soon as practicable following the Closing, filed
with the Secretary of State of the State of Delaware (the "Secretary of State").
The Merger shall become effective upon the latest of: (a) the date and time of
the filing of the Certificate of Merger with the Secretary of State, or (b) such
later date and time as may be specified in the Certificate of Merger with the
consent of Parent (the "Effective Time").
SECTION 1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. : At the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall
be amended to conform to the Certificate of Incorporation of Merger Sub as
in effect immediately prior to the Effective Time;
(b) the bylaws of the Surviving Corporation shall be amended and
restated to conform to the bylaws of Merger Sub as in effect immediately
prior to the Effective Time; and
(c) the officers of Merger Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation from and after the
Effective Time, in each case until their successors are appointed and
qualified or until their resignation or removal. The directors of Merger
Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, in each case until their successors are elected or
until their resignation or removal. If at the Effective Time a vacancy
shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided
by applicable Legal Requirements and the bylaws of the Surviving
Corporation.
SECTION 1.5 CONVERSION OF SECURITIES.
(a) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Merger Sub, the Company or any
stockholder of the Company:
(i) any shares of Company Common Stock then held in the Company's
treasury or owned by any wholly owned Subsidiary of the Company shall
be canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor;
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(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other wholly owned Subsidiary of Parent shall be
canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 1.5(b), 1.5(c) and 1.5(d), each share of Company
Common Stock then outstanding shall be converted into the right to
receive 0.62 of a share of Parent Common Stock; and
(iv) each share of the common stock, $0.01 par value per share, of
Merger Sub then outstanding shall be converted into one share of common
stock of the Surviving Corporation.
The fraction of a share of Parent Common Stock specified in Section 1.5(a)(iii)
(as such fraction may be adjusted in accordance with Section 1.5(b)) is referred
to as the "Exchange Ratio."
(b) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock
split, stock dividend, reverse stock split, reclassification,
recapitalization or other similar transaction, then the Exchange Ratio
shall be appropriately adjusted.
(c) To the extent any shares of Company Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company or under which the Company has any rights, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common
Stock will also be unvested and subject to the same repurchase option, risk
of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends.
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock who
would otherwise be entitled to receive a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, in lieu of such fraction of a share
and, upon surrender of such holder's Company Stock Certificate(s) (as
defined in Section 1.6), be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such
fraction by the closing price of a share of Parent Common Stock on The
Nasdaq Stock Market on the date the Effective Time occurs.
SECTION 1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time:
(a) all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as stockholders of the Company (other than the right to
receive shares of Parent Common Stock and cash in lieu of fractional shares as
set forth
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in Section 1.5); and (b) the stock transfer books of the Company shall
be closed with respect to all shares of Company Common Stock outstanding
immediately prior to the Effective Time. No further transfer of any such shares
of Company Common Stock shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a valid certificate previously
representing any shares of Company Common Stock (a "Company Stock Certificate")
is presented to the Exchange Agent (as defined in Section 1.7) or to the
Surviving Corporation or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in Section 1.7.
SECTION 1.7 EXCHANGE OF CERTIFICATES.
(a) On or prior to the Closing Date, Parent shall select a reputable
bank or trust company reasonably acceptable to the Company to act as
exchange agent in the Merger (the "Exchange Agent"). Promptly (but in any
event within five (5) business days) after the Effective Time, Parent shall
deposit with the Exchange Agent (i) certificates representing the shares of
Parent Common Stock issuable pursuant to this Article 1, and (ii) cash
sufficient to make payments in lieu of fractional shares in accordance with
Section 1.5(d). The shares of Parent Common Stock and cash amounts so
deposited with the Exchange Agent, together with any dividends or
distributions received by the Exchange Agent with respect to such shares,
are referred to collectively as the "Exchange Fund."
(b) As soon as reasonably practicable (but in any event within five (5)
business days) after the Effective Time, Parent shall cause the Exchange
Agent to mail to the record holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as
Parent may reasonably specify (including a provision confirming that
delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of
such Company Stock Certificates to the Exchange Agent), and (ii)
instructions for use in effecting the surrender of Company Stock
Certificates in exchange for certificates representing Parent Common Stock.
Upon surrender of a Company Stock Certificate to the Exchange Agent for
exchange, together with a duly executed letter of transmittal and such
other documents as may be reasonably required by the Exchange Agent or
Parent, (1) the holder of such Company Stock Certificate shall be entitled
to receive in exchange therefor a certificate representing the number of
whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5 (and cash in lieu of any
fractional share of Parent Common Stock), and (2) the Company Stock
Certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 1.7, each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive shares of Parent Common Stock (and cash in lieu of any fractional
share of Parent Common Stock) as contemplated by Section 1.5. If any
Company Stock Certificate shall have been lost, stolen or destroyed, Parent
may, in its discretion and as a condition precedent to the issuance of any
certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Parent may
reasonably direct) as indemnity against any claim that may be made against
the Exchange Agent, Parent or the Surviving Corporation with respect to
such Company Stock Certificate.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, no shares of Parent Common Stock (or certificates therefor)
shall be issued in exchange for any Company Stock Certificate to any Person
who may be an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Company until such Person shall have delivered to
Parent and the Company a duly executed Affiliate Agreement as contemplated
by Section 5.10.
(d) No dividends or other distributions declared or made with respect
to Parent Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock that such holder has the right
to receive in the Merger until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7 (at which time such holder
shall be entitled, subject to the effect of applicable escheat or similar
laws, to receive all such dividends and distributions, without interest).
(e) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the
date on which the Merger becomes effective shall be delivered to Parent
upon demand, and any holders of Company Stock Certificates who have not
theretofore surrendered their Company Stock Certificates in accordance with
this Section 1.7 shall thereafter look only to Parent for satisfaction of
their claims for Parent Common Stock, cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to
Parent Common Stock.
(f) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former
holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state,
local or foreign tax law or under any other applicable Legal Requirement.
To the extent such amounts are so deducted or withheld, such amounts shall
be treated for all purposes under this Agreement as having been paid to the
Person to whom such amounts would otherwise have been paid.
(g) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public
official pursuant to any applicable abandoned property law, escheat law or
similar Legal Requirement.
SECTION 1.8 TAX CONSEQUENCES. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations and agree to take whatever other steps
are necessary to give effect to the Merger on such a basis.
SECTION 1.9 ACCOUNTING CONSEQUENCES. For financial reporting purposes, the
Merger is intended to be accounted for as a "pooling of interests."
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SECTION 1.10 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows,
except as set forth in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 (excluding the exhibits thereto), as filed with the
SEC on March 15, 2001:
SECTION 2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and
neither the Company nor any of the other corporations identified in Part
2.1(a)(i) of the Company Disclosure Schedule owns any capital stock of, or
any equity interest of any nature in, any other Entity, other than the
Entities identified in Part 2.1(a)(ii) of the Company Disclosure Schedule
(the Company and each of its Subsidiaries are referred to collectively in
this Agreement as the "Acquired Corporations"). Except as set forth in Part
2.1(a)(ii) of the Company Disclosure Schedule, none of the Acquired
Corporations has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future equity
investment (including any investment or other interest that by its terms is
or may become convertible, in whole or part, into equity) in or capital
contribution to any other Entity. None of the Acquired Corporations has, at
any time, been a general partner of any general partnership, limited
partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing (in jurisdictions that recognize such
concept) under the laws of the jurisdiction of its incorporation and has
all necessary power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted; (ii) to own and
use its assets in the manner in which its assets are currently owned and
used; and (iii) to perform in all material respects its obligations under
all Contracts by which it is bound.
(c) Except as set forth in Part 2.1(c) of the Company Disclosure
Schedule, each of the Acquired Corporations is qualified to do business as
a foreign corporation, and is in good standing (in jurisdictions that
recognize such concept), under the laws of all jurisdictions where the
nature of its business requires such qualification except where the failure
to be so qualified does not and would not have a Material Adverse Effect on
the Acquired Corporations.
SECTION 2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has made
available to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including
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all amendments thereto and has made available to Parent accurate and complete
copies of any proposed amendments thereto.
SECTION 2.3 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING
NATURE OF AGREEMENT. The Company has the absolute and unrestricted right, power
and authority to enter into this Agreement and, subject to obtaining the
requisite approval and adoption of this Agreement and the Merger by Company
stockholders required by the DGCL, to perform its obligations under this
Agreement. The board of directors of the Company (at a meeting duly called and
held) has (a) unanimously determined that the Merger is advisable and fair and
in the best interests of the Company and its stockholders, (b) unanimously
authorized and approved the execution, delivery and performance of this
Agreement by the Company and unanimously approved the Merger, (c) unanimously
recommended the adoption of this Agreement by the holders of Company Common
Stock and directed that this Agreement and the Merger be submitted for
consideration by the Company's stockholders at the Company Stockholders' Meeting
(as defined in Section 5.2), and (d) to the extent necessary, adopted a
resolution having the effect of causing the Company not to be subject to any
state takeover law or similar Legal Requirement that might otherwise apply to
the Merger or any of the other transactions contemplated by this Agreement. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies. No state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement or any of
the transactions contemplated hereby. Except for the dividend of rights to
shareholders of record on April 17, 2001 pursuant to the Rights Agreement dated
April 2, 2001 between the Company and Mellon Investors Services, LLC, as amended
on April 29, 2001 (the "Company Rights Agreement"), as of the date hereof, the
Company has not taken any action whatsoever under the Company Rights Agreement.
SECTION 2.4 CAPITALIZATION, ETC.
(a) As of the date hereof, the authorized capital stock of the Company
consists of: (i) 50,000,000 shares of Company Common Stock, of which
22,545,807 shares have been issued and are outstanding as of April 27,
2001; and (ii) 7,500,000 shares of Company Preferred Stock, 1,500,000 of
which have been designated Series A Junior Participating Preferred Stock,
of which no shares are outstanding. The Company does not hold any shares of
its capital stock in its treasury. All of the outstanding shares of Company
Common Stock have been duly authorized and validly issued, and are fully
paid and nonassessable. As of the date of this Agreement, there are no
shares of Company Common Stock held by any of the other Acquired
Corporations. Except as set forth in Part 2.4(a) of the Company Disclosure
Schedule: (i) none of the outstanding shares of Company Common Stock is
entitled or subject to any preemptive right, right of participation, right
of maintenance or any similar right; (ii) none of the outstanding shares of
Company Common Stock is subject to any right of first refusal in favor of
the Company; and (iii) there is no Acquired Corporation Contract relating
to the voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any shares of Company Common
Stock. None of the Acquired Corporations is under any obligation, or is
bound by any
7
Contract pursuant to which it may become obligated, to repurchase, redeem
or otherwise acquire any outstanding shares of Company Common Stock.
(b) Except as set forth in Part 2.4(b) of the Company Disclosure
Schedule, as of April 27, 2001: (i) 4,362,366 shares of Company Common
Stock are reserved for future issuance pursuant to stock options granted
and outstanding under the Company's 1996 Stock Plan; (ii) 71,584 shares of
Company Common Stock are reserved for future issuance pursuant to stock
options granted and outstanding under the Company's Non-Employee Directors'
Stock Option Plan; (iii) 252,722 shares of Company Common Stock are
reserved for future issuance pursuant to stock options granted and
outstanding under the Panvera Corporation 1993 Stock Option Plan; (iv) no
shares of Company Common Stock have been granted and no shares of Company
Common Stock are reserved for future issuance pursuant to the Panvera
Corporation 1998 Stock Option Plan; (v) 4,354 shares of Company Common
Stock are reserved for future issuance pursuant to stock options granted
and outstanding under Nonqualified Stock Option Agreements issued to seven
(7) former employees of Quorum Sciences, Inc.; and (vi) 55,821 shares of
Company Common Stock are reserved for future issuance pursuant to the
Company's Employee Stock Purchase Plan (the "Company ESPP") (collectively,
the "Stock Plans"). (Stock options granted by the Company pursuant to the
Company's Stock Plans and otherwise are referred to in this Agreement as
"Company Options.") Part 2.4(b) of the Company Disclosure Schedule sets
forth the following information with respect to each Company Option
outstanding as of the date of this Agreement: (i) if applicable, the
particular plan pursuant to which such Company Option was granted; (ii) the
name of the optionee; (iii) the number of shares of Company Common Stock
subject to such Company Option; (iv) the exercise price of such Company
Option; (v) the date on which such Company Option was granted; (vi) the
extent to which such Company Option is vested and exercisable as of the
date of this Agreement; and (vii) the date on which such Company Option
expires. The Company has made available to Parent accurate and complete
copies of all stock option plans pursuant to which there are currently
outstanding Company Options, and the forms of all stock option agreements
evidencing such options.
(c) Except as set forth in Parts 2.4(b) and 2.4(c) of the Company
Disclosure Schedule, as of the date hereof, there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities
of the Company; (ii) outstanding security, instrument or obligation that is
or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) stockholder rights
plan (or similar plan commonly referred to as a "poison pill") or Contract
under which the Company is or may become obligated to sell or otherwise
issue any shares of its capital stock or any other securities; or (iv) to
the knowledge of the Company, condition or circumstance that would
reasonably be expected to give rise to or provide a basis for the assertion
of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of the
Company.
(d) All outstanding shares of Company Common Stock, all outstanding
Company Options, all outstanding warrants to purchase Company Common Stock
and all outstanding shares of capital stock of each Subsidiary of the
Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
8
(e) All of the outstanding shares of capital stock of the corporations
identified in Part 2.1(a)(i) and (ii) of the Company Disclosure Schedule
have been duly authorized and are validly issued, are fully paid and
nonassessable and are owned beneficially and of record by the Company, free
and clear of any Encumbrances.
SECTION 2.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available (which availability will be deemed
to have been made if such report, registration statement or definitive
proxy statement appears in the XXXXX archives of the SEC) to Parent
accurate and complete copies (excluding copies of exhibits) of each report,
registration statement and definitive proxy statement filed by the Company
with the SEC since January 1, 1998, and all amendments thereto (the
"Company SEC Documents"). Except as set forth in Part 2.5(a) of the Company
Disclosure Schedule, all statements, reports, schedules, forms and other
documents required to have been filed by the Company with the SEC have been
so filed on a timely basis. As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing or on the date on which it became
effective): (i) each of the Company SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) except to the extent that any
information contained in any Company SEC Document has been revised or
superseded by a later filed Company SEC Document, none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Except as set forth in Part 2.5(b) of the Company Disclosure
Schedule, the financial statements (including any related notes) contained
in the Company SEC Documents: (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC and except that unaudited financial statements may not
contain footnotes and are subject to normal and recurring year-end audit
adjustments which will not, individually or in the aggregate, be material
in amount), and (iii) fairly presented the consolidated financial position
of the Company and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods covered thereby.
SECTION 2.6 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement by the Company, nor (2) the consummation by the
Company of the Merger or any of the other transactions contemplated by this
Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the certificate of incorporation, bylaws or other charter
or organizational documents of any of the Acquired Corporations, or (ii)
any resolution adopted by the stockholders, the
9
board of directors or any committee of the board of directors of any of
the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or to the
Company's knowledge, give any Governmental Authority or other Person the
right to challenge the Merger with a reasonable likelihood of success or
any of the other transactions contemplated by this Agreement or give any
Governmental Authority the right to exercise any remedy or obtain any
relief under, any Legal Requirement or any order, writ, injunction,
judgment or decree to which any of the Acquired Corporations, or any of the
assets owned or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by any of the Acquired Corporations
or that otherwise relates to the business of any of the Acquired
Corporations or to any of the assets owned or used by any of the Acquired
Corporations;
(d) except as set forth in Part 2.6(d) of the Company Disclosure
Schedule, contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Acquired Corporation
Contract that is or would constitute a Material Contract (as defined in
Section 2.12), or give any Person the right to (i) declare a default or
exercise any material remedy under any such Acquired Corporation Contract,
(ii) a material rebate, chargeback, penalty or change in delivery schedule
under any such Acquired Corporation Contract, (iii) accelerate the maturity
or performance of any such Acquired Corporation Contract, or (iv) cancel,
terminate or modify any material term of such Acquired Corporation
Contract;
(e) result in a violation by any of the Acquired Corporations of any
order, writ, injunction, judgment or decree to which any of them is
subject;
(f) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by any of the Acquired Corporations
(except for Permitted Encumbrances); or
(g) except as set forth in Part 2.6(g) of the Company Disclosure
Schedule, result in, or increase the likelihood of, the transfer of any
material asset of any of the Acquired Corporations to any Person.
Except (1) as may be required by the Exchange Act, the DGCL, the HSR
Act, any foreign antitrust law or regulation, (2) as may be required by the
rules, regulations and bylaws of the National Association of Securities Dealers
("NASD") (as such rules, regulations and bylaws relate to the Form S-4
Registration Statement and the Joint Proxy Statement), and (3) as set forth in
Part 2.6 of the Company Disclosure Schedule, none of the Acquired Corporations
was, is or will be required to make any material filing with or give any
material notice to, or to obtain any material Consent from, any Person in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement by the Company,
10
or (y) the consummation by the Company of the Merger or any of the other
transactions contemplated by this Agreement.
SECTION 2.7 ABSENCE OF CHANGES. Except as set forth in Part 2.7 of the
Company Disclosure Schedule, between December 31, 2000 and the date of this
Agreement:
(a) there has not been any material adverse change in the business,
condition, capitalization, assets, liabilities, operations or financial
performance of the Acquired Corporations taken as a whole, and no event has
occurred or circumstance has arisen that, in combination with any other
events or circumstances, would reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance);
(c) none of the Acquired Corporations has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or granted, or
authorized the issuance of, (i) any capital stock or other security (except
for Company Common Stock issued upon the valid exercise of outstanding
Company Options), (ii) any option, warrant or right to acquire any capital
stock or any other security (except for Company Options described in Parts
2.4(b) or 2.4(c) of the Company Disclosure Schedule), or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
(e) except as proposed or described in the Company's Proxy Statement
for the Company's 2001 Annual Meeting, a copy of which has been provided to
Parent, the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any of
the Company's Stock Plans, (ii) any provision of any Contract evidencing
any outstanding Company Options, or (iii) any restricted stock purchase
agreement;
(f) except as proposed or described in the Company's Proxy Statement
for the Company's 2001 Annual Meeting, there has been no amendment to the
certificate of incorporation, bylaws or other charter or organizational
documents of any of the Acquired Corporations, and none of the Acquired
Corporations has effected or been a party to any merger, consolidation,
share exchange, business combination, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(g) none of the Acquired Corporations has received any Acquisition
Proposal (other than from Parent);
11
(h) none of the Acquired Corporations has formed any Subsidiary or
acquired any equity interest or other interest in any other Entity;
(i) except as set out in the budget of the Acquired Corporations for
the 2001 fiscal year, a copy of which has previously been provided to
Parent, none of the Acquired Corporations has made any capital expenditure
which exceeds $100,000 individually or any series of related capital
expenditures that exceeds $250,000;
(j) except in the ordinary course of business and consistent with past
practices, none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any
Material Contract (as defined in Section 2.12), or (ii) amended or
terminated, or waived any material right or remedy under, any Material
Contract;
(k) except for rights or other assets acquired, leased, licensed, sold
or disposed of in the ordinary course of business and consistent with past
practices, none of the Acquired Corporations has (i) acquired, leased or
licensed any material right or other material asset from any other Person,
(ii) sold or otherwise disposed of, or leased or licensed, any material
right or other material asset to any other Person, or (iii) waived or
relinquished any right;
(l) none of the Acquired Corporations has written off as uncorrectable,
or established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(m) none of the Acquired Corporations has written down the value of any
of its inventory;
(n) none of the Acquired Corporations has made any pledge of any of its
assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for Permitted Encumbrances;
(o) none of the Acquired Corporations has (i) lent money to any Person,
or (ii) incurred or guaranteed any indebtedness for borrowed money;
(p) none of the Acquired Corporations has (i) adopted, established or
entered into any Plan (as defined in Section 2.19(a)), (ii) caused or
permitted any Plan to be amended in any material respect, or (iii) paid any
bonus or made any profit-sharing or similar payment to, or materially
increased the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors,
officers or employees;
(q) none of the Acquired Corporations has changed any of its methods of
accounting or accounting practices in any material respect;
(r) none of the Acquired Corporations has made any material Tax
election;
12
(s) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
(t) none of the Acquired Corporations has (i) entered into any material
transaction or (ii) taken any other action that has had, or would
reasonably be expected to have, a Material Adverse Effect on the Acquired
Corporations; and
(u) none of the Acquired Corporations has agreed or committed to take
any of the actions referred to in clauses "(c)" through "(t)" above.
SECTION 2.8 TITLE TO ASSETS. Except as disclosed in Part 2.8 of the Company
Disclosure Schedule, the Acquired Corporations own, and have good and valid
title to, all assets purported to be owned by them, including: (i) all assets
reflected on the Company Balance Sheet (except for inventory sold or otherwise
disposed of in the ordinary course of business since the date of the Company
Balance Sheet); and (ii) all other assets reflected in the books and records of
the Acquired Corporations as being owned by the Acquired Corporations. All of
said assets are owned by the Acquired Corporations free and clear of any
Encumbrances, except for Permitted Encumbrances.
SECTION 2.9 RECEIVABLES; EMPLOYEE LOANS; CUSTOMERS.
(a) Except as disclosed in Part 2.9(a) of the Company Disclosure
Schedule, all existing accounts receivable of the Acquired Corporations
(including those accounts receivable reflected on the Company Balance Sheet
that have not yet been collected and those accounts receivable that have
arisen since December 31, 2000, and have not yet been collected) (i)
represent valid obligations of customers of the Acquired Corporations
arising from bona fide transactions entered into in the ordinary course of
business, (ii) are current and, to the Company's knowledge, will be
collected in full when due, without any counterclaim or set off (net of an
allowance for doubtful accounts not to exceed $100,000 in the aggregate).
(b) Part 2.9(b) of the Company Disclosure Schedule contains an accurate
and complete list as of the date of this Agreement of all (i) loans and
advances made by any of the Acquired Corporations to any employee,
director, consultant or independent contractor, other than routine travel
advances made to employees in the ordinary course of business and (ii)
loans made pursuant to the Company's 401(k) Plan.
(c) Part 2.9(c) of the Company Disclosure Schedule accurately
identifies, and provides an accurate and complete breakdown of the revenues
received from, each customer or other Person that accounted for more than
$1,000,000 of the consolidated gross revenues of the Acquired Corporations
in fiscal year 2000. Except as described in Part 2.9(c) of the Company
Disclosure Schedule, the Company has not received any notice or other
communication (in writing or otherwise), and has not received any other
information, indicating that any customer or other Person identified in
Part 2.9(c) of the Company Disclosure Schedule may cease dealing with the
Company or may otherwise reduce the volume of business transacted by such
Person with the Company below historical levels.
SECTION 2.10 REAL PROPERTY; EQUIPMENT; LEASEHOLD. All material items of
equipment and other tangible assets owned by or leased to the Acquired
Corporations are adequate for the
13
uses to which they are being put, are in good and safe condition and repair
(ordinary wear and tear excepted) and are adequate for the conduct of the
business of the Acquired Corporations in the manner in which such business is
currently being conducted. None of the Acquired Corporations own any real
property or any interest in real property. None of the acquired Corporations is
a party to any lease or agreement to lease in respect of any real property,
whether as lessor or lessee, other than the leases (the "Leases") described in
Part 2.10 of the Company Disclosure Schedule. Part 2.10 of the Company
Disclosure schedule sets out the parties to each of the Leases, their dates of
execution and the rent payable thereunder. Except as described in Part 2.10 of
the Company Disclosure Schedule, the Acquired Corporations occupy the leased
property subject to the Leases and have the exclusive right to occupy and use
such leased property. Each of the Leases is in good standing and in full force
and effect, and none of the Acquired Corporations nor, to the Company's
knowledge, any other party thereto is in breach of any covenants, conditions or
obligations contained therein. The Company has made available to Parent a true
and complete copy of each Lease and all amendments thereto.
SECTION 2.11 INTELLECTUAL PROPERTY.
(a) Part 2.11(a)(i) of the Company Disclosure Schedule sets forth, with
respect to all Intellectual Property owned by the Acquired Corporations and
registered with any Governmental Authority or for which an application has
been filed with any Governmental Authority, (i) the registration or
application number and the date filed, the title, if applicable, of the
registration or application, and (ii) the names of the jurisdictions
covered by the applicable registration or application. Part 2.11(a)(ii) of
the Company Disclosure Schedule identifies and provides a brief description
of all other Intellectual Property owned by the Acquired Corporations as of
the date hereof that is material to the business of the Acquired
Corporations. Part 2.11(a)(iii) of the Company Disclosure Schedule
identifies each Contract currently in effect containing any ongoing royalty
or payment obligations in excess of $50,000 per annum with respect to,
Intellectual Property that is licensed or otherwise made available to the
Acquired Corporations by any Person or is material to the business of the
Acquired Corporations (except for any Intellectual Property that is
licensed to the Acquired Corporations under any third party software
license generally available to the public). The Acquired Corporations have
good and valid title to all of the Acquired Corporation Intellectual
Property identified in Parts 2.11(a)(i) and 2.11(a)(ii) of the Company
Disclosure Schedule, free and clear of all Encumbrances, except for
Permitted Encumbrances. To the Company's knowledge, the Acquired
Corporations have a valid right to use, license and otherwise exploit all
Intellectual Property identified in Part 2.11(a)(iii) of the Company
Disclosure Schedule. Except as set forth in Part 2.11(a)(iv) of the Company
Disclosure Schedule, none of the Acquired Corporations has developed
jointly with any other Person any Acquired Corporation Intellectual
Property that is material to the business of the Acquired Corporations with
respect to which such other Person has any rights. Except as set forth in
Part 2.11(a)(v) of the Company Disclosure Schedule, there is no Acquired
Corporation Contract (with the exception of end user license agreements in
the form previously made available to Parent) pursuant to which any Person
has any right (whether or not currently exercisable) to use, license or
otherwise exploit any Acquired Corporation Intellectual Property that is
material to any of the Acquired Corporations.
(b) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value
of all material Acquired Corporation
14
Intellectual Property (except Acquired Corporation Intellectual Property
whose value would be unimpaired by disclosure). Without limiting the
generality of the foregoing, except as set forth in Part 2.11(b) of the
Company Disclosure Schedule, (i) all current and former employees of the
Acquired Corporations who are or were involved in, or who have contributed
to, the creation or development of any material Acquired Corporation
Intellectual Property have executed and delivered to the Acquired
Corporations an agreement (containing no exceptions to or exclusions from
the scope of its coverage with respect to the assignment of Intellectual
Property other than inventions conceived of or reduced to practice prior to
such person's employment with the Company) that is similar in scope to the
form of Proprietary Information and Inventions Agreement previously made
available to Parent, and (ii) all current and former consultants and
independent contractors to the Acquired Corporations who are or were
involved in, or who have contributed to, the creation or development of any
material Acquired Corporation Intellectual Property have executed and
delivered to the Company an agreement (containing no exceptions to or
exclusions from the scope of its coverage with respect to the assignment of
Intellectual Property other than inventions conceived of or reduced to
practice prior to such person's providing services to the Company) that
contains terms substantially similar to those in the form of Proprietary
Information and Inventions Agreement previously made available to Parent.
No current or former employee, officer, director, stockholder, consultant
or independent contractor has any right, claim or interest in or with
respect to any Acquired Corporation Intellectual Property. All Proprietary
Information and Inventions Agreements signed by current and former
employees, consultants and independent contractors remain in full force and
effect and have not been superceded by any subsequent agreements.
(c) To the knowledge of the Company and except as described on Part
2.11(c) of the Company Disclosure Schedule: (i) all patents, trademarks,
service marks and copyrights held by any of the Acquired Corporations are
valid, enforceable and subsisting; (ii) none of the Acquired Corporation
Intellectual Property and no Intellectual Property that is currently being
developed by any of the Acquired Corporations (either by itself or with any
other Person) infringes, misappropriates or conflicts with any Intellectual
Property owned or used by any other Person; (iii) none of the products that
are or have been designed, created, developed, assembled, manufactured or
sold by any of the Acquired Corporations is infringing, misappropriating or
making any unlawful or unauthorized use of any Intellectual Property owned
or used by any other Person, and none of the Acquired Corporations has
received any notice or other communication (in writing or otherwise) of any
actual or alleged infringement, misappropriation or unlawful or
unauthorized use of, any Intellectual Property owned or used by any other
Person; (iv) no other Person is infringing, misappropriating or making any
unlawful or unauthorized use of, and no Intellectual Property owned or used
by any other Person infringes or conflicts with, any material Acquired
Corporation Intellectual Property.
(d) The Acquired Corporation Intellectual Property constitutes all the
Intellectual Property necessary to enable the Acquired Corporations to
conduct their business in the manner in which such business is being
conducted. Except as described on Part 2.11(d) of the Company Disclosure
Schedule, none of the Acquired Corporations has (i) licensed any of the
material Acquired Corporation Intellectual Property to any Person on an
exclusive basis, or (ii) entered into any covenant not to compete or
Contract (other than non-exclusive license agreements) limiting its ability
to exploit fully any material Acquired Corporation Intellectual Property or
to transact business in any market or geographical area or with any Person.
15
(e) Except as set forth in Part 2.11(e) of the Company Disclosure
Schedule, none of the Acquired Corporations has disclosed or delivered to
any Person, or permitted the disclosure or delivery to any escrow agent or
other Person, of any Acquired Corporation Source Code. No event has
occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) would reasonably be expected to, result in the
disclosure or delivery to any Person of any Acquired Corporation Source
Code. Part 2.11(e) of the Company Disclosure Schedule identifies each
Contract currently in effect pursuant to which the Company has deposited or
is required to deposit with an escrowholder or any other Person of any
Acquired Corporation Source Code, and further describes whether the
execution of this Agreement or the consummation of any of the transactions
contemplated hereby would reasonably be expected to result in the release
or disclosure of any Acquired Corporation Source Code.
SECTION 2.12 CONTRACTS.
(a) Part 2.12 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract that constitutes a "Material Contract." For
purposes of this Agreement, each of the following Contracts shall be deemed
to constitute a "Material Contract":
(i) any Contract relating to the employment of, or the performance
of services by, any employee of or consultant to, any of the Acquired
Corporations that is in excess of $100,000 for any single individual,
other than offer letters for "at will" employment that do not contain
any severance obligations, and any Contract pursuant to which any of
the Acquired Corporations is or may become obligated to make any
severance, termination or similar payment to any current or former
employee, executive officer or director of or consultant to any of the
Acquired Corporations; and any Contract pursuant to which any of the
Acquired Corporations is or may become obligated to make any bonus or
similar payment or series of payments (other than payments constituting
base salary) in excess of $50,000 to any current or former employee,
executive officer or director of the Acquired Corporations;
(ii) any Contract (A) relating to the acquisition, transfer,
development, sharing or license of any Intellectual Property (except
for any Contract pursuant to which any Intellectual Property is
licensed to the Acquired Corporations under any third party software
license generally available to the public) (B) creating or relating to
any partnership or joint venture or any sharing of revenues, profits,
losses, costs or liabilities; or (C) of the type referred to in Section
2.11(e);
(iii) any Contract that provides any of the Acquired Corporations
to indemnify any current or former officer, director, employee, agent,
consultant or independent contractor of the Acquired Corporations in an
amount, in each instance in excess of $200,000;
(iv) any Contract imposing any restriction on the right or ability
of any Acquired Corporation (A) to compete with any other Person, (B)
to acquire any product or other asset or any services from any other
Person, (C) to solicit, hire or retain any Person as an employee,
consultant or independent contractor, (D) to develop, sell, supply,
distribute, offer, support or service any product or any technology or
other asset to or for
16
any other Person, (E) to perform services for any other Person, or
(F) to transact business or deal in any other manner with any other
Person;
(v) any Contract (other than Contracts evidencing Company Options)
(A) relating to the acquisition, issuance, voting, registration, sale
or transfer of any securities of any of the Acquired Corporations, (B)
providing any Person with any preemptive right, right of participation,
right of maintenance or any similar right with respect to any
securities of any of the Acquired Corporations, or (C) providing any of
the Acquired Corporations with any right of first refusal with respect
to, or right to repurchase or redeem, any securities of any of the
Acquired Corporations;
(vi) any Contract incorporating or relating to any guaranty,
pledge, warranty or indemnity or similar obligation by an Acquired
Corporation for the benefit of any other Person;
(vii) any Contract relating to any currency hedging;
(viii) any Contract containing "standstill" or similar provisions
currently in effect;
(ix) any Contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(x) any Contract relating to the creation of any Encumbrance with
respect to any asset of any of the Acquired Corporations, other than
Permitted Encumbrances;
(xi) any Contract relating to the purchase or sale of any product
or other asset by or to, or the performance of any services by or for,
any affiliate of any of the Acquired Corporations;
(xii) any Contract (A) to which any Governmental Authority is a
party or under which any Governmental Authority has any rights or
obligations, or (B) directly benefiting any Governmental Authority
(including any subcontract or other Contract between any Acquired
Corporation and any contractor or subcontractor to any Governmental
Authority);
(xiii) any Contract requiring that any of the Acquired
Corporations give any notice or provide any information to any Person
prior to considering or accepting any Acquisition Proposal or similar
proposal, or prior to entering into any discussions, agreement,
arrangement or understanding relating to any Acquisition Transaction or
similar transaction;
(xiv) any Contract that has a term of more than one year and that
may not be terminated by an Acquired Corporation (without penalty)
within 90 days after the delivery of a termination notice by such
Acquired Corporation;
(xv) any Contract that contemplates or involves the payment or
delivery of cash or other consideration by any Acquired Corporation in
an amount or having a value
17
in excess of $250,000 in the aggregate, or contemplates or involves
the performance of services by any Acquired Corporation having a
value in excess of $250,000 in the aggregate; and
(xvi) any Contract not otherwise identified in clauses "(i)"
through "(xv)", a breach of which would reasonably be expected to have
a Material Adverse Effect on the Acquired Corporations.
The Company has made available to Parent an accurate and complete copy
of each Material Contract.
(b) Each Acquired Corporation Contract that constitutes a Material
Contract, as may have been amended, is valid and in full force and effect
in accordance with its terms, and is enforceable in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.12(c) of the Company Disclosure
Schedule: (i) none of the Acquired Corporations has violated or breached,
or committed any default under (1) any Acquired Corporation Contract that
is a Material Contract or (2) any other Acquired Corporation Contract where
such violation, breach or default has had or would reasonably be expected
to have a Material Adverse Effect on the Acquired Corporations; and, to the
knowledge of the Company, no other Person has violated or breached, or
committed any default under (1) any Acquired Corporation Contract that is a
Material Contract or (2) any other Acquired Corporation Contract where such
violation, breach or default has had or would reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations; (ii) to the
knowledge of the Company, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will or
would reasonably be expected to, (A) result in a violation or breach of any
of the provisions of , (B) give any Person the right to declare a default
or exercise any remedy under, (C) give any Person the right to receive or
require a rebate, chargeback, penalty or change in delivery schedule under,
(D) give any Person the right to accelerate the maturity or performance of,
or (E) give any Person the right to cancel, terminate or modify, in each
instance, (1) any Acquired Corporation Contract that is a Material Contract
or (2) any other Acquired Corporation Contract where such violation, breach
or default has had or would reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations; and (iii) since December 31,
2000, none of the Acquired Corporations has received any notice or other
communication regarding any actual or possible violation, breach or
acceleration of, or default under, (1) any Acquired Corporation Contract
that is a Material Contract or (2) any other Acquired Corporation Contract
where such violation, breach or default has had or would reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations.
18
SECTION 2.13 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except as set forth in Part 2.13(a) of the Company Disclosure
Schedule, each product, system, program, Intellectual Property or other
asset designed, developed, manufactured, assembled, sold, installed,
repaired, licensed or otherwise made available by any of the Acquired
Corporations to any Person:
(i) conformed and complied in all material respects with the terms
and requirements of any applicable warranty or other Contract and with
all applicable Legal Requirements; and
(ii) was free of any design defect or other defect or deficiency
at the time it was sold or otherwise made available, other than any
immaterial defect that would not adversely affect in any material
respect such product, system, program, Acquired Corporation
Intellectual Property or other asset (or the operation or performance
thereof), except for such design defects or other defects or
differences that, taken in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Acquired
Corporations.
(b) Except as set forth in Part 2.13(b) of the Company Disclosure
Schedule, all installation services, programming services, repair services,
maintenance services, support services, training services, upgrade services
and other services that have been performed by the Acquired Corporations
were performed properly and in full conformity with the terms and
requirements of all applicable warranties and other Contracts and with all
applicable Legal Requirements.
(c) Except as set forth in Part 2.13(c) of the Company Disclosure
Schedule, no customer or other Person has asserted or threatened to assert
any claim, right or privilege against any of the Acquired Corporations (i)
under or based upon any warranty provided by or on behalf of any of the
Acquired Corporations, (ii) under or based upon any right arising as a
result of the late, delayed or non-performance by any of the Acquired
Corporations of any obligations thereof under any Material Contract related
to any product system or program designed, developed, manufactured,
assembled, sold, installed, repaired, licensed or otherwise made available
by any of the Acquired Corporations, or (iii) under or based upon any other
warranty relating to any product, system, program, Intellectual Property or
other asset designed, developed, manufactured, assembled, sold, installed,
repaired, licensed or otherwise made available by any of the Acquired
Corporations or any services performed by any of the Acquired Corporations.
SECTION 2.14 LIABILITIES. None of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, except for: (a) liabilities included in the Company Balance Sheet
(including the notes thereto); (b) liabilities that have been incurred by the
Acquired Corporations since December 31, 2000 in the ordinary course of business
and consistent with past practices; (c) liabilities incurred under this
Agreement and the other agreements contemplated hereby; and (d) liabilities
described in Part 2.14 of the Company Disclosure Schedule.
19
SECTION 2.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as disclosed in
Part 2.15 of the Company Disclosure Schedule, each of the Acquired Corporations
is in compliance in all material respects with all applicable Legal
Requirements. None of the Acquired Corporations has received any written notice
or other communication from any Governmental Authority regarding any actual or
possible material violation of, or material failure to comply with, any Legal
Requirement.
SECTION 2.16 CERTAIN BUSINESS PRACTICES. None of the Acquired Corporations
nor any director, officer, agent or employee of any of the Acquired Corporations
has (i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) to the Company's knowledge,
made any other unlawful payment in their capacity as a director, officer, agent
or employee of any of the Acquired Corporations.
SECTION 2.17 GOVERNMENTAL AUTHORIZATIONS. Except as disclosed in Part 2.17
of the Company Disclosure Schedule, the Acquired Corporations hold all material
Governmental Authorizations required to enable the Acquired Corporations to
conduct their respective businesses in the manner in which such businesses are
currently being conducted. All such Governmental Authorizations are valid and in
full force and effect. Each Acquired Corporation is in substantial compliance
with the terms and requirements of such Governmental Authorizations. None of the
Acquired Corporations has received any written notice or other communication
from any Governmental Authority regarding (a) any actual or possible violation
of or failure to comply with any term or requirement of any material
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization.
SECTION 2.18 TAX MATTERS.
(a) Except as disclosed in Part 2.18(a) of the Company Disclosure
Schedule, each Tax Return required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Authority with
respect to any taxable period ending on or before the Closing Date (the
"Acquired Corporation Returns") (i) has been or will be filed on or before
the applicable due date (including any extensions of such due date), and
(ii) has been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on the
Acquired Corporation Returns to be due on or before the Closing Date have
been or will be paid on or before the Closing Date.
(b) Except as disclosed in Part 2.18(b) of the Company Disclosure
Schedule, the Company Balance Sheet fully accrues all actual and contingent
liabilities for Taxes with respect to all periods through December 31, 2000
in accordance with generally accepted accounting principles. Each Acquired
Corporation will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of
all Taxes for the period from December 31, 2000 through the Closing Date.
20
(c) Except as set forth in Part 2.18(c) of the Company Disclosure
Schedule, (i) no Acquired Corporation Return has ever been examined or
audited by any Governmental Authority, and (ii) no extension or waiver of
the limitation period applicable to any of the Acquired Corporation Returns
has been granted (by the Company or any other Person), and no such
extension or waiver has been requested from any Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of the Company, has been threatened against or with respect to
any Acquired Corporation in respect of any material Tax. There are no
unsatisfied liabilities for material Taxes (including liabilities for
interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by any
Acquired Corporation with respect to any material Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or
similar document which are being contested in good faith by the Acquired
Corporations and with respect to which adequate reserves for payment have
been established on the Company Balance Sheet). There are no liens for
material Taxes upon any of the assets of any of the Acquired Corporations
except liens for current Taxes not yet due and payable. None of the
Acquired Corporations has entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code (or any comparable provision
of state or foreign Tax laws). None of the Acquired Corporations has been,
and none of the Acquired Corporations will be, required to include any
adjustment in taxable income for any tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code (or any comparable provision
under state or foreign Tax laws) as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
(e) Except as set forth in Part 2.18(e) of the Company Disclosure
Schedule, none of the Acquired Corporations is a party to any agreement,
plan, arrangement or other Contract covering any employee or independent
contractor or former employee or independent contractor of any of the
Acquired Corporations that, considered individually or considered
collectively with any other such Contracts, would reasonably be expected
to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162(m) the Code
(or any comparable provision of state or foreign Tax laws). None of the
Acquired Corporations is, or has ever been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract.
(f) Neither Company nor any of its affiliates has taken, failed to take
or agreed to take any action or knows of any fact, circumstance, plan or
intention that is or would be reasonably likely to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code.
SECTION 2.19 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.19(a) of the Company Disclosure Schedule identifies each
salary, bonus, vacation, deferred compensation, incentive compensation,
stock purchase, stock option, severance pay, termination pay, death and
disability benefits, hospitalization, medical, life or other insurance,
flexible benefits, supplemental unemployment benefits, profit-sharing,
pension or retirement plan, program or agreement and each other employee
benefit plan or arrangement sponsored, maintained, contributed to or
required to be contributed to by any of the Acquired
21
Corporations for the benefit of any current or former employee of any of
the Acquired Corporations (collectively, the "Plans"). Part 2.19(a) of the
Company Disclosure Schedule also identifies (i) each Legal Requirement
pursuant to which any of the Acquired Corporations is required to establish
any reserve or make any contribution for the benefit of any current or
former employee located in any foreign jurisdiction and (ii) any change of
control provision in any agreement or arrangement between an employee,
director or consultant of any of the Acquired Corporations and any of the
Acquired Corporations. Except as disclosed in Part 2.19(a) of the Company
Disclosure Schedule, none of the Acquired Corporations has any outstanding
payment or other obligation pursuant to any severance agreement, separation
agreement, or other agreement to settle or compromise any legal claim or
right, regardless of whether any Legal Proceeding to enforce any such claim
or right has been threatened or commenced.
(b) Except as set forth in Part 2.19(b) of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and none of the Acquired Corporations has at any time in
the past maintained, sponsored or contributed to, any employee pension
benefit plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any similar pension benefit
plan under the laws of any foreign jurisdiction, whether or not excluded
from coverage under specific Titles or Subtitles of ERISA for the benefit
of employees or former employees of any of the Acquired Corporations (a
"Pension Plan").
(c) Except as set forth in Part 2.19(c) of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to any employee welfare benefit plan (as defined in Section
3(1) of ERISA or any similar welfare benefit plan under the laws of any
foreign jurisdiction, whether or not excluded from coverage under specific
Titles or Subtitles of ERISA), for the benefit of any current or former
employees or directors of any of the Acquired Corporations (a "Welfare
Plan"). No Welfare Plan is a self-insured Welfare Plan or a "multiple
employer welfare arrangement" as such term is defined in Section 3(40) of
ERISA.
(d) With respect to each Plan, the Company has made available to
Parent: (i) an accurate and complete copy of such Plan (including all
amendments thereto); (ii) an accurate and complete copy of the annual
report (along with all schedules and attachments), if required under ERISA,
with respect to such Plan for the last three (3) years; (iii) an accurate
and complete copy of the most recent summary plan description, together
with each summary of material modifications, if required under ERISA, with
respect to such Plan, (iv) if such Plan is funded through a trust or any
third party funding vehicle, an accurate and complete copy of the trust or
other funding agreement (including all amendments thereto) and accurate and
complete copies of the most recent financial statements thereof; (v)
accurate and complete copies of all Contracts relating to such Plan,
including service provider agreements, insurance contracts, minimum premium
contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and record keeping agreements;
(vi) an accurate and complete copy of the most recent determination letter
received from the Internal Revenue Service with respect to such Plan (if
such Plan is intended to be qualified under Section 401(a) of the Code);
and (vii) a copy of the nondiscrimination testing completed with respect to
each plan for the last three (3) years, if applicable
22
(e) None of the Acquired Corporations is or has ever been required to
be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code, except
for the Acquired Corporations. None of the Acquired Corporations has ever
been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. None of the Acquired Corporations has ever
maintained, participated in or contributed to a multiemployer plan (within
the meaning of Section 3(37) of ERISA). None of the Acquired Corporations
has ever made a complete or partial withdrawal from a multiemployer plan,
as such term is defined in Section 3(37) of ERISA, resulting in "withdrawal
liability," as such term is defined in Section 4201 of ERISA (without
regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA). None of the Acquired Corporations has ever
sponsored, maintained or contributed to an employee pension benefit plan as
defined in Section 3(2) of ERISA or which is subject to Title IV of ERISA
or Section 412 of the Code.
(f) None of the Acquired Corporations has any plan or commitment to
create any Welfare Plan or any Pension Plan, or to modify or change any
existing Welfare Plan or Pension Plan (other than to comply with applicable
Legal Requirements).
(g) No Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former employee or director of any
of the Acquired Corporations after any termination of service of such
employee or director (other than benefit coverage mandated by applicable
Legal Requirements, including coverage provided pursuant to Section 4980B
of the Code).
(h) With respect to any Plan constituting a group health plan within
the meaning of Section 4980B(g)(2) of the Code, the provisions of Section
4980B of the Code ("COBRA") have been complied with in all material
respects. Any such Plan is in compliance with the requirements of the
Health Insurance Portability and Accountability Act of 1996. Part 2.19(h)
of the Company Disclosure Schedule describes all obligations of the
Acquired Corporations as of the date of this Agreement under any of the
provisions of COBRA.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with its terms and with applicable Legal
Requirements, including ERISA, the Code and applicable foreign Legal
Requirements, and all required governmental filings and participant reports
or disclosures have been made on a timely basis.
(j) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service, covering changes mandated by TRA '86. Each trust
maintained with respect to each Plan is exempt from taxation under Section
501(a) of the Code. No act or omission has occurred that would adversely
affect such qualified or tax exempt status. There have been no "prohibited
transactions" within the meaning of Section 406 of ERISA or Section 4975 of
the Code involving any of the Plans. There are no pending, or to the
knowledge of the Company threatened or anticipated claims, litigation,
administrative actions or proceedings against or otherwise involving any of
the Plans or related trusts, or any fiduciary thereof, by any governmental
agency, or by any employee, former employee, retiree, participant or
beneficiary covered under any of the Plans, or otherwise involving the
Plans (other than routine claims for benefits). There is no judgment,
decree,
23
injunction, rule or order of any court, governmental body, commission,
agency or arbitrator outstanding against or in favor of any Plan or any
fiduciary thereof in that capacity.
(k) Part 2.19(k) of the Company Disclosure Schedule sets forth all
bonus, golden parachute, severance or other payments or obligations to any
current or former employee or director of any of the Acquired Corporations
(whether or not under any Plan, written or oral) which will become payable
or will be materially increased, or which such payment or vesting of such
benefit will be accelerated, as a direct or indirect result of the
execution, delivery or performance of this Agreement, or the consummation
of the Merger or any of the other transactions contemplated by this
Agreement, irrespective of whether such material increase or acceleration
of vesting or time of payment is directly or indirectly related to a
"change in control" (as defined in any applicable Plan, arrangement or
agreement) or a voluntary or involuntary termination of employment within a
certain period of time either before or after such "change in control" (as
defined in the applicable Plan, arrangement or agreement). Without limiting
the generality of the foregoing, except as set forth in Part 2.19(k) of the
Company Disclosure Schedule, there is no stock option, restricted stock or
other type of agreement pursuant to which such individual shall be entitled
to actual or potential acceleration of vesting or lapsing of restrictions
as a result, either directly or indirectly, of the consummation of the
Merger, or the consummation of any other transactions contemplated by this
Agreement, including, but not limited to, any Company Options or options or
stock grants which were granted by PanVera Corporation or Quorum Sciences,
Inc. without regard to whether such options have been converted into
Company Options or other options or awards in the Common Stock or any other
class of stock of Parent.
(l) Part 2.19(l)(i) of the Company Disclosure Schedule contains a list
of all salaried employees of each of the Acquired Corporations as of the
date of this Agreement, and correctly reflects, in all material respects,
their salaries, any other compensation payable to them (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements), their dates and terms of employment, their positions and any
notice, payment, bonus, accelerated vesting of Company Options, or other
form of remuneration (exclusive of accrued vacation pay) to which each such
employee may be entitled upon termination of his or her employment. None of
the Acquired Corporations is a party to any collective bargaining contract
or other Contract with a labor union involving any of its employees. Except
as set forth on Part 2.19(l)(ii) of the Company Disclosure Schedule, all
employees of the Acquired Corporations are "at will" employees. The
standard offer letters used by the Acquired Corporations are substantially
identical in form to those previously made available to Parent.
(m) Part 2.19(m) of the Company Disclosure Schedule identifies each
employee of any of the Acquired Corporations who is not fully available to
perform work because of disability or other leave and sets forth the basis
of such disability or leave and the anticipated date of return to full
service.
(n) Each of the Acquired Corporations is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions
of employment, including employee compensation matters.
24
(o) Each of the Acquired Corporations has good labor relations, and the
Company has no knowledge of any facts indicating that (i) the consummation
of the Merger or any of the other transactions contemplated by this
Agreement will have a Material Adverse Effect on the labor relations of any
of the Acquired Corporations, or (ii) any of the employees of any of the
Acquired Corporations intends to terminate his or her employment with the
Acquired Corporation with which such employee is employed.
(p) None of the Acquired Corporations has entered into any Contracts
with any labor union or employee association or made any commitments, to or
conducted negotiations with, any labor union or employee association with
respect to future agreements. None of the Acquired Corporations is aware of
any current attempts to organize or establish labor union or employee
association with respect to any employees of the Acquired Corporations.
(q) During the last five (5) years, there has not occurred nor been
threatened any labor strike, dispute, slowdown, work stoppage, picketing,
concerted refusal to work regular or overtime hours or similar labor
activity with respect to any employees of the Acquired Corporations.
SECTION 2.20 ENVIRONMENTAL MATTERS. Except as disclosed in Part 2.20 of the
Company Disclosure Schedule, each of the Acquired Corporations is in compliance
in all material respects with all applicable Environmental Laws, which
compliance includes, among other things, the possession by each of the Acquired
Corporations of all permits, approvals, and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, except for incidents of noncompliance which, taken in the
aggregate, have not had and would not reasonably be expected to have, a Material
Adverse Effect on the Acquired Corporations. No prior authorization of any
Governmental Authority is required in order to maintain the effectiveness of any
material permit, approval or other Governmental Authorization beyond the
Effective Time. Except as set forth in Part 2.20 of the Company Disclosure
Schedule, none of the Acquired Corporations has received any notice or other
communication (in writing or otherwise), whether from a Governmental Authority,
citizens group, employee or otherwise, that alleges liability, potential
liability, or noncompliance of the Acquired Corporations with any Environmental
Law; nor is the Company aware of any facts, circumstances, conditions, or
occurrences regarding the Acquired Corporations' operations or any property
owned, leased, managed, or operated by the Acquired Corporations that would
reasonably be expected to result in such a notice, communication or allegation.
To the knowledge of the Company, except as disclosed in Part 2.20 of the Company
Disclosure Schedule, all property that is owned, leased, managed or operated by
the Acquired Corporations, and all surface water, groundwater and soil
associated with or adjacent to such property, is free of any Material
Environmental Concern. To the knowledge of the Company, none of the property
owned, leased, managed or operated by any of the Acquired Corporations contains
any underground storage tanks, asbestos, equipment using PCBs or underground
injection xxxxx. To the knowledge of the Company, none of the property owned,
leased, managed or operated by any of the Acquired Corporations contains any
septic tanks into which process wastewater or any Materials of Environmental
Concern have been released, spilled, or discharged. No Acquired Corporation has
ever sent or transported, or arranged to send or transport, any Materials of
Environmental Concern to a site that, pursuant to any applicable Environmental
Law (i) has been placed on the "National Priorities List" of hazardous waste
sites or any similar state list, (ii) is
25
otherwise designated or identified as a potential site for remediation, cleanup,
closure or other environmental remedial activity, or (iii) is subject to a Legal
Requirement to take "removal" or "remedial" action as detailed in any applicable
Environmental Law or to make payment for the cost of cleaning up the site. (For
purposes of this Section 2.20: (i) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health, safety, or the environment (including, among others, ambient air,
surface water, ground water, land surface or subsurface strata), including any
Legal Requirement relating to emissions, discharges, releases (including, but
not limited to, any dumping, spilling, leaking, leaching, escaping, migrating,
seeping, and injecting), or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, radioactive
substances, petroleum and petroleum products and any other substance that is
regulated by any Environmental Law.
SECTION 2.21 INSURANCE. The Company has made available to Parent a copy of
all material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of the Acquired
Corporations. Part 2.21 of the Company Disclosure Schedule lists each such
insurance policy, program and arrangement and sets out a description of all
claims made (whether pending or satisfied) thereunder since January 1, 1996.
Each of such insurance policies is in full force and effect. None of the
Acquired Corporations has received any notice or other communication regarding
any actual or possible (a) cancellation or invalidation of any insurance policy,
(b) refusal of any coverage or rejection of any material claim under any
insurance policy, or (c) material adjustment in the amount of the premiums
payable with respect to any insurance policy. Except as set forth in Part 2.21
of the Company Disclosure Schedule, there is no pending workers' compensation or
other claim under or based upon any insurance policy of any of the Acquired
Corporations.
SECTION 2.22 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement and except as
set forth in Part 2.22 of the Company Disclosure Schedule, between the date of
the Company's last proxy statement filed with the SEC and the date of this
Agreement, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 2.22
of the Company Disclosure Schedule identifies each Person who is (or who may be
deemed to be) an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Company as of the date of this Agreement.
SECTION 2.23 LEGAL PROCEEDINGS; ORDERS.
(a) Except as disclosed in Part 2.23(a) of the Company Disclosure
Schedule, there is no pending Legal Proceeding, and to the knowledge of the
Company, no Person has threatened to commence any Legal Proceeding: (i)
that involves any of the Acquired Corporations or any of the assets owned
or used by any of the Acquired Corporations; or (ii) that challenges, or
that may have the effect of preventing, delaying, making illegal or
otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement. Except as disclosed in Part 2.23 of the
Company Disclosure Schedule, to the knowledge of the Company, no event has
occurred, and no claim, dispute or other condition or circumstance exists,
that would reasonably
26
be expected to, give rise to or serve as a basis for the commencement of
any such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment or decree to
which any of the Acquired Corporations, or any of the assets owned or used
by any of the Acquired Corporations, is subject. To the knowledge of the
Company, no officer or key employee of any of the Acquired Corporations is
subject to any order, writ, injunction, judgment or decree that prohibits
such officer or other employee from engaging in or continuing any conduct,
activity or practice relating to the business of any of the Acquired
Corporations.
SECTION 2.24 NO EXISTING DISCUSSIONS. Except as set forth in Part 2.24 of
the Company Disclosure Schedule, none of the Acquired Corporations, and no
Representative of any of the Acquired Corporations, is engaged, directly or
indirectly, in any discussions or negotiations with any Person (other than
Parent) relating to any Acquisition Proposal.
SECTION 2.25 ACCOUNTING MATTERS. As of the date hereof, to the knowledge of
the Company, neither the Company nor any "affiliate" (as that term is used in
Rule 145 under the Securities Act) of any of the Acquired Corporations has taken
or agreed to take, or plans to take, any action that could prevent Parent from
accounting for the Merger as a "pooling of interests."
SECTION 2.26 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Company Stockholders' Meeting (as defined in Section 5.2) (the "Required
Company Stockholder Vote") is the only vote of the holders of any class or
series of the Company's capital stock necessary to adopt this Agreement and
approve the Merger and the other transactions contemplated by this Agreement.
SECTION 2.27 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date hereof
and at all times on or prior to the Effective Time, the board of directors of
the Company has taken and will take all actions so that the restrictions
applicable to business combinations contained in Section 203 of the DGCL are,
and will be, inapplicable to the execution, delivery and performance of this
Agreement and to the consummation of the Merger and the other transactions
contemplated by this Agreement. No state takeover statute or similar Legal
Requirement applies or purports to apply to the Merger, this Agreement or any of
the other transactions contemplated hereby.
SECTION 2.28 FAIRNESS OPINION. The Company's board of directors has
received the written opinion of Xxxxxxx, Xxxxx & Co., financial advisor to the
Company, dated the date of this Agreement, to the effect that the Exchange Ratio
is fair from a financial point of view to the stockholders of the Company. The
Company will furnish an accurate and complete copy of said written opinion to
Parent.
SECTION 2.29 FINANCIAL ADVISOR. Except for Xxxxxxx, Sachs & Co. and except
as set forth on Part 2.29 of the Company Disclosure Schedule, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Acquired Corporations. The Company has made available to Parent
accurate and complete copies of all agreements under which any such fees,
commissions or other
27
amounts have been paid to, or may become payable to, and all indemnification
and other agreements related to the engagement of Xxxxxxx, Xxxxx & Co.
SECTION 2.30 FULL DISCLOSURE. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement is filed with the SEC or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Joint Proxy Statement will, at the time the Joint Proxy
Statement is mailed to the stockholders of the Company and stockholders of
Parent or at the time of the Company Stockholders' Meeting (as defined in
Section 5.2) or the Parent Stockholders' Meeting (as defined in Section 5.3),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent for inclusion or incorporation
by reference in the Joint Proxy Statement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 3.1 DUE ORGANIZATION; SUBSIDIARIES; ETC. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Parent and Merger Sub has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its obligations under all Contracts
by which it is bound, except where the failure to have such power or authority
does not and would not have a Material Adverse Effect on Parent or Merger Sub.
Each of Parent and Merger Sub is duly qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions where
the nature of its business requires such qualification.
SECTION 3.2 ARTICLES OF ORGANIZATION AND BYLAWS. Parent has made available
to the Company accurate and complete copies of the articles of organization,
bylaws and other charter and organizational documents of Parent and its
Subsidiaries, including all amendments thereto.
SECTION 3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent has the absolute
and unrestricted right, power and authority to enter into this Agreement and,
subject to obtaining the requisite approval of the issuance of Parent Common
Stock in connection with the Merger by
28
Parent stockholders as required by the NASD, to perform its obligations under
this Agreement. Merger Sub has the absolute and unrestricted right, power and
authority to enter into this Agreement and to perform its obligations under this
Agreement. The execution, delivery and performance by Parent and Merger Sub of
this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Merger Sub, subject to obtaining requisite Parent
Stockholder approval of the issuance of Parent Common Stock in connection with
the Merger as required by the NASD. This Agreement constitutes the legal, valid
and binding obligation of Parent and Merger Sub, enforceable against them in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
SECTION 3.4 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: (i) 100,000,000
shares of Parent Common Stock; and (ii) 1,000,000 shares of Parent
Preferred Stock. As of April 27, 2001, 60,293,702 shares of Parent Common
Stock were issued and outstanding. As of the date of this Agreement, no
shares of Parent Preferred Stock are issued or outstanding. All of the
outstanding shares of Parent Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable.
(b) As of the date of this Agreement: (i) 1,548,821 shares of Parent
Common Stock are reserved for future issuance pursuant to stock options
granted and outstanding under Parent's 1991 Stock Option Plan; (ii)
1,884,998 shares of Parent Common Stock are reserved for future issuance
pursuant to stock options granted and outstanding under Parent's 1994 Stock
and Option Plan; (iii) 8,037,900 shares of Parent Common Stock are reserved
for future issuance, pursuant to stock options granted and outstanding
under Parent's 1996 Stock and Option Plan; (iv) 342,517 shares of Parent
Common Stock are reserved for future issuance pursuant to Parent's Employee
Stock Purchase Plan and (v) 3,739,432 shares of Parent Common Stock are
reserved for future issuance upon the conversion of Parent's outstanding 5%
Convertible Subordinated Notes due 2007. Parent has made available to the
Company accurate and complete copies of all stock option plans pursuant to
which Parent has ever granted stock options, and the forms of all stock
option agreements evidencing such options. As the date of this Agreement,
there are outstanding options to purchase 11,480,085 shares of Parent
Common Stock. Parent has no present intention to issue any shares of Parent
capital stock or other securities other than pursuant to: (i) the exercise
or conversion of outstanding options, warrants or other rights (whether or
not currently exercisable) to acquire any shares of the capital stock or
other securities of Parent, (ii) to Parent's Employee Stock Purchase Plan
and 401(k) Plan, (iii) upon the conversion of any Parent's outstanding 5%
Convertible Subordinated Notes due 2007; and (iv) upon the exercise of
options to purchase Parent Common Stock issued after the date of this
Agreement under existing option plans of Parent in the ordinary course of
business and consistent with past practice.
(c) Except as set forth in Section 3.4(c) of the Parent Disclosure
Schedule, there is no (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of
the capital stock or other securities of Parent; (ii) outstanding security,
instrument or obligation that is or may become convertible into or
exchangeable for any shares
29
of the capital stock or other securities of Parent; (iii) stockholder
rights plan (or similar plan commonly referred to as a "poison pill") or
Contract under which Parent is or may become obligated to sell or otherwise
issue any shares of its capital stock or any securities; or (iv) to the
knowledge of Parent, condition or circumstance that would reasonably be
expected to give rise to or provide a basis for the assertion of a claim by
any Person to the effect that such Person is entitled to acquire or receive
any shares of capital stock or other securities of Parent.
(d) The authorized capital stock of Merger Sub consists of 3,000 shares
of common stock, of which 100 are issued and outstanding. All of the
outstanding shares of Merger Sub common stock have been duly authorized and
validly issued, and are fully paid and nonassessable. Merger Sub is a
wholly-owned subsidiary of Parent.
SECTION 3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available (which availability will be deemed to
have been made if such report, registration statement or definitive proxy
appears in the Xxxxx archives of the SEC) to the Company accurate and
complete copies (excluding copies of exhibits) of each report, registration
statement and definitive proxy statement filed by Parent with the SEC since
January 1, 1998, and all amendments thereto (the "Parent SEC Documents").
All statements, reports, schedules, forms and other documents required to
have been filed by Parent with the SEC have been so filed on a timely
basis. As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing): (i) each of the Parent SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be); and (ii) none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The financial statements (including any related notes) contained in
the Parent SEC Documents: (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered
(except as may be indicated in the notes to such financial statements and,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that unaudited financial statements may not contain footnotes
and are subject to normal and recurring year-end audit adjustments which
will not, individually or in the aggregate, be material in amount); and
(iii) fairly present the consolidated financial position of Parent and its
Subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its Subsidiaries for the periods
covered thereby.
SECTION 3.6 NON-CONTRAVENTION; CONSENTS. Neither (1) execution and delivery
of this Agreement or any other of the agreements referenced to in this Agreement
by Parent and Merger Sub, nor (2) the consummation by Merger Sub of the Merger
or any of the other transactions contemplated by this Agreement, will directly
or indirectly (with or without notice or lapse of time):
30
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the articles of organization or bylaws of Parent or the
certificate of incorporation or bylaws of Merger Sub or other charter or
organizational documents of either of them, or (ii) any resolution adopted
by the stockholders, the board of directors or any committee of the board
of directors of Parent or Merger Sub;
(b) contravene, conflict with or result in a violation of, or to
Parent's knowledge, give any Governmental Authority or other Person the
right to challenge, with a reasonable likelihood of success, the Merger or
any of the other transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under any Legal Requirement or any order,
writ, injunction, judgment or decree to which Parent or Merger Sub, or any
of the assets owned or used by either of them, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by Parent or any Subsidiary of
Parent or that otherwise relates to the business of Parent or any
Subsidiary of Parent or to any of the assets owned or used by them;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Contract of Parent that is
or would constitute a Material Contract (as defined in Section 2.12), or
give any Person the right to (i) declare a default or exercise any remedy
under any such Contract, (ii) a rebate, chargeback, penalty or change in
delivery schedule under any such Contract, (iii) accelerate the maturity or
performance of any such Contract, or (iv) cancel, terminate or modify any
material term of such Contract;
(e) result in a violation by Parent or Merger Sub of any order, writ,
injunction, judgment or decree to which either of them is subject;
(f) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by Parent or Merger Sub (except for
Permitted Encumbrances); or
(g) result in, or increase the likelihood of, the transfer of any
material asset of any Parent or Merger Sub to any Person.
Except (1) as may be required by the Exchange Act, the DGCL, the HSR Act,
any foreign antitrust law or regulation, and (2) as may be required by the
rules, regulations and bylaws of the NASD (as such rules, regulations and bylaws
relate to the Form S-4 Registration Statement and the Joint Proxy Statement),
neither Parent or Merger Sub was, is or will be required to make any material
filing with or give any material notice to, or to obtain any material Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement
by Parent or Merger Sub, or (y) the consummation by Parent and Merger Sub of the
Merger or any of the other transactions contemplated by this Agreement.
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SECTION 3.7 ABSENCE OF CHANGES. Except as set forth in Part 3.7 of the
Parent Disclosure Schedule, between December 31, 2000 and the date of this
Agreement:
(a) there has not been any material adverse change in the business,
condition, capitalization, assets, liabilities, operations or financial
performance of Parent or any Subsidiary of Parent, and no event has
occurred or circumstance has arisen that, in combination with any other
events or circumstances, would reasonably be expected to have a Material
Adverse Effect on Parent.
(b) Parent has not commenced or settled any material Legal Proceeding;
and
(c) Parent has not entered into (i) any material transaction, or (ii)
taken any other action that has had or would reasonably be expected to have
a Material Adverse Effect on Parent.
SECTION 3.8 PRODUCTS; GOVERNMENT COMPLIANCE.
(a) Part 3.8(a) of the Parent Disclosure Schedule identifies any
correspondence from, and any written summaries of discussions with, any
Governmental Authority relating to or otherwise covering any research,
development, clinical trials or Products that contain a material adverse
finding or otherwise is materially adverse to any research, development,
clinical trials or Products (as defined in Section 3.8(b)) being
undertaken, developed, sold, distributed, marketed, manufactured or tested
by or on behalf of Parent.
(b) Except as disclosed on Part 3.8(b)(i) of the Parent Disclosure
Schedule, to the Parent's knowledge, no product liability claims have been
asserted or, to the knowledge of Parent, threatened against Parent relating
to products or product candidates developed, tested, manufactured,
marketed, distributed or sold by Parent or any of its Subsidiaries. All
products and product candidates that have been developed, tested,
manufactured, marketed, distributed or sold by or on behalf of Parent or
any of its Subsidiaries since January 1, 1999 (the "Products") are
described in Part 3.8(b)(ii) of the Parent Disclosure Schedule, which
schedule also indicates each such product currently developed,
manufactured, marketed, distributed or sold by or on behalf of Parent or
any of its Subsidiaries.
(c) To Parent's knowledge, the development, testing, manufacture, sale
and marketing of the Products by Parent and its Subsidiaries complies, and
at all times has complied, in all material respects with all applicable
Legal Requirements including, without limitation, any reporting
requirements thereof.
(d) Except for noncompliance that would not reasonably be expected to
have a Material Adverse Effect on Parent, Parent and each of its
Subsidiaries (i) is in compliance with all material Legal Requirements
applicable to the development, testing, manufacturing, sale and
distribution of pharmaceuticals regulated by, and (ii) has obtained and is
in compliance with all certifications, approvals and clearances from, the
United States Food and Drug Administration (the "FDA"), or similar state,
local or foreign Governmental Authority necessary in order to develop, test
manufacture, market, export and sell the Products in any and all geographic
areas in which they are currently being developed, tested, marketed,
exported to and/or sold by Parent or its Subsidiaries. To Parent's
knowledge, there are no rulemaking or similar proceedings before the
32
FDA or comparable state, local or foreign Governmental Authority which
involve or affect Parent or any of its Subsidiaries, which, if the subject
of an action unfavorable to Parent or any of its Subsidiaries, could result
in a Material Adverse Effect on Parent.
(e) Part 3.8(e) of the Parent Disclosure Schedule contains a
description of all Legal Proceedings relating to Products developed,
tested, manufactured, marketed or sold, or services rendered by Parent or
its Subsidiaries, which are presently pending against Parent or any of its
Subsidiaries or which, to Parent's knowledge, are threatened, or which have
been asserted or commenced against Parent or any of its Subsidiaries within
the last three (3) years, in which a party thereto either requests
injunctive relief (whether temporary or permanent) or alleges damages in
excess of $25,000 (whether or not covered by insurance).
(f) Except as disclosed in Part 3.8(f) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries has granted rights to
manufacture (except for rights to manufacture for Parent for use in
research and development in the ordinary course of business), produce,
license, market, or sell any Products to any other Person, which rights are
in effect on the date hereof, and is not bound by any agreement that
materially limits Parent's or its Subsidiaries' right to develop,
manufacture, assemble, distribute, market, or sell Products. Except for
matters which would not reasonably be expected to have a Material Adverse
Effect on Parent, all manufacturing operations of Parent and its
Subsidiaries and all other manufacturing facilities where Products are
being and have been manufactured have been and are being conducted in
compliance with all applicable good manufacturing practices of the FDA,
including those set forth in 21 C.F.R. Parts 210 and 211.
SECTION 3.9 INTELLECTUAL PROPERTY.
(a) Parent has good and valid title to all of the Parent Intellectual
Property owned by Parent, free and clear of all Encumbrances, except for
Permitted Encumbrances. To Parent's knowledge, except as set forth in Part
3.9(a)(i) of the Parent Disclosure Schedule, Parent and its Subsidiaries
have a valid right to use, license and otherwise exploit all Intellectual
Property licensed to Parent or any of its Subsidiaries that is material to
the business of the Parent and its Subsidiary. Except as disclosed on Part
3.9(a)(ii) of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries has developed jointly with any other Person any Parent
Intellectual Property that is material to the business of Parent and its
Subsidiaries with respect to which such other Person has any rights. Except
as set forth in Part 3.9(a)(iii) of the Parent Disclosure Schedule, there
is no Contract to which Parent or any Subsidiary of Parent is a party (with
the exception of end user license agreements in the form previously made
available to the Company by Parent) pursuant to which any Person has any
exclusive right (whether or not currently exercisable) to use, license or
otherwise exploit any material Parent Intellectual Property.
(b) Parent and its Subsidiaries have taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value
of all material Parent Intellectual Property (except Parent Intellectual
Property whose value would be unimpaired by disclosure). Without limiting
the generality of the foregoing, except as set forth in Part 3.9(b) of the
Parent Disclosure Schedule, (i) all current and former employees of Parent
who are or were involved in, or who have contributed to, the creation or
development of any material Parent Intellectual
33
Property have executed and delivered to Parent an agreement (containing no
exceptions to or exclusions from the scope of its coverage with respect to
assignment of Intellectual Property) that is substantially similar in scope
with respect to the assignment of Intellectual Property to the form of
Employee Non-Disclosure, Non-Competition and Assignment of Inventions
Agreement previously made available by Parent to the Company, and (ii) all
current and former consultants and independent contractors to the Parent
who are or were inventors of any material Parent Intellectual Property have
executed and delivered to Parent an agreement (containing no exceptions to
or exclusions from the scope of its coverage with respect to the assignment
of Intellectual Property) that is similar in scope with respect to the
assignment of Intellectual Property to the form of Consulting Agreement
previously made available to the Company by Parent. No current or former
employee, officer, director, stockholder, consultant or independent
contractor has any right, claim or interest in or with respect to any
Parent Intellectual Property.
(c) Except as disclosed in Part 3.9(c) of the Parent Disclosure
Schedule, to the knowledge of Parent: (i) all patents, trademarks, service
marks and copyrights held by Parent or its Subsidiaries are valid,
enforceable and subsisting; (ii) none of the Parent Intellectual Property
and no Intellectual Property that is currently being developed by Parent
(either by itself or with any other Person) infringes, misappropriates or
conflicts with any Intellectual Property owned or used by any other Person;
(iii) none of the Products that are or have been designed, created,
developed, assembled, manufactured or sold by Parent or any of its
Subsidiaries is infringing, misappropriating or making any unlawful or
unauthorized use of any Intellectual Property owned or used by any other
Person, (iv) since January 1, 1999, neither Parent nor any its Subsidiaries
has received any notice or other communication (in writing or otherwise) of
any actual or alleged infringement, misappropriation or unlawful or
unauthorized use of, any Intellectual Property owned or used by any other
Person; and (v) to the knowledge of Parent, no other Person is infringing,
misappropriating or making any unlawful or unauthorized use of, and no
Intellectual Property owned or used by any other Person infringes or
conflicts with, any material Parent Intellectual Property.
(d) The Parent Intellectual Property constitutes all the Intellectual
Property necessary to enable Parent and its Subsidiaries to conduct their
business in the manner in which such business is being conducted. Except as
disclosed in Part 3.9(d) of the Parent Disclosure Schedule, neither Parent
nor any Subsidiary of Parent has (i) licensed any of the material Parent
Intellectual Property to any Person on an exclusive basis, or (ii) entered
into any covenant not to compete or Contract materially limiting its
ability to exploit any material Parent Intellectual Property or to transact
business in any market or geographical area or with any Person.
SECTION 3.10 LIABILITIES. Parent and its Subsidiaries have no accrued,
contingent or other liabilities of any nature, either matured or unmatured,
except for: (a) liabilities included in the Parent Balance Sheet (including the
notes thereto); (b) liabilities that have been incurred by Parent and its
Subsidiaries since December 31, 2000 in the ordinary course of business and
consistent with past practices; (c) liabilities incurred under this Agreement
and the other agreements contemplated hereby; and (d) liabilities described in
Part 3.10 of the Parent Disclosure Schedule.
SECTION 3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Parent and its
Subsidiaries are in compliance in all material respects with all applicable
Legal Requirements. Neither Parent nor
34
any of its Subsidiaries has received any written notice or other communication
from any Governmental Authority regarding any actual or possible material
violation of, or material failure to comply with, any Legal Requirement.
SECTION 3.12 GOVERNMENTAL AUTHORIZATIONS. Parent and its Subsidiaries hold
all material Governmental Authorizations required to enable Parent and its
Subsidiaries to conduct their business in the manner in which such business is
currently being conducted. All such Governmental Authorizations are valid and in
full force and effect. Parent and its Subsidiaries are in substantial compliance
with the terms and requirements of such Governmental Authorizations. Parent and
its Subsidiaries have not received any written notice or other communication
from any Governmental Authority regarding (a) any actual or possible violation
of or failure to comply with any term or requirement of any material
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization.
SECTION 3.13 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.13 of the Parent Disclosure Schedule,
there is no pending Legal Proceeding, and, to the knowledge of Parent, no
Person has threatened to commence any Legal Proceeding: (i) that involves
Parent or any of its Subsidiaries or Merger Sub or any of the assets owned
or used by any of them; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger or any of the other transactions contemplated by this
Agreement. To the knowledge of Parent, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that would reasonably be
expected to, give rise to or serve as a basis for the commencement of any
such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment or decree to
which Parent or any of its Subsidiaries, or any of the assets owned or used
by any of them, is subject. To the knowledge of Parent, no officer or key
employee of Parent or any of its Subsidiaries is subject to any order,
writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the business of Parent or its Subsidiaries.
SECTION 3.14 NO EXISTING DISCUSSIONS. Neither Parent nor any Representative
of Parent, is engaged, directly or indirectly, in any discussions or
negotiations with any Person (other than the Company) relating to (i) any
Acquisition Proposal (it being understood that, for the purposes of this Section
3.14, all references to the "Acquired Corporations" in the definition of
Acquisition Transaction shall be deemed to refer to "Parent"); or (ii) the
acquisition of a majority of the outstanding stock or substantially all of the
assets of any Person.
SECTION 3.15 ACCOUNTING MATTERS. As of the date hereof, to the knowledge of
Parent, neither Parent nor any "affiliate" (as that term is used in Rule 145
under the Securities Act) of Parent has taken or agreed to take, or plans to
take, any action that could prevent Parent from accounting for the Merger as a
"pooling of interests."
35
SECTION 3.16 VOTE REQUIRED. Approval of the issuance of Parent Common Stock
in the Merger as prescribed by Marketplace Rule 4310 of the NASD (the "Required
Parent Stockholder Vote") is the only vote of the holders of any class or series
of the Parent's capital stock necessary to adopt this Agreement and approve the
Merger and the other transactions contemplated by this Agreement.
SECTION 3.17 FAIRNESS OPINION. Parent's board of directors has received the
written opinion of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, financial
advisor to Parent, dated the date of this Agreement, to the effect that the
Exchange Ratio is fair to Parent from a financial point of view.
SECTION 3.18 VALID ISSUANCE. The Parent Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
SECTION 3.19 MERGER SUB. Merger Sub has not conducted any activities other
than in connection with the organization of Merger Sub, the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated hereby. Merger Sub has no Subsidiaries.
SECTION 3.20 FULL DISCLOSURE.
None of the information to be supplied by or on behalf of Parent for
inclusion in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion in the
Joint Proxy Statement will, at the time the Joint Proxy Statement is mailed to
the stockholders of the Company and Stockholders of Parent, at the time of the
Company Stockholders' Meeting (as defined in Section 5.2) or the Parent
Stockholders' Meeting (as defined in Section 5.3), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder, except that no representation or warranty is made by Parent with
respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
in the Joint Proxy Statement.
SECTION 3.21 TAXES.
(a) Except as disclosed in Part 3.21(a) of the Parent Disclosure
Schedule, each Tax Return required to be filed by or on behalf of Parent
with any Governmental Authority with respect to any taxable period ending
on or before the Closing Date (the "Parent Returns") (i) has been or will
be filed on or before the applicable due date (including any extensions of
such due date), and (ii) has been, or will be when filed, prepared in all
material respects in compliance
36
with all applicable Legal Requirements. All amounts shown on the Parent
Returns to be due on or before the Closing Date have been or will be paid
on or before the Closing Date.
(b) Except as disclosed in Part 3.21(b) of the Parent Disclosure
Schedule, the Parent Balance Sheet fully accrues all actual and contingent
liabilities for Taxes with respect to all periods through December 31, 2000
in accordance with generally accepted accounting principles. Parent will
establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period
from December 31, 2000 through the Closing Date.
(c) Neither Parent, Merger Sub nor any of their affiliates has taken,
failed to take or agreed to take any action or knows of any fact,
circumstance, plan or intention that is or would be reasonably likely to
prevent the Merger from qualifying as a "reorganization" within the meaning
of Section 368(a) of the Code.
ARTICLE 4
CERTAIN COVENANTS OF THE COMPANY AND PARENT
SECTION 4.1 ACCESS AND INVESTIGATION.
(a) During the period from the date of this Agreement through the
Effective Time (the "Pre-Closing Period"), subject to applicable antitrust
laws and regulations relating to the exchange of information, the Company
shall, and shall cause the respective Representatives of the Acquired
Corporations to: (i) provide Parent and Parent's Representatives with
reasonable access to the Acquired Corporations' Representatives, personnel
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to the Acquired Corporations; (ii)
provide Parent and Parent's Representatives with a reasonable opportunity
to hold discussions regarding the Company and the Merger with customers and
suppliers of the Company provided that the Company, acting reasonably,
shall be entitled (A) to approve in advance the scope and substance of such
discussions, and (B) to have a Representative of the Company present during
all such discussions; and (iii) provide Parent and Parent's Representatives
with such copies of the existing books, records, Tax Returns, work papers
and other documents and information relating to the Acquired Corporations,
and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as Parent may reasonably
request. Without limiting the generality of the foregoing, during the
Pre-Closing Period, the Company shall promptly provide Parent with copies
of: (A) all material operating and financial reports prepared by the
Company and its Subsidiaries for the Company's senior management, including
(1) copies of the unaudited monthly consolidated balance sheets of the
Company and its consolidated Subsidiaries and the related unaudited monthly
consolidated statements of operations, statements of stockholders' equity
and statements of cash flows and (2) copies of any sales forecasts,
marketing plans, development plans, discount reports, write-off reports,
hiring reports and capital expenditure reports prepared for the Company's
senior management; (B) any written materials or communications sent by or
on behalf of the Company to its stockholders; (C) any material notice,
document or other communication sent by or on behalf of any of the Acquired
Corporations to any party to any Acquired Corporation Contract or sent to
any of the Acquired
37
Corporations by any party to any Acquired Corporation Contract (other than
any communication that relates solely to commercial transactions between
the Company and the other party to any such Acquired Corporation Contract
and that is of the type sent in the ordinary course of business and
consistent with past practices); (D) any notice, report or other document
filed with or sent to any Governmental Authority (excluding confidential
sections of HSR filings) in connection with the Merger or any of the other
transactions contemplated by this Agreement; and (E) any material notice,
report, correspondence or other document received by any of the Acquired
Corporations from any Governmental Authority or any written summaries of
discussions between any Representative of the Acquired Corporations and any
Governmental Authority.
(b) During the Pre-Closing Period, subject to applicable antitrust laws
and regulations relating to the exchange of information, Parent shall, and
shall cause the respective Representatives of Parent to: (i) provide the
Company and the Company's Representatives with reasonable access to
Parent's Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information
relating to Parent; and (ii) provide the Company and the Company's
Representatives with such copies of the existing books, records, Tax
Returns, work papers and other documents and information relating to
Parent, and with such additional financial, operating and other data and
information regarding Parent, as the Company may reasonably request.
Without limiting the generality of the foregoing, during the Pre-Closing
Period, Parent shall promptly provide the Company with copies of: (i) any
written materials or communications sent by or on behalf of Parent to its
stockholders, (ii) any notice, report or other document filed with or sent
to any Governmental Authority (excluding confidential sections of HSR
filings) in connection with the Merger or any of the other transactions
contemplated by this Agreement; and (iii) any material notice, report,
correspondence or other document received by Parent or any Subsidiary of
Parent from any Governmental Authority or any material written summaries of
discussions between any Representative of Parent or any of its Subsidiaries
and any Governmental Authority.
SECTION 4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall ensure that
each of the Acquired Corporations conducts its business and operations (A)
in the ordinary course and in accordance with past practices and (B) in
compliance with all applicable material Legal Requirements and the
requirements of all Acquired Corporation Contracts that constitute Material
Contracts; (ii) the Company shall use commercially reasonable efforts to
ensure that each of the Acquired Corporations preserves intact its current
business organization, keeps available the services of its current officers
and employees and maintains its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with the respective Acquired
Corporations; (iii) the Company shall keep in full force all insurance
policies referred to in Section 2.21; (iv) the Company shall provide all
notices required by any Material Contract; (v) the Company shall promptly
notify Parent of (A) any notice or other communication from any Person
alleging that the Consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement, and (B)
any Legal Proceeding commenced or threatened in writing against, relating
to or involving or otherwise affecting any of the Acquired Corporations;
(vi) the Company shall (to the extent requested by Parent) cause its
officers to report regularly to
38
Parent concerning the status of the Company's business; and (vii) the
Company shall disclose to Parent any interparty administrative patent
proceedings including, without limitation, proceedings with respect to any
patent interferences or limitations that are commenced or threatened in
writing and shall also disclose to Parent any development in discussions or
proceedings between the Acquired Corporations and any academic institution
that are with respect to any Acquired Corporation Intellectual Property.
(b) During the Pre-Closing Period, the Company shall not (without the
prior written consent of Parent), and shall not permit any of the other
Acquired Corporations to:
(i) except for (A) the issuance of shares of Company Common Stock
(1) upon the valid exercise of Company Options or warrants outstanding
as of the date hereof and (2) 55,821 shares of Company Common Stock
pursuant to the Company ESPP, which issuances shall be made by May 1,
2001 and upon such issuances all outstanding offering periods under the
Company ESPP shall terminate and no further offering periods shall
commence, provided however, if the stockholders of the Company approve
an increase of 500,000 shares of Company Common Stock under the
Company's ESPP at the Company's Annual Meeting of stockholders on May
22, 2001, the Company shall adopt a new offering period commencing June
1, 2001 which shall continue until March 31, 2002 with an interim
purchase date of November 30, 2001 and a final purchase date of March
31, 2002; and (B) grants of Company Options to employees and directors
in the ordinary course of business and in amounts and in a manner
consistent with past practice, provided that, the aggregate number of
shares of Company Common Stock issuable thereunder shall not exceed
200,000; issue, sell, pledge, dispose of, encumber, authorize, or
propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of capital stock of, or any other ownership
interest in, the Company or any of its Subsidiaries; (ii) amend or
propose to amend the Certificate of Incorporation or bylaws of the
Company or any of its Subsidiaries (except as otherwise contemplated by
the Company's Proxy Statement for the Company's 2001 Annual Meeting, a
copy of which has been provided to Parent) or adopt, amend or propose
to amend any shareholder rights plan or related rights agreement; (iii)
split, combine or reclassify any outstanding shares of Company Common
Stock, or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to shares of
Company Common Stock, except for cash dividends to shareholders of the
Company declared in accordance with existing dividend policy payable to
shareholders of record on the record dates consistently used in prior
periods and except for the dividend of rights to shareholders of record
on April 17, 2001 pursuant to the Company Rights Agreement; (iv)
redeem, purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire any shares of its capital stock, or (v) authorize or
propose or enter into any contract, agreement, commitment or
arrangement with respect to any of the matters prohibited by this
Section 4.2(b)(i);
(ii) (A) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof, or (B) make any investment in another
entity (other than any of the Subsidiaries of the Company or other
commitments disclosed in Part 2.1(a)(i) of the Company Disclosure
Schedule
39
and other than incorporation of a wholly owned Subsidiary);
(ii) except in the ordinary course of business and in a manner
consistent with past practice sell, pledge, dispose of, or encumber or
authorize or propose the sale, pledge, disposition or encumbrance of
any assets, except for transactions which do not exceed $100,000
individually and which do not exceed $250,000 in the aggregate; or
(iii) authorize, enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the matters prohibited
by this Section 4.2(b)(ii);
(iii) sell, transfer, lease, license, or sublicense, mortgage,
pledge, dispose of, encumber, grant or otherwise dispose of any
material Intellectual Property rights, or amend or modify in any
material way any existing agreements with respect to any material
Intellectual Property rights;
(iv) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person
(except obligations of any other Acquired Corporation), or make any
loans or advances (other than routine travel advances and loans under
the Company's 401(k) Plan), except in the ordinary course of business
consistent with past practice and as otherwise permitted under any loan
or credit agreement to which it is a party; authorize any capital
expenditures which are, in the aggregate, in excess of $100,000 and not
reflected in the Company's capital expenditure budget made available to
Parent; or enter into or amend in any material respect any Contract
with respect to any of the matters set forth in this Section
4.2(b)(iv);
(v) hire or terminate any employees, independent contractors or
consultants, having a total salary or severance package that is
individually in excess of $100,000, or that collectively is in excess
of $300,000; terminate without cause any employees or consultants where
the aggregate of such terminations could result in the acceleration of
vesting of options to acquire, in the aggregate, more than 10,000
shares of Company Common Stock; increase the compensation (including,
without limitation, bonus) payable or to become payable to its officers
or employees, except for previously disclosed officers salary
increases, increases in salary or wages of employees who are not
officers in the ordinary course of business consistent with past
practices, or enter into any employment or severance agreement, except
for employee offer letters substantially identical to one of the forms
of offer letter included in Part 2.19(l)(iii) of the Company Disclosure
Schedule; or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option
(except as contemplated by Section 4.2(b)(i), restricted stock,
pension, benefits, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees;
(vi) change, any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of
accounts payable and collection of accounts receivable) unless required
by statutory accounting principles or GAAP;
(vii) create, incur, or assume any Encumbrance on any material
assets other than Permitted Encumbrances;
40
(viii) (A) enter into any Material Contract, (B) modify, amend or
transfer in any material respect or terminate any Acquired Corporation
Contract that constitutes a Material Contract or waive, release or
assign any material rights or claims thereto or thereunder, (C) enter
into or extend any lease with respect to real property with any third
party, (D) enter into any Acquired Corporation Contract that includes a
change of control provision; (E) enter into any Acquired Corporation
Contract providing for the payment of royalties in any amount or any
Acquired Corporation Contract that provides for in-licensing or (F)
modify, amend, transfer or terminate any Acquired Corporation Contract
in a manner that could be reasonably expected to detract from the
ability of Parent and the Surviving Corporation to exploit technology
of the Acquired Corporations;
(ix) make any Tax election not required to be made prior to the
Effective Time or settle or compromise any federal, state, local or
foreign income tax liability or agree to an extension of a statute of
limitations;
(x) take any action that results in the acceleration of vesting
rights for Company Options;
(xi) settle any material litigation or waive, assign or release
any material rights or claims except, in the case of litigation, any
litigation which settlement would not (A) impose either material
restrictions on the conduct of the business of it or (B) for any
individual litigation item settled, exceed $50,000 in cost or value to
it. None of the Acquired Corporations shall pay, discharge or satisfy
any liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except in the ordinary course of
business consistent with past practice in an amount or value not
exceeding $50,000 in any instance or series of related instances or
$100,000 in the aggregate or in accordance with their terms as in
effect as of the date hereof;
(xii) engage in any transaction, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any
director or officer of any of the Acquired Corporations other than (1)
those existing as of the date hereof which are listed in the Company
Disclosure Schedule, and (2) agreements regarding loans made under the
Company's 401(k) Plan;
(xiii) take any action which it believes when taken would
reasonably be expected to adversely affect or delay in any material
respect the ability of any of the parties to obtain any Consent or
approval of any Governmental Authority required to consummate the
transactions contemplated hereby;
(xiv) other than pursuant to this Agreement, take any action to
cause the shares of Company Common Stock to cease to be quoted on The
Nasdaq Stock Market;
(xv) make any payment of investment banking, financial advisory or
other similar fees; or
(xvii) take any action which it believes when taken would cause
any of its representations and warranties contained herein to become
inaccurate in any material respect.
41
(c) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance, whether occurring or existing on or prior
to the date of this Agreement or arising hereafter, that caused or
constitutes an inaccuracy in any representation or warranty made by the
Company in this Agreement to the extent that the condition, set forth in
Section 7.1 would not be satisfied as of the time of such inaccuracy; (ii)
any breach of any covenant or obligation of the Company to the extent that
the condition set forth in Section 7.2 would not be satisfied as of the
time of such breach; and (iii) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set forth
in Articles 6, 7 or 8 impossible or unlikely or that has had or would
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. Without limiting the foregoing, the Company shall promptly
advise Parent in writing of any Legal Proceeding or material claim
threatened, or asserted in writing or commenced against or with respect to
any of the Acquired Corporations. No notification given to Parent pursuant
to this Section 4.2(c) shall limit or otherwise affect any of the
representations, warranties, covenants or obligations of the Company
contained in this Agreement.
SECTION 4.3 OPERATION OF PARENT'S BUSINESS.
(a) During the Pre-Closing Period: (i) Parent shall conduct its
business and operations (A) in the ordinary course and in accordance with
past practices and (B) in compliance with all applicable material Legal
Requirements and the requirements of all Material Contracts to which Parent
is a party; (ii) Parent shall use commercially reasonable efforts to ensure
that it preserves intact its current business organization, keeps available
the services of its current officers and employees and maintains its
relations and goodwill with all suppliers, customers, landlords, creditors,
licensors, licensees, employees and other Persons having business
relationships with Parent; and (iii) Parent shall promptly notify the
Company of any Legal Proceeding commenced or, to Parent's knowledge,
threatened in writing against, relating to or involving or otherwise
affecting, Parent.
(b) During the Pre-Closing Period, Parent shall not (without the prior
written consent of the Company), and shall not permit any of Parent's
Subsidiaries to:
(i) take any action which it believes when taken would reasonably
be expected to adversely affect or delay in any material respect the
ability of any of the parties to obtain any Consent or approval of any
Governmental Authority required to consummate the transactions
contemplated hereby;
(ii) other than pursuant to this Agreement, take any action to
cause the shares of Parent Common Stock to cease to be quoted on The
Nasdaq Stock Market; or
(iii) take any action which it believes when taken would cause its
representations and warranties contained herein to become inaccurate in
any material respect.
(c) During the Pre-Closing Period, Parent shall promptly notify the
Company in writing of: (i) the discovery by Parent of any event, condition,
fact or circumstance, whether occurring or existing on or prior to the date
of this Agreement or arising hereafter, and that
42
caused or constitutes an inaccuracy in any representation or warranty made
by the Parent in this Agreement to the extent that the condition set forth
in Section 8.1 would not be satisfied as of the time of such inaccuracy;
(ii) any material breach of any covenant or obligation of Parent to the
extent the condition set forth in Section 8.2 would not be satisfied as of
the time of such breach; and (iii) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the
conditions set forth in Articles 6, 7 or 8 impossible or unlikely or that
has had or would reasonably be expected to have a Material Adverse Effect
on Parent. Without limiting the foregoing, Parent shall promptly advise the
Company in writing of any Legal Proceeding or material claim threatened or
asserted in writing, or commenced against or with respect to Parent or any
Subsidiary of Parent. No notification given to the Company pursuant to this
Section 4.3(c) shall limit or otherwise affect any of the representations,
warranties, covenants or obligations of Parent contained in this Agreement.
SECTION 4.4 NO SOLICITATION.
(a) From the date hereof until the earlier of the Effective Time and
the termination of this Agreement in accordance with its terms, the Company
shall not directly or indirectly, and shall not authorize or permit any of
the other Acquired Corporations or any Representative acting on behalf of
any of the Acquired Corporations directly or indirectly to, (i) solicit,
initiate, knowingly encourage or induce the making, submission or
announcement of any Acquisition Proposal or take any action that would
reasonably be expected to lead to an Acquisition Proposal (which shall
include any Acquisition Proposal received prior to the date hereof), (ii)
furnish any nonpublic information regarding any of the Acquired
Corporations to any Person in connection with or in response to an
Acquisition Proposal or an inquiry or indication of interest that would
reasonably be expected to lead to an Acquisition Proposal (which shall
include any Acquisition Proposal received prior to the date hereof), (iii)
engage in discussions or negotiations with any Person with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition
Transaction; PROVIDED, HOWEVER, this Section 4.4(a) shall not prohibit the
Company from entering into discussions with, or furnishing nonpublic
information to, any Person in response to a Superior Proposal that is
submitted to the Company or a Representative of the Company by such Person
(and not withdrawn) if (1) neither the Company nor any Representative
acting on behalf of any of the Acquired Corporations shall have violated
any of the restrictions set forth in this Section 4.4, (2) the board of
directors of the Company concludes in good faith, after consultation with
its outside legal counsel, that the failure to do so would create a
substantial risk of liability for breach of its fiduciary duties to the
Company's stockholders under applicable Legal Requirements, and (3) at
least two (2) business days prior to having such discussions with, such
Person, the Company gives Parent written notice of the identity of such
Person and of the Company's intention to furnish nonpublic information to,
or enter into discussions with, such Person, and the Company receives from
such Person an executed confidentiality agreement containing customary
limitations on the use and disclosure of all nonpublic written and oral
information furnished to such Person by or on behalf of the Company and
containing reasonable "standstill" provisions which continue for a term of
no less than one (1) year, provided further that this Section 4.4(a) shall
not prohibit the Company's board of directors from complying with Rules
14d-9 and 14e-2 under the Exchange Act or making any disclosure to the
Company's stockholders that is required by applicable Legal Requirements.
Without limiting the generality of the foregoing, the Company acknowledges
and
43
agrees that any violation of or the taking of any action inconsistent
with any of the restrictions set forth in the preceding sentence by any
Representative acting on behalf of any of the Acquired Corporations, shall
be deemed to constitute a breach of this Section 4.4 by the Company for all
purposes of this Agreement. Notwithstanding anything to the contrary
contained in this Section 4.4(a), at any time after the date hereof, the
Company may file with the SEC (i) a report on Form 8-K with respect to this
Agreement and may file a copy of this Agreement and any related agreements
as exhibits thereto, and (ii) all materials and documents that the Company
is required to file under Regulation M-A.
(b) The Company shall promptly (and in no event later than two (2)
business days after receipt by any officer or director of the Company or by
any employee of the Company's financial advisors of any Acquisition
Proposal, any inquiry or indication of interest that could lead to an
Acquisition Proposal or any request for nonpublic information) advise
Parent in writing of any Acquisition Proposal, any inquiry or indication of
interest that would reasonably be expected to lead to an Acquisition
Proposal (which shall include any Acquisition Proposal received prior to
the date hereof) or any request for nonpublic information relating to any
of the Acquired Corporations by a Person who would reasonably be expected
to submit an Acquisition Proposal (including the identity of the Person
making or submitting such Acquisition Proposal, inquiry, indication of
interest or request, and the terms thereof) that is made or submitted by
any Person during the Pre-Closing Period. The Company shall keep Parent
informed with respect to the status of any Acquisition Proposal, inquiry,
indication of interest or request and any modification or proposed
modification thereto. Nothing contained in this Section 4.4(b) shall
prevent any party hereto from taking a position contemplated by Rule 14d-9
and Rule 14e-2 of the Exchange Act.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any Person (other than Parent
and/or Merger Sub) that relate to any Acquisition Proposal.
(d) The Company has not, within the prior twelve months, released or
permitted the release, and agrees not to release or permit the release of
any Person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill" or similar agreement to which any of the
Acquired Corporations is a party, and will use its best efforts to enforce
or cause to be enforced each such agreement at the request of Parent. The
Company also will promptly request each Person that has executed, within
twelve months prior to the date of this Agreement, a confidentiality
agreement in connection with its consideration of a possible Acquisition
Transaction not consummated to return all confidential information
heretofore furnished to such Person by or on behalf of any of the Acquired
Corporations.
ARTICLE 5
ADDITIONAL COVENANTS OF THE PARTIES
SECTION 5.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement, Parent
and the Company shall prepare and cause to be filed with the SEC the Joint
Proxy Statement and Parent
44
shall prepare and cause to be filed with the SEC the Form S-4 Registration
Statement, in which the Joint Proxy Statement will be included as a
prospectus, with respect to the issuance of Parent Common Stock in the
Merger. Each of Parent and the Company shall furnish all information
concerning it and the holders of its capital stock as the other may
reasonably request in connection with the preparation of the Form S-4
Registration Statement and Joint Proxy Statement. Each of Parent and the
Company shall use commercially reasonable efforts to (i) cause the Form S-4
Registration Statement and the Joint Proxy Statement to comply with the
rules and regulations promulgated by the SEC, (ii) respond promptly, after
consultation with each other, to any comments of the SEC or its staff and
(iii) have the Form S-4 Registration Statement declared effective under the
Securities Act as promptly as practicable after it is filed with the SEC.
Parent will cause the Joint Proxy Statement to be mailed to Parent's
stockholders, and the Company will cause the Joint Proxy Statement to be
mailed to the Company's stockholders, as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities
Act. Parent shall also promptly file, use all reasonable efforts to cause
to become effective as promptly as possible and, if required, Parent and
the Company shall mail to their respective stockholders any amendment to
the Form S-4 Registration Statement or Joint Proxy Statement that becomes
necessary after the date the S-4 Registration Statement is declared
effective.
(b) If at any time prior to the Effective Time any event or
circumstance relating to Parent or any Parent Subsidiary or their
respective directors or officers is discovered by Parent which is required
to be set forth in an amendment or supplement to the Form S-4 Registration
Statement or Joint Proxy Statement, Parent shall promptly inform the
Company. All documents that Parent is responsible for filing with the SEC
in connection with the transactions contemplated hereby will comply as to
form and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(c) If at any time prior to the Effective Time any event or
circumstance relating to any of the Acquired Corporations or their
respective directors or officers is discovered by the Company which is
required to be set forth in an amendment or supplement to the Form S-4
Registration Statement or Joint Proxy Statement, the Company shall promptly
inform Parent. All documents that the Company is responsible for filing
with the SEC in connection with the transaction contemplated herein will
comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(d) Each of Parent and the Company will advise the other, promptly
after it receives notice thereof, of the time when the Form S-4
Registration Statement has become effective or any supplement or amendment
thereto has been filed, the issuance of any stop order, or any request by
the SEC for amendment of the Joint Proxy Statement or Form S-4 Registration
Statement or comments thereon or responses thereto.
(e) Prior to the Effective Time, Parent shall use reasonable efforts to
obtain all regulatory approvals needed to ensure that the Parent Common
Stock to be issued in the Merger (including shares of Parent Common Stock
to be issued in connection with Company Options assumed by Parent) will be
registered or qualified under the securities law of every jurisdiction of
the United States in which any registered holder of Company Common Stock
has an address of record on the record date for determining the
stockholders entitled to notice of and to vote at
45
the Company Stockholders' Meeting; PROVIDED, HOWEVER, that Parent shall not
be required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general
consent to service of process in any jurisdiction.
SECTION 5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all applicable
Legal Requirements to call, give notice of and hold a meeting of the
holders of Company Common Stock to vote on a proposal to adopt this
Agreement (the "Company Stockholders' Meeting"). The Company Stockholders'
Meeting shall be held (on a date selected by the Company in consultation
with Parent) as promptly as practicable after the Form S-4 Registration
Statement is declared effective under the Securities Act. Once the Company
Stockholders' Meeting has been called and notice given, the Company shall
not postpone or adjourn (other than for the absence of a quorum and then
only to a future date selected by the Company after consultation with
Parent) the Company Stockholders' Meeting without the written consent of
Parent. The Company shall ensure that all proxies solicited in connection
with the Company Stockholders' Meeting are solicited in compliance with all
applicable Legal Requirements.
(b) Subject to Section 5.2(c): (i) the Joint Proxy Statement shall
include a statement to the effect that the board of directors of the
Company recommends that the Company's stockholders vote to adopt this
Agreement at the Company Stockholders' Meeting (the recommendation of the
Company's board of directors that the Company's stockholders vote to adopt
this Agreement being referred to as the "Company Board Recommendation");
and (ii) the Company Board Recommendation shall not be withdrawn or
modified in a manner adverse to Parent, and no resolution by the board of
directors of the Company or any committee thereof to withdraw or modify the
Company Board Recommendation in a manner adverse to Parent shall be adopted
or proposed.
(c) Notwithstanding anything to the contrary contained in Section 4.4
or 5.2(b), the Company Board Recommendation may be withdrawn or modified in
a manner adverse to Parent and such modification thereto may be included in
the Joint Proxy Statement (or the withdrawal of the Company Board
Recommendation may be noted therein) if the board of directors of the
Company determines in good faith, after consultation with outside legal
counsel that the failure to do so would create a substantial risk of
liability for breach of its fiduciary duties to the Company's stockholders
under applicable Legal Requirements.
(d) The Company's obligation to call, give notice of and hold the
Company Stockholders' Meeting in accordance with Section 5.2(a) shall not
be limited or otherwise affected by the commencement, disclosure,
announcement or submission of any Superior Proposal or other Acquisition
Proposal, or by any withdrawal or modification of the Company Board
Recommendation.
SECTION 5.3 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action necessary under all applicable Legal
Requirements to call, give notice of and hold a meeting of the holders of
Parent Common Stock to vote on the issuance of Parent Common Stock in the
Merger (the "Parent Stockholders' Meeting"). The
46
Parent Stockholders' Meeting will be held, on the same date and at the same
time as the Company Stockholders' Meeting. Once the Parent Stockholders'
Meeting has been called and notice given, Parent shall not postpone or
adjourn (other than for the absence of a quorum and then only to a future
date selected by Parent after consultation with the Company) the Parent
Stockholders' Meeting without the written consent of the Company. Parent
shall ensure that all proxies solicited in connection with the Parent
Stockholders' Meeting are solicited in compliance with all applicable Legal
Requirements.
(b) The Joint Proxy Statement shall include a statement to the effect
that the board of directors of Parent recommends that Parent's stockholders
vote to approve the issuance of Parent Common Stock in the Merger (the
recommendation of Parent's board of directors that Parent's stockholders
vote to approve the issuance of Parent Common Stock in the Merger being
referred to as the "Parent Board Recommendation"). The Parent Board
Recommendation shall not be withdrawn or modified in a manner adverse to
the Company, and no resolution by the board of directors of Parent or any
committee thereof to withdraw or modify the Parent Board Recommendation in
a manner adverse to the Company shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section
5.3(c), nothing in this Agreement shall prevent Parent's board of directors
from making any disclosure to Parent's Stockholders where it determines in
good faith, after consultation with outside legal counsel, that the failure
to do so would create a substantial risk of liability for breach of its
fiduciary duties to Parent's stockholders under applicable Legal
Requirements.
(d) Parent's obligation to call, give notice of and hold the Parent
Stockholders' Meeting in accordance with Section 5.3(a) shall not be
limited or otherwise affected by any withdrawal or modification of the
Parent Board Recommendation.
SECTION 5.4 REGULATORY APPROVALS.
(a) Subject to Section 5.4(c), Parent and the Company shall use
commercially reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Merger and make effective the other
transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, but subject to Section 5.4(c), Parent and the
Company (i) shall make all filings (if any) and give all notices (if any)
required to be made and given by such party in connection with the Merger
and the other transactions contemplated by this Agreement and to submit
promptly any additional information requested in connection with such
filings and notices, (ii) shall use commercially reasonable efforts to
obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by
this Agreement, and (iii) shall use all commercially reasonable efforts to
lift any restraint, injunction or other legal bar to the Merger. Each party
shall promptly deliver to the other party a copy of each such filing made,
each such notice given and each such Consent obtained by such party during
the Pre-Closing Period.
(b) Without limiting the generality of Section 5.4(a), the Company and
Parent shall, promptly after the date of this Agreement, prepare and file
the notifications required under the HSR Act and any applicable foreign
antitrust laws or regulations in connection with the Merger.
47
The Company and Parent shall respond as promptly as practicable to any
inquiries or requests received from any Governmental Authority in
connection with antitrust or related matters. Except as may be prohibited
by any Governmental Authority or any Legal Requirement, each of the Company
and Parent shall: (1) give the other party prompt notice of the
commencement or threat of commencement of any Legal Proceeding by or before
any Governmental Authority with respect to the Merger or any of the other
transactions contemplated by this Agreement, (2) keep the other party
informed as to the status of any such Legal Proceeding or threat, and (3)
promptly inform the other party of any material communication concerning
the HSR Act or any other foreign, federal or state antitrust or fair trade
laws to or from any Governmental Authority regarding the Merger. Except as
may be prohibited by any Governmental Authority or by any Legal
Requirement, the Company and Parent will consult and cooperate with one
another, and will consider in good faith the views of one another, in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other foreign,
federal or state antitrust or fair trade law. Subject to the foregoing,
Parent shall be principally responsible for and in control of the process
of dealing with any Governmental Authority concerning the effect of the HSR
Act and any other applicable foreign, federal or state antitrust or fair
trade law on the transaction contemplated by this Agreement. In addition,
except as may be prohibited by any Governmental Authority or by any Legal
Requirement, in connection with any Legal Proceeding under or relating to
the HSR Act or any other foreign, federal or state antitrust or fair trade
law or any other similar Legal Proceeding, each of the Company and Parent
will permit authorized Representatives of the other party to be present at
each meeting or conference relating to any such Legal Proceeding and to
have access to and be consulted in connection with any document, opinion or
proposal made or submitted to any Governmental Authority in connection with
any such Legal Proceeding.
(c) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any obligation under
this Agreement: (i) to dispose or transfer or cause any of its Subsidiaries
to dispose of or transfer any assets, or to commit to cause any of the
Acquired Corporations to dispose of any assets; (ii) to discontinue or
cause any of its Subsidiaries to discontinue offering any product or
service, or to commit to cause any of the Acquired Corporations to
discontinue offering any product or service; (iii) to license or otherwise
make available, or cause any of its Subsidiaries to license or otherwise
make available, to any Person, any technology, software or other
Intellectual Property, or to commit to cause any of the Acquired
Corporations to license or otherwise make available to any Person any
technology, software or other Intellectual Property; (iv) to hold separate
or cause any of its Subsidiaries to hold separate any assets or operations
(either before or after the Closing Date), or to commit to cause any of the
Acquired Corporations to hold separate any assets or operations; (v) to
make or cause any of its Subsidiaries to make any commitment (to any
Governmental Authority or otherwise) regarding its future operations or the
future operations of any of the Acquired Corporations, or (vi) to contest
any Legal Proceeding relating to the Merger if Parent determines in good
faith that contesting such Legal Proceeding might not be advisable.
SECTION 5.5 STOCK OPTIONS.
(a) Subject to Section 5.5(b), at the Effective Time, all rights with
respect to Company Common Stock under each Company Option then outstanding,
except for Company
48
Options outstanding under the Company's Non-Employee Directors' Stock
Option Plan, shall be converted into and become rights with respect to
Parent Common Stock, and Parent shall assume each such Company Option in
accordance with the terms (as in effect as of the date of this Agreement
or, for Company Options granted after the date hereof, as in effect on the
date of such grants) of the Stock Plan under which it was issued and or the
terms of the stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each Company Option assumed by Parent may be
exercised solely for shares of Parent Common Stock, (ii) the number of
shares of Parent Common Stock subject to each such Company Option shall be
equal to the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounding down to the nearest whole share, (iii) the per
share exercise price under each such Company Option shall be adjusted by
dividing the per share exercise price under such Company Option by the
Exchange Ratio and rounding up to the nearest cent and (iv) any restriction
on the exercise of any such Company Option shall continue in full force and
effect and the term, exercisability, vesting schedule and other provisions
of such Company Option shall otherwise remain unchanged. All Company
Options granted and outstanding under the Company's Non-Employee Directors'
Stock Option Plan shall terminate immediately prior to the Effective Time.
The rights of participants in the Company ESPP with respect to the offering
period beginning June 1, 2001 under the Company ESPP shall continue in
effect until such offering period terminates on March 31, 2002 pursuant to
the Company ESPP provided, however, if the stockholders of the Company do
not approve an increase of 500,000 shares of Company Common Stock under the
Company ESPP at the Company's Annual Meeting of Stockholders on May 22,
2001, the Company shall terminate the Company ESPP and any outstanding
offering periods prior to the Effective Time. Parent shall file with the
SEC, no later than 20 days after the date on which the Effective Time
occurs, a registration statement on Form S-8 relating to the shares of
Parent Common Stock issuable with respect to the Company Options assumed by
Parent in accordance with this Section 5.5(a).
(b) Prior to the Effective Time, the Company shall take all action that
may be necessary (under the Stock Plans pursuant to which Company Options
are outstanding and otherwise) to effectuate the provisions of this Section
5.5 and to ensure that, from and after the Effective Time, holders of
Company Options have no rights in connection with the Merger with respect
thereto other than those specifically provided in this Section 5.5.
SECTION 5.6 EMPLOYEE BENEFITS.
(a) Parent agrees that all employees of the Acquired Corporations who
continue employment with Parent, the Surviving Corporation or any
Subsidiary of Parent or the Surviving Corporation after the Effective Time
("Continuing Employees") shall be eligible to participate in the Surviving
Corporation's retirement, health, vacation and other non-equity based
employee benefit plans; provided, however, that (i) nothing in this Section
5.6 or elsewhere in this Agreement shall limit the right of Parent or the
Surviving Corporation to amend or terminate any such retirement health,
vacation or other employee benefit plan at any time, and (ii) if Parent or
the Surviving Corporation terminates any such retirement, health, vacation
or other employee benefit plan, then, subject to any necessary transition
period, the Continuing Employees shall be eligible to participate in
Parent's retirement, health, vacation and other non equity based employee
benefit plans, to substantially the same extent as employees of Parent in
similar
49
positions and at similar grade levels. Parent shall, or shall cause
the Surviving Corporation to, give each Continuing Employee full credit for
purposes of eligibility and vesting under any employee benefit plans or
arrangements maintained by Parent or the Surviving Corporation for such
Continuing Employee's service with any Acquired Corporation to the same
extent recognized by such Acquiring Corporation prior to the Effective
Time. If a Continuing Employee commences participation in an employee
benefit plan of Parent or the Surviving Corporation, Parent will or will
cause the Surviving Corporation to use its best efforts to cause an
applicable insurance carrier to (i) waive all limitations as to preexisting
condition, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Continuing Employees under any
employee benefits plans maintained by Parent or the Surviving Corporation
that such employees may be eligible to participate in after the Effective
Time, and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid during the calendar year prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any employee benefit plans that such employees may be
eligible to participate in after the Effective Time. Nothing in this
Section 5.6 or elsewhere in this Agreement shall be construed to create a
right in any employee to employment with Parent, the Surviving Corporation
or any other Subsidiary of Parent and, subject to any other binding
agreement between an employee and Parent, the Surviving Corporation or any
other Subsidiary of Parent, the employment of each Continuing Employee
shall be "at will" employment.
(b) Prior to the Effective Time, the Company, at the sole discretion of
Parent, shall complete all such steps as Parent reasonably determines to be
necessary to correct operational failures and design defects with respect
to any Plan in order for such Plan as corrected to fully comply with
Applicable Law, such steps shall include without limitation the submission
of any such Plan for approval of any corrections to the Internal Revenue
Service in accordance with Revenue Procedure 2001-17 and/or the U.S.
Department of Labor in accordance with the U.S. Department of Labor
Voluntary Fiduciary Correction Program, as applicable, and implementation
of such corrective action required by the Internal Revenue Service and/or
the Department of Labor, as applicable, in connection with each such
submission.
SECTION 5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of those Persons
who are, or were, directors and officers of the Company at or prior to the
Effective Time (the "Indemnified Persons") shall survive the Merger and
shall be observed by the Surviving Corporation to the fullest extent
permitted by Delaware law for a period of six years from the Effective
Time. Without limiting the generality of the foregoing, Parent shall cause
the Surviving Corporation to fulfill and honor in all respects the
obligations of the Company to the Indemnified Persons, pursuant to (i) each
indemnification agreement currently in effect between the Company and each
Indemnified Person, and (ii) any indemnification provision under the
Company's Amended and Restated Certificate of Incorporation or Amended and
Restated Bylaws, each in effect as of the date of this Agreement.
(b) Without limiting the provisions of Section 5.7(a), during the
period ending six years after the Effective Time, Parent will indemnify and
hold harmless each Indemnified Person against and from any costs or
expenses (including reasonable attorneys' fees), judgements, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection
with any claim,
50
action, suit, proceeding or investigation to the extent such claim, action,
suit, proceeding or investigation arises out of or pertains to (i) any
action or omission or alleged action or omission in his or her capacity as
a director or officer of the Company or any of its subsidiaries (regardless
of whether such action or omission occurred prior to, on or after the
Closing Date, or (ii) any of the transactions contemplated by this
Agreement; provided however that if at any time prior to the sixth
anniversary of the Effective Time, any Indemnified Person delivers to
Parent a written notice asserting a claim for indemnification under this
Section 5.7(b), then the claim asserted in such notice shall survive the
sixth anniversary of the Effective Time until such time as such claim is
fully and finally resolved. Parent shall not be entitled to settle,
compromise or consent to the entry of any judgment or otherwise seek
termination of any claim, action, suit, proceeding or investigation for
which indemnification may be sought under this Agreement unless such
settlement, compromise, consent or termination includes an unconditional
release of all Indemnified Persons from all liability arising out of such
claim, action, suit, proceeding or investigation.
(c) From the Effective Time until the sixth anniversary of the
Effective Time, Parent shall or shall cause the Surviving Corporation to,
maintain in effect, for the benefit of the Indemnified Persons with respect
to acts or omissions occurring prior to the Effective Time, the existing
policy of directors' and officers' liability insurance maintained by the
Company as of the date of this Agreement in the form disclosed by the
Company to Parent prior to the date of this Agreement (the "Existing
Policy"); provided, however, that (i) the Surviving Corporation may
substitute for the Existing Policy a policy or policies of comparable
coverage, and (ii) the Surviving Corporation shall not be required to pay
annual premiums for the Existing Policy (or for any substitute policies) in
excess of $180,000 in the aggregate. In the event any future annual
premiums for the Existing Policy (or any substitute policies) exceeds
$180,000 in the aggregate, the Surviving Corporation shall be entitled to
reduce the amount of coverage of the Existing Policy (or any substitute
policies) to the amount of coverage that can be obtained for a premium
equal to $180,000.
(d) Parent and the Surviving Corporation agree to pay all expenses,
including attorneys' fees, that may be incurred by the Indemnified Persons
in enforcing the indemnity and other obligations provided for in this
Section 5.7. This Section 5.7 shall survive the consummation of the Merger
and the Effective Time, is intended to benefit and may be enforced by the
Company, Parent, the Surviving Corporation and the Indemnified Persons, and
shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
SECTION 5.8 POOLING OF INTERESTS. Each of the Company and Parent agrees,
and the Company agrees to cause the Acquired Corporations, (a) not to take any
action during the Pre-Closing Period that would adversely affect the ability of
Parent to account for the Merger as a "pooling of interests," and (b) to use all
reasonable efforts to attempt to ensure that none of its "affiliates" (as that
term is used in Rule 145 under the Securities Act) takes any action that could
adversely affect the ability of Parent to account for the Merger as a "pooling
of interests." The Company agrees to provide to Ernst & Young such letters as
shall be reasonably requested by Ernst & Young in connection with the letters
referred to in Section 7.5(c).
SECTION 5.9 DISCLOSURE. Each of Parent and the Company shall consult with
and obtain the approval of the other party before issuing any press release or
other public announcement
51
with respect to the Merger or this Agreement and shall not issue any such press
release prior to such consultation and approval, except as may be required by
applicable Legal Requirements or any listing agreement related to the trading of
the shares of either party on any national securities exchange or national
automated quotation system, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press release
or making any such public announcement. Notwithstanding the foregoing, in the
event either party's Board of Directors withdraws its recommendation of this
Agreement in compliance herewith, such will no longer be required to consult
with or obtain the agreement of the other party in connection with any press
release or public announcement.
SECTION 5.10 AFFILIATE AGREEMENTS AND STOCKHOLDER AGREEMENTS.
(a) Contemporaneous with the execution and delivery of this Agreement,
each of the parties shall deliver to the other party Stockholder Agreements
in the form of Exhibit B that have been executed by each of the directors
and executive officers of such party.
(b) The parties shall use all reasonable efforts to cause each Person
who is or becomes (or may be deemed to be) an "affiliate" (as that term is
used in Rule 145 under the Securities Act) of such party to execute and
deliver to the other party, prior to the date that is 30 days prior to
consummation of the Merger, an Affiliate Agreement in the form of Exhibit
C. Shares of Parent Common Stock and shares of Company Common Stock
beneficially owned by each "affiliate" of the Company who has not provided
a signed Affiliate Agreement in accordance with this Section 5.10 shall not
be transferable during any period prior to and after the Effective Time if,
as a result of the transfer during any such period, taking into account the
nature, extent and timing of the transfer and similar transfers by all
other "affiliates" of Parent and the Company, the transfer may, in the
reasonable judgment of the independent accountants to Parent, prevent
Parent from accounting for the Merger as a "pooling of interests" in
accordance with generally accepted accounting principles, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC. Neither Parent nor the Company shall register, or
allow its transfer agent to register, on its books any transfer of any
shares of Parent Common Stock or Company Common Stock of any "affiliate" of
the Company who has not provided a signed Affiliate Agreement in accordance
with this Section 5.10.
SECTION 5.11 TAX MATTERS. Each of Parent, Merger Sub and Company agrees
that it will not engage in any action, or fail to take any action, and will
cause its respective subsidiaries not to engage in any action, or fail to taken
any action, which action or failure to take action would reasonably be expected
to cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code, whether or not permitted by the provisions of this
Agreement. At or prior to the filing of the Form S-4 Registration Statement, the
Company, Parent and Merger Sub shall execute and deliver to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, PC and to Xxxxxx Godward LLP tax representation
letters in customary form. Parent, Merger Sub and the Company shall each confirm
to Mintz, Levin, Xxxx,
52
Xxxxxx, Xxxxxxx and Xxxxx, PC and to Xxxxxx Godward LLP the accuracy and
completeness as of the Effective Time of the tax representation letters
delivered pursuant to the immediately preceding sentence. Following delivery of
the tax representation letters pursuant to the previous sentence of this Section
5.11, each of Parent and the Company shall use its reasonable efforts to cause
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC and Xxxxxx Godward LLP,
respectively, to deliver to it a tax opinion satisfying the requirements of Item
601 of Regulation S-K promulgated under the Securities Act. In rendering such
opinions, each of such counsel shall be entitled to rely on the tax
representation letters referred to in this Section 5.11.
SECTION 5.12 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use all
reasonable efforts to cause to be delivered to Parent a letter of Ernst & Young,
dated no more than two business days before the date on which the Form S-4
Registration Statement becomes effective (and reasonably satisfactory in form
and substance to Parent), that is customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4 Registration Statement.
SECTION 5.13 LISTING. Parent shall use reasonable efforts to cause the
shares of Parent Common Stock being issued in the Merger (including the shares
of Parent Common Stock required to be reserved for issuance with respect to
Company Options) to be approved for listing (subject to notice of issuance) on
The Nasdaq Stock Market prior to the Effective Time.
SECTION 5.14 SECTION 16B-3. Parent, Merger Sub, and the Company shall take
all such steps as may be required to cause the transactions contemplated by
Article 1 and Section 5.5 and any other dispositions of equity securities of the
Company (including derivative securities) or acquisitions of equity securities
of Parent by each individual who (a) is a director or officer of the Company, or
(b) at the Effective Time will become a director or officer of Parent, to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 5.15 EMPLOYMENT AGREEMENTS.
(a) On the date of this Agreement, subject to and as a condition to the
occurrence of the Closing, Company shall enter into employment agreements
with the individuals identified in Part 5.15(a) of the Company Disclosure
Schedule, substantially in the form attached hereto as Part 5.15(a) of the
Company Disclosure Schedule.
(b) On the date of this Agreement, subject to and as a condition to the
occurrence of the Closing, Company shall enter into an employment agreement
with Stuart X.X. Xxxxxxxxx, substantially in the form attached hereto as
Part 5.15(b) of the Company Disclosure Schedule.
SECTION 5.16 RIGHTS AGREEMENTS. The Board of Directors of the Company shall
take all action necessary (including amending the Company Rights Agreement dated
April 2, 2001) in order to render the Company rights thereunder inapplicable to
the Merger and the other transactions contemplated by this Agreement. Except in
connection with the foregoing sentence or where the board of directors of the
Company determines in good faith, after consultation with outside legal counsel,
that the failure to do so would create a substantial risk of liability for
breach of its fiduciary duties to the Company's stockholders under applicable
Legal Requirements, the Board of Directors of the Company shall not, without the
prior written consent of Parent, (i) amend the Company Rights Agreement or (ii)
take any action with respect to, or make any determination under, the Company
Rights Agreement, including a redemption of the Company rights, in each case in
order to facilitate an Acquisition Transaction.
53
SECTION 5.17 TERMINATION OF CHANGE IN CONTROL BONUS PLAN. As soon as
practicable (and, in any event, prior to the Effective Time), the Company's
Board of Directors shall terminate, as of its effective date, the Company Change
in Control Bonus Plan, effective March 26, 2001 (the "Change In Control Bonus
Plan"), with the intention that the Change In Control Bonus Plan and the
payments and benefits provided therein are rescinded as of such date, that the
Change In Control Bonus Plan has no past, present or future force or effect,
and, in accordance with such termination, that no employee of the Company or any
other individual has any past, present or future rights to any payments or
benefits under the Change In Control Bonus Plan.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligation of each party to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions:
SECTION 6.1 EFFECTIVENESS OF FORM S-4 REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order suspending the effectiveness
of the Form S-4 Registration Statement shall have been issued by the SEC, and no
proceeding for that purpose shall have been initiated or threatened by the SEC.
SECTION 6.2 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted, and the Merger shall have been duly approved, by the Required Company
Stockholder Vote; and the issuance of Parent Common Stock in the Merger pursuant
to this Agreement shall have been duly approved by the Required Parent
Stockholder Vote.
SECTION 6.3 HSR ACT. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated and, on the
Closing Date, there shall not be in effect any voluntary agreement between
Parent and the Federal Trade Commission or the Department of Justice pursuant to
which Parent has agreed not consummate the Merger for a period of time; any
similar waiting period under any applicable foreign antitrust law or regulation
shall have expired or been terminated; and any Consent required under any
applicable foreign antitrust law or regulation shall have been obtained.
SECTION 6.4 LISTING. The shares of Parent Common Stock to be issued in the
Merger (including the shares of Parent Common Stock reserved for issuance with
respect to Company Options) pursuant to this Agreement shall have been approved
for listing (subject to notice of issuance) on The Nasdaq Stock Market.
SECTION 6.5 NO RESTRAINTS; LEGALITY. No temporary restraining order,
preliminary or permanent injunction or other order preventing the consummation
of the Merger shall have been issued (and be in effect) by any court of
competent jurisdiction or any other Governmental Authority, nor shall any
proceeding brought by any administrative agency or commission or other
Governmental Authority, domestic or foreign, seeking to prevent the consummation
of the Merger be pending. No Law shall have been enacted, entered, promulgated
or enforced by any
54
Governmental Authority which is in effect and has the effect of making the
Merger illegal or otherwise prohibiting the consummation of the Merger.
SECTION 6.6 REGULATORY MATTERS. All authorizations, consents, orders,
permits or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any Governmental Authority (all of the foregoing,
"Regulatory Consents") which are necessary for the consummation of the
transactions contemplated hereby, other than Regulatory Consents which, if not
obtained, would not in the aggregate have a Material Adverse Effect on Parent,
with or without including its ownership of the Acquired Corporations after the
Merger, or the Company, shall have been filed, have occurred or have been
obtained and all such Regulatory Consents shall be in full force and effect.
SECTION 6.7 TAX OPINIONS. Parent and the Company shall have received
written opinions of, respectively, Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, PC and Xxxxxx Godward LLP, in form and substance reasonably satisfactory
to such law firms to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code; provided, however, if either
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC or Xxxxxx Godward LLP does not
render such opinion or withdraws or modifies such opinion, this condition shall
nonetheless be satisfied if the other law firm renders such opinion to Parent or
the Company, as the case may be.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing of each of the following conditions:
SECTION 7.1 ACCURACY OF REPRESENTATIONS.
(a) The representations and warranties of the Company set forth in
Article 2 of this Agreement shall be true and correct in all material respects
(or if qualified as to materiality or Material Adverse Effect, shall be true and
correct), as of the date of this Agreement, provided that if any of such
representations or warranties are incorrect or untrue as of the date of this
Agreement, the Acquired Corporations shall have the longer of twenty (20)
business days and the date on which all other conditions in Articles 6, 7 and 8
of this Agreement are satisfied, to cure the circumstances that caused such
representations or warranties to be incorrect or untrue and if such
circumstances are cured within that period, such representations and warranties
shall be treated as true and correct as of the date of this Agreement, provided
further that any update of or modification to the Company Disclosure Schedule
made or purported to have been made after the date hereof shall be disregarded.
(b) The representations and warranties of the Company set forth in Article
2 of this Agreement shall be true and correct in all material respects (or if
qualified as to materiality or Material Adverse Effect, shall be true and
correct) as of the Effective Time, provided that, for the purpose of determining
whether such representations and warranties are true and correct, circumstances
arising between the date of this Agreement and the Effective Time which do not
55
constitute, individually or in the aggregate, a Material Adverse Effect with
respect to the Acquired Corporations, taking into account the exceptions to
Material Adverse Effect set forth in Section 7.4, shall not make such
representations and warranties untrue or incorrect, provided further that any
update of or modification to the Company Disclosure Schedule made or purported
to have been made after the date hereof shall be disregarded.
SECTION 7.2 PERFORMANCE OF COVENANTS. Each of the covenants and obligations
that the Company is required to comply with or to perform at or prior to the
Closing shall have been complied with or performed in all material respects.
SECTION 7.3 CONSENTS. All Consents required to be obtained, made or given
in connection with the Merger and the other transactions contemplated by this
Agreement which, if not obtained, either individually or in the aggregate, will,
or would reasonably be expected to, have a Material Adverse Effect on the
Acquired Corporations, shall have been obtained, made or given and shall be in
full force and effect.
SECTION 7.4 NO MATERIAL ADVERSE EFFECT. From and including the date hereof,
the Acquired Corporations shall not have suffered any Material Adverse Effect
which is continuing on the date on which all other conditions in Articles 6, 7
and 8 of this Agreement are satisfied; provided however, that none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in
determining, for the purposes of Section 7.1 and this Section 7.4, whether there
has been or will be, a Material Adverse Effect on the Acquired Corporations or
Parent, as the case may be: (a) any change in the market price or trading volume
of a party's stock after the date hereof, (b) any failure by a party to meet
internal projections or forecasts or published revenue or earnings predictions
for any period ending (or for which revenues or earnings are released) on or
after the date of this Agreement, (c) with respect to the Acquired Corporations,
any adverse change, effect, event, occurrence, state of facts or development
arising out of or relating to any Contract between any of the Acquired
Corporations and any of the entities listed in Part 7.4 of the Company
Disclosure Schedule, (d) any adverse change, effect, event, occurrence, state of
facts or development affecting the biotechnology industry or the U.S. economy as
a whole, (e) any adverse change, effect, event, occurrence, state of facts or
development attributable or relating to (1) out-of-pocket fees and expenses
(including legal, accounting, financial advisory and other fees and expenses)
incurred in connection with the transactions contemplated by this Agreement, or
(2) the payment of any amounts due to, or the provision of any other benefits
(including benefits relating to acceleration of stock options) to, any officers
or employees under employment contracts, employee benefit plans, severance
arrangements or other arrangements either as disclosed in Part 7.4 of the
Company Disclosure Schedule or hereafter granted, adopted or provided in
accordance with the provisions of Article 4 of this Agreement, (f) any event,
violation, inaccuracy, circumstance or other matter resulting from or relating
to compliance with the terms of, or the taking of any action required by, this
Agreement, or (g) any event, violation, inaccuracy, circumstance or other matter
arising from or relating to any change in accounting requirements or principles
or any change in applicable laws, rules or regulations or the interpretation
thereof.
SECTION 7.5 AGREEMENTS AND DOCUMENTS. The following agreements and
documents shall have been delivered to Parent, and shall be in full force and
effect:
56
(a) a certificate, executed on behalf of the Company by an executive
officer of the Company, confirming that the conditions set forth in
Sections 7.1, 7.2, 7.3 and 7.4 have been duly satisfied;
(b) Affiliate Agreements in the form of Exhibit C, executed by each
Person who could reasonably be deemed to be an "affiliate" (as that term is
used in Rule 145 under the Securities Act) of the Company;
(c) a letter from the Company's independent accountant, dated as of the
Closing Date and addressed to Parent, the Company and
PricewaterhouseCoopers, in its capacity as Parent's independent accountant,
reasonably satisfactory in form and substance to Parent and
PricewaterhouseCoopers, to the effect that, after reasonable investigation,
Ernst & Young is not aware of any fact concerning the Company or any of the
Company's stockholders or affiliates that could preclude Parent from
accounting for the Merger as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board
Opinion No. 16 and all published rules, regulations and policies of the
SEC;
(d) a letter from PricewaterhouseCoopers, in its capacity as Parent's
independent accountant, dated as of the Closing Date and addressed to
Parent, reasonably satisfactory in form and substance to Parent, to the
effect PricewaterhouseCoopers, concurs with Parent's management conclusion
that Parent may account for the Merger as a "pooling of interests" in
accordance with generally accepted accounting principles, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC; and
(e) the written resignations of all directors of each of the Acquired
Corporations, effective as of the Effective Time.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions:
SECTION 8.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
of Parent and Merger Sub set forth in this Agreement shall be true and correct
in all material respects or, if qualified as to materiality or Material Adverse
Effect, true and correct, as of the date of this Agreement and as of the
Effective Time, provided that any update of or modification to the Parent
Disclosure Schedule made or purported to have been made after the date hereof
shall be disregarded.
SECTION 8.2 PERFORMANCE OF COVENANTS. Each of the covenants and obligations
that Parent or Merger Sub is required to comply with or to perform at or prior
to the Closing shall have been complied with or performed in all material
respects.
57
SECTION 8.3 NO MATERIAL ADVERSE EFFECT. From and including the date hereof,
Parent shall not have suffered any Material Adverse Effect which is continuing
on the date on which all other conditions in Articles 6, 7 and 8 of this
Agreement are satisfied.
Section 8.4 OFFICER'S CERTIFICATE. A certificate executed on behalf of
Parent by an executive officer of Parent, confirming that the conditions set
forth in Sections 8.1, 8.2 and 8.3 have been duly satisfied and shall have been
delivered to the Company.
ARTICLE 9
TERMINATION
SECTION 9.1 TERMINATION. This Agreement may be terminated by action taken
by the board of directors of Parent or the Company, as the case may be, prior to
the Effective Time (whether before or after adoption of this Agreement by the
Company's stockholders and whether before or after the approval of the issuance
of Parent Common Stock in the Merger by Parent's stockholders) as follows:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by September 30, 2001; PROVIDED, HOWEVER, that if the Merger
shall not have been consummated solely due to the waiting period (or any
extension thereof) or approvals under the HSR Act not having expired or
been terminated or received, then such date shall be extended to December
31, 2001; and PROVIDED, FURTHER, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party whose willful
failure to fulfill any material obligation under this Agreement has been
the cause of, or resulted in, the failure of the Merger to have been
consummated on or before such date;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Authority shall have issued an order,
decree or ruling, or shall have taken any other action, having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final and
non-appealable;
(d) by either Parent or the Company if (i) the Company Stockholders'
Meeting (including any adjournments and postponements thereof) shall have
been held and completed and the Company's stockholders shall have voted on
a proposal to adopt this Agreement, and (ii) this Agreement shall not have
been adopted at such meeting (and shall not have been adopted at any
adjournment or postponement thereof) by the Required Company Stockholder
Vote; PROVIDED, HOWEVER, that (A) a party shall not be permitted to
terminate this Agreement pursuant to this Section 9.1(d) if the failure to
obtain such stockholder approval is attributable to a failure on the part
of such party to perform any material obligation required to be performed
by such party at or prior to the Effective Time pursuant to this Agreement,
and (B) the Company shall not be permitted to terminate this Agreement
pursuant to this Section 9.1(d) unless the Company shall have made the
payment, if any, required to be made to Parent pursuant to Section 9.3(b);
58
(e) by either Parent or the Company if (i) the Parent Stockholders'
Meeting (including any adjournments and postponements thereof) shall have
been held and completed and Parent's stockholders shall have voted on the
issuance of shares of Parent Common Stock in the Merger, and (ii) the
issuance of Parent Common Stock in the Merger shall not have been approved
at such meeting (and shall not have been approved at any adjournment or
postponement thereof) by the Required Parent Stockholder Vote; PROVIDED,
HOWEVER, that a party shall not be permitted to terminate this Agreement
pursuant to this Section 9.1(e) if the failure to obtain such stockholder
vote is attributable to a failure on the part of the party seeking to
terminate this Agreement to perform any material obligation required to be
performed by such party at or prior to the Effective Time pursuant to this
Agreement, and (B) Parent shall not be permitted to terminate this
Agreement pursuant to this Section 9.1(e) unless Parent shall have made the
payment, if any, required to be made pursuant to Section 9.3(b);
(f) by Parent (at any time prior to the adoption of this Agreement by
the Required Company Stockholder Vote) if a Company Triggering Event shall
have occurred;
(g) by the Company (at any time prior to the approval by the
stockholders of Parent of the issuance of Parent Common Stock in the
Merger) if a Parent Triggering Event shall have occurred;
(h) by Parent (i) if any of the Company's representations and
warranties shall have been inaccurate as of the date of this Agreement,
such that the condition set forth in Section 7.1 would not be satisfied, or
(ii) if (a) any of Company's representations and warranties become
inaccurate as of a date subsequent to the date of this Agreement (as if
made on such subsequent date), such that the condition set forth in Section
7.1(b) would not be satisfied, and (B) such inaccuracy has not been cured
by the Company by the later of (1) twenty (20) business days after its
receipt of written notice thereof and remains uncured at the time notice of
termination is given, and (2) the date on which all other conditions set
forth in Articles 6, 7 and 8 are satisfied, or (iii) any of the Company's
covenants contained in this Agreement shall not have been complied with in
the time period specified such that the condition set forth in Section 7.2
would not be satisfied and such noncompliance has not been cured within 20
business days after its receipt of written notice thereof and remains
uncured at the time notice of termination is given; or
(i) by the Company (i) if any of the Parent's representations and
warranties shall have been inaccurate as of the date of this Agreement,
such that the condition set forth in Section 8.1 would not be satisfied, or
(ii) if (A) any of Parent's representations and warranties shall have
become inaccurate as of a date subsequent to the date of this Agreement (as
if made on such subsequent date), such that the condition set forth in
Section 8.1 would not be satisfied, and (B) such inaccuracy has not been
cured by Parent within twenty (20) business days after its receipt of
written notice thereof and remains uncured at the time notice of
termination is given, or (iii) any of Parent's covenants contained in this
Agreement shall not have been complied with in the time period specified
such that the condition set forth in Section 7.2 would not be satisfied and
such noncompliance has not been cured within 20 business days after its
receipt of written notice thereof and remains uncured at the time notice of
termination is given; or
59
(j) by the Company if the board of directors of the Company determines
in good faith, after consultation with outside legal counsel, that the
failure to terminate this Agreement would create a substantial risk of
liability for breach of its fiduciary duties to the Company's stockholders
under applicable Legal Requirements, provided that the Company shall not be
permitted to terminate this Agreement pursuant to this Section 9.1(j)
unless the Company shall have made the payment required to be made pursuant
to Section 9.3(b).
SECTION 9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement shall be of no further
force or effect; PROVIDED, HOWEVER, that (i) this Section 9.2, Section 9.3 and
Section 10 shall survive the termination of this Agreement and shall remain in
full force and effect, and (ii) the termination of this Agreement shall not
relieve any party from any liability for any material inaccuracy in or breach of
any representation or any material breach of any warranty, covenant or other
provision contained in this Agreement.
SECTION 9.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 9.3, all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; PROVIDED, HOWEVER, that
Parent and the Company shall share equally all fees and expenses, other
than attorneys' fees, incurred in connection with (A) the filing, printing
and mailing of the Form S-4 Registration Statement and the Joint Proxy
Statement and any amendments or supplements thereto and (B) the filing by
the parties hereto of the premerger notification and report forms relating
to the Merger under the HSR Act and the filing of any notice or other
document under any applicable foreign antitrust law or regulation.
(b) If (i) (A) this Agreement is terminated by Parent or the Company
pursuant to Section 9.1(d), (B) at or prior to the time of the termination
of this Agreement an Acquisition Proposal shall have been publicly
disclosed or announced, and (C) within twelve (12) months after such
termination the Company (1) consummates an Acquisition Transaction with any
Person who made any such Acquisition Proposal, or (2) consummates a Third
Party Acquisition Transaction with any other Person, (ii) this Agreement is
terminated by Parent pursuant to Section 9.1(f), or (iii) this Agreement is
terminated by the Company pursuant to Section 9.1(j), then the Company
shall pay to Parent, in cash at the time specified in the next sentence a
nonrefundable fee in the amount equal to the sum of (1) $20,000,000 and (2)
the aggregate amount of all fees, costs and expenses (including all
attorneys' fees, financial advisory fees and filing fees) that have been
paid or that may become payable by or on behalf of Parent in connection
with the preparation and negotiation of this Agreement and otherwise in
connection with the Merger; PROVIDED HOWEVER that the aggregate amount
payable under clauses (1) and (2) shall in no event exceed $21,500,000. In
the case of termination of this Agreement by the Company or Parent pursuant
to Section 9.1(d), the fee referred to in the preceding sentence shall be
paid by the Company on the date of the consummation of the Acquisition
Transaction referred to in the preceding sentence; in the case of
termination of this Agreement by the Company pursuant to Section 9.1(j),
the fee referred to in the preceding sentence shall be paid by the Company
prior to the time of such termination; and in the case of termination of
this Agreement by Parent pursuant to Section 9.1(f), the fee referred to in
the preceding sentence shall be paid by
60
the Company within five business days after such termination. If this
Agreement is terminated by the Company pursuant to Section 9.1(g), then
Parent shall pay to the Company, in cash at the time specified in the next
sentence, a nonrefundable fee in the amount equal to the sum of (1)
$20,000,000, and (2) the aggregate amount of all fees, costs and expenses
(including all attorneys' fees, financial advisory fees and filing fees)
that have been paid or that may become payable by or on behalf of the
Company in connection with the preparation and negotiation of this
Agreement and otherwise in connection with the Merger; PROVIDED HOWEVER
that the aggregate amount payable under clauses (1) and (2) shall in no
event exceed $21,500,000. The fee referred to in the preceding sentence
shall be paid by Parent within five business days after such termination.
(c) If the Company fails to pay when due any amount payable under this
Section 9.3, then (i) the Company shall reimburse Parent for all costs and
expenses (including fees and disbursements of counsel) incurred in
connection with the collection of such overdue amount and the enforcement
by Parent of its rights under this Section 9.3, and (ii) the Company shall
pay to Parent interest on such overdue amount (for the period commencing as
of the date such overdue amount was originally required to be paid and
ending on the date such overdue amount is actually paid to Parent in full)
at a rate per annum equal to 3% over the "prime rate" (as announced by
Citibank N.A.) in effect on the date such overdue amount was originally
required to be paid.
(d) If Parent fails to pay when due any amount payable under this
Section 9.3, then (i) Parent shall reimburse the Company for all costs and
expenses (including fees and disbursements of counsel) incurred in
connection with the collection of such overdue amount and the enforcement
by the Company of its rights under this Section 9.3, and (ii) Parent shall
pay to the Company interest on such overdue amount (for the period
commencing as of the date such overdue amount was originally required to be
paid and ending on the date such overdue amount is actually paid to the
Company in full) at a rate per annum equal to 3% over the "prime rate" (as
announced by Citibank N.A.) in effect on the date such overdue amount was
originally required to be paid.
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1 AMENDMENT. This Agreement may be amended with the approval of
the respective boards of directors of the Company, Parent and Merger Sub at any
time (whether before or after adoption of this Agreement by the stockholders of
the Company and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders); PROVIDED, HOWEVER, that
(i) after any such adoption of this Agreement by the Company's stockholders, no
amendment shall be made which under any Legal Requirement requires further
approval of the stockholders of the Company without the further approval of such
stockholders, and (ii) after any such approval of the issuance of Parent Common
Stock in the Merger by Parent's stockholders, no amendment shall be made which
under any Legal Requirement requires further approval of Parent's stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
61
SECTION 10.2 WAIVER.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or
of any other power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it
is given.
SECTION 10.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
(other than the representations in the letters delivered pursuant to Section
5.11 of this Agreement) delivered pursuant to this Agreement shall survive the
Merger.
SECTION 10.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among or between any of the parties with respect to the
subject matter hereof and thereof; PROVIDED, HOWEVER, that the certain
non-disclosure agreement dated March 23, 2001, between the Company and Parent
shall not be superceded and shall remain in full force and effect. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument.
SECTION 10.5 APPLICABLE LAW; JURISDICTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. In any action between any of the parties arising
out of or relating to this Agreement or any of the transactions contemplated by
this Agreement: (a) each of the parties irrevocably and unconditionally consents
and submits to the exclusive jurisdiction and venue of the state and federal
courts located in the State of Delaware; (b) if any such action is commenced in
a state court, then, subject to applicable Legal Requirements, no party shall
object to the removal of such action to any federal court located in the State
of Delaware; (c) each of the parties irrevocably waives the right to trial by
jury; and (d) each of the parties irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepaid, to the
address at which such party is to receive notice in accordance with Section
10.9.
SECTION 10.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in Article 2, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Article 2, and shall not be deemed to relate to or to qualify any
other representation or warranty. The Parent Disclosure Schedule shall be
arranged
62
in separate parts corresponding to the numbered and lettered sections
contained in Article 3, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Article 3, and shall not be deemed to relate to or to qualify any
other representation or warranty.
SECTION 10.7 ATTORNEYS' FEES. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
SECTION 10.8 ASSIGNABILITY. This Agreement shall be binding upon, and shall
be enforceable by and inure solely to the benefit of, the parties hereto and
their respective successors and assigns; PROVIDED, HOWEVER, that neither this
Agreement nor any of the rights hereunder may be assigned by either Party
without the prior written consent of the other, and any attempted assignment of
this Agreement or any of such rights without such consent shall be void and of
no effect. Nothing in this Agreement, express or implied, is intended to or
shall confer upon any Person (other than the parties hereto) any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.9 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
parties hereto):
IF TO PARENT OR MERGER SUB:
Vertex Pharmaceuticals Incorporated
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: General Counsel
WITH A COPY TO:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
63
IF TO THE COMPANY:
Aurora Biosciences Corporation
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: General Counsel.
WITH A COPY TO:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile No. (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
SECTION 10.10 COOPERATION. The parties hereto agree to cooperate fully with
each other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other party to evidence or reflect the transactions
contemplated by this Agreement and to carry out the intent and purposes of this
Agreement.
SECTION 10.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender
shall include the masculine and neuter genders; and the neuter gender shall
include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
(e) The bold-faced headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction
or interpretation of this Agreement.
64
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
VERTEX PHARMACEUTICALS INCORPORATED
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
--------------------------
Title: CEO
--------------------------
AHAB ACQUISITION SUB, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
--------------------------
Title: President
--------------------------
AURORA BIOSCIENCES CORPORATION
By: /s/ Stuart X.X. Xxxxxxxxx
--------------------------
Name: Stuart X.X. Xxxxxxxxx
--------------------------
Title: Chairman of the Board,
Chief Executive Officer
and President
--------------------------
65
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of this Agreement (including this Exhibit A):
"AFFILIATE" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.
"ACQUIRED CORPORATION CONTRACT" shall mean any Contract: (a) to which
any of the Acquired Corporations is a party; (b) by which any of the Acquired
Corporations or any asset of any of the Acquired Corporations is or may become
bound or under which any of the Acquired Corporations has, or may become subject
to, any obligation; or (c) under which any of the Acquired Corporations has or
may acquire any right or interest.
"ACQUIRED CORPORATION INTELLECTUAL PROPERTY" shall mean any
Intellectual Property owned by or licensed to any of the Acquired Corporations
or otherwise used by any of the Acquired Corporations.
"ACQUIRED CORPORATION SOURCE CODE" shall mean any source code, or any
portion, aspect or segment of any source code, relating to any Intellectual
Property owned by or licensed to any of the Acquired Corporations or otherwise
used by any of the Acquired Corporations.
"ACQUISITION PROPOSAL" shall mean any offer, proposal, inquiry or
indication of interest (other than an offer, proposal, inquiry or indication of
interest by Parent) contemplating or otherwise relating to any Acquisition
Transaction.
"ACQUISITION TRANSACTION" shall mean any transaction (other than the
Merger) or series of transactions involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer, exchange
offer or other similar transaction (i) in which any of the Acquired
Corporations is a constituent corporation, or (ii) in which a Person or
"group" (as defined in the Exchange Act and the rules promulgated
thereunder) of Persons directly or indirectly acquires beneficial or record
ownership of securities representing more than 20% of the outstanding
securities of any class of voting securities of any of the Acquired
Corporations, or (iii) in which any of the Acquired Corporations issues or
sells securities representing more than 20% of the outstanding securities
of any class of voting securities of any of the Acquired Corporations; or
(b) any sale (other than sales of inventory in the ordinary course of
business), lease (other than in the ordinary course of business), exchange,
transfer (other than sales of inventory in the ordinary course of
business), license (other than nonexclusive licenses in the ordinary course
of business), acquisition or disposition of any business or businesses or
assets that constitute or account for 20% or more of the consolidated net
revenues, net income or assets of the Acquired Corporations.
-i-
"AGREEMENT" shall mean the Agreement and Plan of Merger to which this
Exhibit A is attached, as it may be amended from time to time.
"COMPANY COMMON STOCK" shall mean the Common Stock, $.001 par value
per share, of the Company.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule that
has been prepared by the Company in accordance with the requirements of Section
10.6 and that has been delivered by the Company to Parent on the date of this
Agreement and signed by the President of the Company.
"COMPANY PREFERRED STOCK" shall mean the Preferred Stock, $.001 par
value per share, of the Company.
"COMPANY TRIGGERING EVENT" shall mean: (i) the failure of the board of
directors of the Company to recommend that the Company's stockholders vote to
adopt this Agreement, or the withdrawal or modification of the Company Board
Recommendation in a manner adverse to the Parent; (ii) the Company shall have
failed to include in the Joint Proxy Statement the Company Board Recommendation
or a statement to the effect that the board of directors of the Company has
determined and believes that the Merger is in the best interests of the
Company's stockholders; (iii) the board of directors of the Company fails to
reaffirm, without qualification, the Company Board Recommendation, or fails to
publicly state, without qualification, that the Merger is in the best interests
of the Company's stockholders, within five business days after Parent requests
in writing that such action be taken; (iv) the board of directors of the Company
shall have approved, endorsed or recommended any Acquisition Proposal; (v) the
Company shall have failed to hold the Company Stockholders Meeting within sixty
(60) days after the Form S-4 Registration Statement was declared effective; (vi)
a tender or exchange offer relating to securities of the Company shall have been
commenced and the Company shall not have sent to its securityholders, within ten
business days after the commencement of such tender or exchange offer, a
statement disclosing that the Board of Directors recommends rejection of such
tender or exchange offer; (vii) an Acquisition Proposal is publicly announced,
and the Company fails to issue a press release announcing its opposition to such
Acquisition Proposal within ten business days after such Acquisition Proposal is
announced; or (viii) any of the Acquired Corporations or any Representative
acting on behalf of any of the Acquired Corporations shall have breached or
taken any action inconsistent with any of the provisions set forth in Section
4.4.
"COMPANY BALANCE SHEET" shall mean the consolidated balance sheet of
the Company and its consolidated Subsidiaries as of December 31, 2000 included
in the Company SEC Documents.
"CONSENT" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).
"CONTRACT" shall mean any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature.
-ii-
"ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, claim, infringement, interference, option, right of
first refusal, preemptive right, community property interest or restriction of
any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset).
"ENTITY" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FORM S-4 REGISTRATION STATEMENT" shall mean the registration statement
on Form S-4 to be filed with the SEC by Parent in connection with issuance of
Parent Common Stock in the Merger, as said registration statement may be amended
prior to the time it is declared effective by the SEC.
"GOVERNMENTAL AUTHORIZATION" shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"INTELLECTUAL PROPERTY" shall mean any: (a) patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name (including material Internet domain name registrations), fictitious
business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how (including
protocols, results of experimentation and testing, specifications, strategies
and techniques) and all tangible and intangible embodiments thereof of any kind
whatsoever (including, without limitation, apparatus, biological or chemical
materials), formulas, processes, invention records, procedures, research and
development activity reports, laboratory notebooks, customer lists, franchise,
system, computer software, computer program, source code, algorithm, invention,
design, blueprint, engineering drawing, proprietary product, technology,
proprietary right or
-iii-
other intellectual property right or intangible asset; or (b) right to use or
exploit any of the foregoing.
"JOINT PROXY STATEMENT" shall mean the Joint Proxy Statement/prospectus
to be sent to the Company's stockholders in connection with the Company
Stockholders' Meeting.
"LEGAL PROCEEDING" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Authority or any arbitrator or
arbitration panel.
"LEGAL REQUIREMENT" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Authority (or under
the authority of the NASD) and any judicial or administrative interpretation
thereof.
"MATERIAL" shall mean, with respect to any Person or group of Persons,
any material event, change, condition or effect related to the financial
condition, properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such Person or Persons.
"MATERIAL ADVERSE EFFECT" Except where this definition is expressly
qualified in Sections 7.1 and 7.4 of the Merger Agreement, any event, change,
effect, occurrence, violation, inaccuracy, circumstance or other matter will be
deemed to have a "Material Adverse Effect" on a party to this Agreement if such
event, change, effect, occurrence, violation, inaccuracy, circumstance or other
matter (either individually or when considered together with all other matters
that would constitute either exceptions to the representations and warranties or
breaches of any covenant set forth in the Agreement but for the presence of
"Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties or covenants) had or
would reasonably be expected to have a material adverse effect on: (i) the
business, condition, capitalization, assets, liabilities, operations or
financial performance of such party and its Subsidiaries taken as a whole, (ii)
the ability of a party to consummate the Merger or any of the other transactions
contemplated by the Agreement or to perform any of its obligations under the
Agreement; or (iii) with respect to Parent only, Parent's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Surviving Corporation.
"PARENT BALANCE SHEET" shall mean the consolidated balance sheet of
Parent and its consolidated Subsidiaries as of December 31, 2000 included in the
Parent SEC Documents.
"PARENT COMMON STOCK" shall mean the Common Stock, $.01 par value per
share, of Parent.
"PARENT INTELLECTUAL PROPERTY" shall mean any Intellectual Property
owned by or licensed to Parent or any of its Subsidiaries or otherwise used by
Parent or any of its Subsidiaries.
-iv-
"PARENT TRIGGERING EVENT" shall mean: (i) the failure of the board of
directors of Parent to recommend that Parent's stockholders approve the issuance
of Parent Common Stock in the Merger, or the withdrawal or modification of the
Parent Board Recommendation in a manner adverse to the Company, (ii) Parent
shall have failed to include in the Joint Proxy Statement the Parent Board
Recommendation or a statement to the effect that the board of directors of
Parent has determined and believes that the issuance of Parent Common Stock in
the Merger is in the best interests of Parent and its stockholders, (iii) the
board of directors of Parent fails to reaffirm, without qualification, the
Parent Board Recommendation, or fails to publicly state, without qualification,
that the Merger is in the best interests of Parent's stockholders, within five
(5) business days after the Company requests in writing that such action be
taken; and (iv) Parent shall have failed to hold the Parent Stockholders Meeting
within sixty (60) days after the Form S-4 Registration Statement was declared
effective.
"PARENT PREFERRED STOCK" shall mean the Preferred Stock, $.01 par
value, of the Company.
"PERMITTED ENCUMBRANCES" shall mean such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Encumbrances for taxes, assessments and charges or levies of
Governmental Authorities not yet due and payable or due but for which no notice
of assessment has been given; (b) Encumbrances for taxes, assessments and
charges or levies of Governmental Authorities due and being contested in good
faith and diligently by appropriate proceedings (and for the payment of which
adequate provision has been made); (c) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 30 days; (d) pledges or deposits
to secure obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations; (e) security given in the ordinary
course of business to any Public Utility, municipality or other Government
Authority in connection with the operation of the business in the ordinary
course and other than security for borrowed money; and (f) assignments of
insurance to landlords (or their mortgagees) pursuant to the terms of any lease
and Encumbrances or rights reserved in any lease for rents or for compliance
with the terms of the lease.
"PERSON" shall mean any individual, Entity or Governmental Authority.
"REPRESENTATIVES" shall mean officers, directors, employees, agents,
attorneys, accountants and advisors.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities or other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body, or (b) at least 50% of the
outstanding equity or financial interests of such Entity.
-v-
"SUPERIOR PROPOSAL" shall mean an unsolicited, bona fide written offer
made by a third party to purchase a majority of the outstanding Company Common
Stock on terms that the board of directors of the Company determines, in its
reasonable judgment, (i) after consultation with an independent financial
advisor of nationally recognized reputation, to be more favorable from a
financial point of view to the Company's stockholders than the terms of the
Merger, including any improved terms offered in writing by the Parent and (ii)
is reasonably capable of being consummated; PROVIDED, HOWEVER, that any such
offer shall not be deemed to be a "Superior Proposal" if any financing required
to consummate the transaction contemplated by such offer is not committed or is
not reasonably capable of being obtained by such third party.
"TAX" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Authority.
"TAX RETURN" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"THIRD PARTY ACQUISITION TRANSACTION" shall mean any transaction (other
than the Merger) or series of transactions involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer, exchange
offer or other similar transaction (i) in which any of the Acquired
Corporations is a constituent corporation and either (1) a majority of the
members of the board of directors of the Company immediately after any such
transaction are not persons who were members of the board of directors of
the Company prior to such transaction, or (2) the stockholders of the
Company immediately prior to any such transaction (excluding any parties to
such transaction and their respective affiliates) hold less than 70% of the
outstanding capital stock or control less than 70% of the voting power of
the outstanding capital stock of the Company immediately after the
transaction, or (ii) in which a Person or "group" (as defined in the
Exchange Act and the rules promulgated thereunder) of Persons directly or
indirectly acquires beneficial or record ownership of securities
representing more than 30% of the outstanding securities of any class of
voting securities of any of the Acquired Corporations, or (iii) in which
any of the Acquired Corporations issues or sells securities representing
more than 30% of the outstanding securities of any class of voting
securities of any of the Acquired Corporations; or
(b) any sale (other than sales of inventory in the ordinary course of
business), lease (other than in the ordinary course of business), exchange,
transfer (other than sales of inventory in the ordinary course of
business), license (other than nonexclusive licenses in the ordinary course
of business), acquisition or disposition of any business or businesses or
assets that constitute or account for 30% or more of the consolidated net
revenues, net income or assets of the Acquired Corporations.
