Exhibit 1
SHARE EXCHANGE AGREEMENT
among
XXXXXX INTERNATIONAL INC.,
NEPTUNE ACQUISITION CORP.
and
NORTH AMERICAN VACCINE, INC.
Dated as of November 17, 1999
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...................................................... 2
SECTION 1.01 Certain Defined Terms.................................. 2
ARTICLE II THE ARRANGEMENT................................................. 8
SECTION 2.01 The Arrangement........................................ 8
SECTION 2.02 Interim Order.......................................... 8
SECTION 2.03 Mailing of Proxy Statement............................. 8
SECTION 2.04 Final Order............................................ 8
SECTION 2.05 Filing of Articles of Arrangement...................... 9
SECTION 2.06 Effective Time......................................... 9
ARTICLE III EXCHANGE OF SHARES............................................. 9
SECTION 3.01 Exchange of Shares..................................... 9
SECTION 3.02 No Fractional Share Certificates....................... 11
SECTION 3.03 Options and Warrants to Purchase Company Common Shares. 11
SECTION 3.04 Certain Adjustments.................................... 12
SECTION 3.05 Lost, Stolen or Destroyed Certificates................. 12
SECTION 3.06 Taking of Necessary Action; Further Action............. 12
SECTION 3.07 Dissenting Shareholders................................ 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY....................... 13
SECTION 4.01 Organization and Qualification; Subsidiaries........... 13
SECTION 4.02 Certificate of Incorporation and Bylaws................ 13
SECTION 4.03 Capitalization......................................... 13
SECTION 4.04 Authority Relative to this Agreement................... 14
SECTION 4.05 No Conflict; Required Filings and Consents............. 15
SECTION 4.06 Permits; Compliance with Laws.......................... 15
SECTION 4.07 SEC Filings; Financial Statements...................... 16
SECTION 4.08 Absence of Certain Changes or Events................... 17
SECTION 4.09 Employee Benefit Plans; Labor Matters.................. 17
SECTION 4.10 Contracts.............................................. 20
SECTION 4.11 Litigation............................................. 21
SECTION 4.12 Environmental Matters.................................. 21
SECTION 4.13 Intellectual Property.................................. 22
SECTION 4.14 Taxes.................................................. 24
SECTION 4.15 Insurance.............................................. 25
SECTION 4.16 Properties............................................. 25
SECTION 4.17 Affiliates............................................. 26
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SECTION 4.18 Opinion of Financial Advisor........................ 26
SECTION 4.19 Brokers............................................. 26
SECTION 4.20 Certain Business Practices.......................... 26
SECTION 4.21 Business Activity Restriction....................... 27
SECTION 4.22 WARN Act............................................ 27
SECTION 4.23 FDA Matters......................................... 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUIRECO........ 28
SECTION 5.01 Organization and Qualification; Subsidiaries........ 28
SECTION 5.02 Certificate of Incorporation and Bylaws............. 28
SECTION 5.03 Capitalization...................................... 28
SECTION 5.04 Authority........................................... 29
SECTION 5.05 No Conflict; Required Filings and Consents.......... 29
SECTION 5.06 Absence of Certain Changes or Events................ 30
SECTION 5.07 SEC Filings; Financial Statements................... 30
SECTION 5.08 Brokers............................................. 30
SECTION 5.09 No Prior Activities................................. 31
ARTICLE VI COVENANTS.................................................... 31
SECTION 6.01 Conduct of Business by Company Pending the Effective
Time................................................ 31
SECTION 6.02 Notices of Certain Events........................... 33
SECTION 6.03 Access to Information; Confidentiality.............. 34
SECTION 6.04 No Solicitation of Transactions..................... 34
SECTION 6.05 Control of Operations............................... 35
SECTION 6.06 Further Action; Consents; Filings................... 35
SECTION 6.07 Additional Reports.................................. 37
SECTION 6.08 Company Stock Plans and Warrants.................... 37
SECTION 6.09 United Kingdom Filings.............................. 37
SECTION 6.10 Company Indebtedness................................ 38
ARTICLE VII ADDITIONAL AGREEMENTS....................................... 38
SECTION 7.01 Registration Statement; Proxy Statement............. 38
SECTION 7.02 Shareholders' Meeting............................... 40
SECTION 7.03 Affiliates.......................................... 40
SECTION 7.04 Directors' and Officers' Indemnification and
Insurance........................................... 40
SECTION 7.05 No Shelf Registration............................... 41
SECTION 7.06 Public Announcements................................ 41
SECTION 7.07 NYSE Listing........................................ 41
SECTION 7.08 Blue Sky............................................ 41
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ARTICLE VIII CONDITIONS....................................................... 42
SECTION 8.01 Conditions to the Obligations of Each Party............... 42
SECTION 8.02 Conditions to the Obligations of Company.................. 43
SECTION 8.03 Conditions to the Obligations of Parent and Acquireco..... 43
SECTION 8.04 Merger of Conditions...................................... 44
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.................................. 44
SECTION 9.01 Termination............................................... 44
SECTION 9.02 Effect of Termination..................................... 46
SECTION 9.03 Amendment................................................. 46
SECTION 9.04 Waiver.................................................... 47
SECTION 9.05 Termination Fee; Expenses................................. 47
ARTICLE X GENERAL PROVISIONS.................................................. 48
SECTION 10.01 Non-Survival of Representations and Warranties............ 48
SECTION 10.02 Notices................................................... 48
SECTION 10.03 Severability.............................................. 49
SECTION 10.04 Assignment; Binding Effect; Benefit....................... 49
SECTION 10.05 Incorporation of Exhibits................................. 49
SECTION 10.06 Governing Law............................................. 49
SECTION 10.07 Waiver of Jury Trial...................................... 50
SECTION 10.08 Specific Performance...................................... 50
SECTION 10.09 Headings; Interpretation.................................. 50
SECTION 10.10 Counterparts.............................................. 50
SECTION 10.11 Entire Agreement.......................................... 50
ANNEXES
ANNEX A Plan of Arrangement
ANNEX B Form of Company Shareholder Agreement
ANNEX C Form of Warrant Termination Letter
ANNEX D Form of Affiliate Letter
ANNEX E Form of Opinion of Xxxxxx X. Xxxxxxxx, Xx., General Counsel of Parent
ANNEX F Form of Opinion of Special Patent Counsels to Company
ANNEX G-1 Form of Opinion of U.S. Counsel to Company
ANNEX G-2 Form of Opinion of Canadian Counsel to Company
ANNEX H Term Sheet to Tax Side Letter
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of November 17, 1999, among
XXXXXX INTERNATIONAL INC., a Delaware corporation ("Parent"), NEPTUNE
ACQUISITION CORP., an unlimited liability company existing under the laws of the
Province of Nova Scotia and a wholly owned subsidiary of Parent ("Acquireco"),
and NORTH AMERICAN VACCINE, INC., a corporation existing under the federal laws
of Canada ("Company"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS the Company and Acquireco desire to propose to the
shareholders of Company an Arrangement (as hereinafter defined) under the CBCA
(as hereinafter defined) substantially on the terms and subject to the
conditions set forth in the Plan of Arrangement attached hereto as Annex A;
WHEREAS in order to implement Acquireco's proposal referred to above,
Company intends to propose to its shareholders an Arrangement under Section 192
of the CBCA involving Company, Acquireco and the shareholders of Company;
WHEREAS the board of directors of Company has unanimously determined
that the Arrangement is fair and is in the best interests of Company and the
shareholders of Company and has agreed to enter into this Agreement and to
recommend that the shareholders of Company vote in favor of the Arrangement
Resolution (as hereinafter defined), all on the terms and subject to the
conditions contained herein;
WHEREAS the board of directors of Parent and Acquireco have approved
the transactions contemplated by this Agreement, including the Arrangement;
WHEREAS the parties acknowledge that the transactions contemplated by
this Agreement are intended to result in a "qualified stock purchase" within the
meaning of Section 338(d)(3) of the Code (as hereinafter defined) and that an
election pursuant to Section 338(g) of the Code will be made with respect to
such purchase;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, certain shareholders of
Company have entered into a shareholder agreement (each, a "Company Shareholder
Agreement") in the form attached hereto as Annex B;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable to
the singular and plural forms of the terms defined):
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with the first
Person.
"Agreement" shall mean this Share Exchange Agreement and includes the
Plan of Arrangement attached hereto as Annex A as the same may be supplemented
or amended from time to time.
"Arrangement" shall mean the arrangement under Section 192 of the
CBCA, pursuant to which all of the issued and outstanding Company Common Shares
and Company Preferred Shares shall be acquired by Acquireco from the holders of
such shares for the consideration set forth in Section 3.01 hereof,
substantially on the terms and subject to the conditions set forth in this
Agreement and the Plan of Arrangement attached hereto as Annex A.
"Arrangement Resolution" shall mean the resolution or resolutions of
the shareholders of Company approving the Arrangement as required by applicable
law and the Interim Order, substantially in the form attached to the Proxy
Statement (as defined in Section 7.01).
"Articles of Arrangement" shall mean the articles of arrangement in
respect of the Arrangement in the form required by the CBCA to be sent to the
Director after the Final Order is made.
"ASE" shall mean the American Stock Exchange.
"Best Knowledge" shall mean, with respect to Company, that any one of
the following employees of Company is actually aware of a fact or other matter,
or should have become aware of a fact or other matter, based upon due inquiry
and investigation: Chief Executive Officer; Chief Financial Officer; Acting
General Counsel; Vice President, Marketing and Sales; Vice President, Regulatory
Affairs; Director of Human Resources.
"Blue Sky Laws" shall mean state and provincial securities or "blue
sky" laws.
"Business Day" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in the City of New
York.
"CBCA" shall mean the Canada Business Corporations Act, as amended
from time to time.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Competing Transaction" shall mean any of the following
involving Company (other than the Arrangement):
(i) any merger, consolidation, amalgamation, arrangement, share
exchange, business combination or other similar transaction;
(ii) any sale, lease, exchange, transfer or other disposition of
10% or more of the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of transactions, other than in the
ordinary course of business consistent with past practice;
(iii) any license, sublicense or sale of Company Intellectual
Property (as defined in Section 4.13(a)) or similar contract, agreement,
arrangement, or commitment with respect to Company Intellectual Property
(except for any express or implied license in connection with the sale of
Company's products in the ordinary course of business consistent with past
practice);
(iv) any tender offer or exchange offer for 10% or more of the
outstanding voting securities of the Company or the filing of a
registration statement under the Securities Act in connection therewith;
(v) any Person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed (other
than a Person or group consisting exclusively of those Persons who execute
a Company Shareholder Agreement (the execution of which shall not be deemed
to be an admission that such Person is a "group" as defined under Section
13(d) of the Exchange Act)) which beneficially owns or has the right to
acquire beneficial ownership of, 10% or more of the outstanding voting
securities of the Company;
(vi) any solicitation in opposition to the approval of this
Agreement by the stockholders of Company; or
(vii) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
"Company Disclosure Schedule" shall mean the disclosure schedule
delivered by Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"Company Material Adverse Effect" shall mean (1) any change in or
effect on the business of Company and the Company Subsidiaries that,
individually or in the aggregate (taking into account all other such changes or
effects), is, or is reasonably likely to be, materially adverse to the business,
assets, liabilities, prospects, financial condition or results of operations of
Company and the Company Subsidiaries, taken as a whole, or (2) any significant
loss of personnel of Company or the Company Subsidiaries, which personnel cannot
be retained by offering additional compensation (consistent with the terms of
Section 6.01(h)) or replaced by
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Company or Parent, as the case may be, using commercially reasonable efforts,
within a reasonable period of time after such departure(s) so as to avoid any
material adverse change in Company's performance or prospects or, with respect
to the period of time from the date hereof until March 31, 2000, from Company's
performance set forth in Company's financial projections as set forth in the
balance sheets, statements of cash flows, and comparative statements of
operations (2000 forecast) for Company dated October 25, 1999 included in
Schedule 1 to the Company Disclosure Schedule ("Company Projections"))
(including but not limited to losses of institutional knowledge, know how or
other intangible intellectual property that could prevent or materially delay
Company from meeting such projections) provided, however, that clause (1) of
this definition shall not include (i) a decrease in the trading price of Company
Common Shares or (ii) any circumstances or events (including, without
limitation, any loss of personnel, loss of customers, loss of suppliers or the
delay or cancellation of any orders for products) (a) relating to the economy in
general, (b) relating to the industry in which Company operates in general, (c)
relating to any actions taken by the ASE with respect to its letter to Company
dated September 24, 1999, (d) arising primarily out of or resulting primarily
from actions contemplated by Company and Parent in connection with, or which is
attributable primarily to, the announcement of this Agreement and/or the
transactions contemplated hereby or (e) relating to the release of Company's
financial results or Company's failure to meet any publicized financial
projections for so long as Company's revenue and expenses are substantially in
accordance with the Company Projections. Notwithstanding anything to the
contrary contained in this Agreement, a Company Material Adverse Effect shall be
deemed to have occurred if any of the following shall have occurred: Company
shall have failed to (i) obtain the regulatory approvals for NeisVac-C necessary
to perform its obligations under the Supply Agreement dated July 7, 1999
("Supply Agreement") between Company and NHS Supplies Authority, (ii)
manufacture, fill and prepare for shipping such number of doses of NeisVac-C as
shall equal the minimum requirements for delivery for the months of April and
May, 2000 under the Supply Agreement, or (iii) ensure that it will not be
prohibited by U.S. governmental authorities from exporting NeisVac-C, in each
case on or before April 1, 2000.
"Company Stock Plans" shall mean the Company's Share Option Plan, the
Company's 1995 Share Option Plan, the Company's 1997 Share Option Plan, the
Company's Non-Employee Director and Senior Executive Stock Option Plan, the
Company's 1995 Non-Employee Director and Senior Executive Stock Option Plan and
the Company's 1999 Non-Employee Director and Senior Executive Stock Option Plan.
"Confidentiality Agreement" shall mean the confidentiality agreement,
dated as of April 27, 1999, between Parent and Company, as amended from time to
time.
"Court" shall mean the Ontario Superior Court of Justice.
"Depository" shall mean the bank, trust company or other entity
selected by Parent and reasonably acceptable to Company to act as depository in
connection with the Arrangement.
"Director" shall mean the Director appointed under Section 260 of the
CBCA.
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"Dissent Procedures" has the meaning ascribed thereto in Article 4 of
the Plan of Arrangement.
"Dissent Rights" shall mean the rights of dissent which each
Dissenting Shareholder is entitled to exercise, under the Interim Order and the
Final Order and strictly in the manner set out in Section 190 of the CBCA and
the Plan of Arrangement, in respect of the Arrangement Resolution.
"Dissenting Shareholder" shall mean a shareholder of Company who
dissents from the Arrangement Resolution in strict compliance with the Dissent
Procedures and the CBCA.
"$" shall mean United States Dollars.
"Effective Date" shall mean the date upon which the Plan of
Arrangement became effective as established by the date set forth in the
certificate of arrangement issued by the Director giving effect to the
Arrangement.
"Effective Time" shall mean the time of the filing of the Articles of
Arrangement implementing the Arrangement.
"Encumbrances" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal, preemptive
rights, mortgages, hypothecations, prior assignments, title retention
agreements, indentures, security agreements or any other encumbrance of any
kind.
"Environmental Law" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Material.
"Environmental Permit" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Expenses" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its Affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and the
completion of the Arrangement, the preparation, printing, filing and mailing
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of the Registration Statement (as defined in Section 7.01) and the Proxy
Statement (as defined in Section 7.01), the solicitation of shareholder
approvals, the filing of HSR Act notice, if any, the requirements of the
Competition Act, if any, and all other matters related to the transactions
contemplated hereby and the completion of the Arrangement.
"Final Order" shall mean the final order of the Court approving the
Arrangement.
"Governmental Entity" shall mean any United States Federal, state or
local or any Canadian or other foreign governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
arbitral body.
"Governmental Order" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"Hazardous Material" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, friable
asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical,
material or substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"Interim Financing Documents" shall mean the following documents dated
as of November 1, 1999: (i) Letter Loan Agreement between Bank of America, N.A.
("Lender") and Company; (ii) Security Agreement between Parent and Company;
(iii) Security Agreement between Lender and Company; (iv) Patent and Trademark
Assignment and Security Agreement between Parent and Company; (v) Patent and
Trademark Assignment and Security Agreement between Lender and Company; (vi)
Guaranty by Parent for the benefit of Company; (vii) Reimbursement Agreement
between Company and Parent; (viii) Fee Letter Agreement between Lender and
Company; and (ix) Break-up Fee Letter between Parent and Company.
"Interim Order" shall mean the interim order of the Court approving
the Arrangement.
"IRS" shall mean the United States Internal Revenue Service.
"Law" shall mean any United States Federal, state, foreign or local
statute, law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law of the United States or any other jurisdiction, and
any other similar act or law.
"NYSE" shall mean the New York Stock Exchange.
"Parent Disclosure Schedule" shall mean the disclosure schedule
delivered by Parent to Company prior to the execution of this Agreement and
forming a part hereof.
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"Parent Material Adverse Effect" shall mean any change in or effect on
the business of Parent and its subsidiaries that, individually or in the
aggregate (taking into account all other such changes or effects), is, or is
reasonably likely to be, materially adverse to the business, assets,
liabilities, prospects, financial condition or results of operations of Parent
and its subsidiaries, taken as a whole, provided, however, that Parent Material
Adverse Effect shall not include (i) a decrease in the trading price of Parent
Common Stock or (ii) any circumstances or events (including, without limitation,
any loss of personnel, loss of customers, loss of suppliers or the delay or
cancellation of any orders for products) (a) relating to the economy in general,
(b) relating to the industry in which Parent operates in general, or (c) arising
primarily out of or resulting primarily from actions contemplated by Company and
Parent in connection with, or which is attributable primarily to, the
announcement of this Agreement and/or the transactions contemplated hereby.
"Permitted Encumbrances" shall mean (i) liens for Taxes, assessments
and other governmental charges not yet due and payable, (ii) immaterial unfiled
mechanics', workmen's, repairmen's, warehousemen's, carriers' or other like
liens arising or incurred in the ordinary course of business which are not yet
due and payable and (iii) equipment leases with third parties entered into in
the ordinary course of business.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association, entity or government or political subdivision, agency or
instrumentality of a government.
"Plan of Arrangement" shall mean the plan of arrangement proposed
under Section 192 of the CBCA substantially in the form attached as Annex A to
this Agreement, as the same may be supplemented or amended from time to time in
accordance herewith and any order of the Court;
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, joint venture or other legal entity of
which such Person (either alone or through or together with any other Subsidiary
of such Person) owns, directly or indirectly, a majority of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"Tax" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority ("Taxing Authority"),
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment
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compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges; (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, combined, consolidated or
unitary group for any taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any Person or as a result of an express or
implied obligation to indemnify any Person.
"Tax Return" shall mean any return, statement or form (including,
without limitation, any estimated tax report or return, withholding tax report
or return and information report or return) required to be filed with respect to
any Taxes.
"U.S. GAAP" shall mean United States generally accepted accounting
principles.
ARTICLE II
THE ARRANGEMENT
SECTION 2.01 The Arrangement. Company and Acquireco hereby agree
that the Arrangement shall be implemented in accordance with and subject to the
terms and conditions contained in this Agreement and the Plan of Arrangement.
SECTION 2.02 Interim Order. As soon as reasonably practicable after
the date hereof, Company shall bring an application (the form and substance of
which shall be reasonably satisfactory to it and Acquireco) before the Court
pursuant to subsection 192(3) of the CBCA for the Interim Order providing for,
among other things, the calling and holding of the Company Shareholders' Meeting
(as defined in Section 7.01), the determination of the approvals required from
the Company's shareholders in respect of the Arrangement and the granting of the
Dissent Rights.
SECTION 2.03 Mailing of Proxy Statement. (a) As soon as practicable
after the later of the effective date of the Registration Statement (as defined
in Section 7.01) and the date on which the Interim Order is obtained, Company
shall mail the Proxy Statement (as defined in Section 7.01) to the Company's
shareholders.
SECTION 2.04 Final Order. If the Arrangement is approved at the
Company Shareholders' Meeting by the Arrangement Resolution as required by the
Interim Order, Company shall bring an application, as soon as reasonably
practicable after the Company Shareholders' Meeting, before the Court pursuant
to subsection 192(3) of the CBCA for a Final Order approving the Arrangement.
SECTION 2.05 Filing of Articles of Arrangement. If the Final Order
is obtained, as soon as reasonably practicable thereafter but in no event
earlier than April 3, 2000, and with the approval of Acquireco, subject to the
satisfaction, waiver or release of the conditions set forth in Article VIII,
Company shall file Articles of Arrangement, and such other documents as may be
required under the CBCA, with the Director to give effect to the Arrangement
pursuant to subsection 192(7) of the CBCA. Notwithstanding the foregoing, if the
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proposed date of filing of the Articles of Arrangement and the completion of the
Arrangement, as determined in accordance with this Section 2.05, would result in
the Effective Date occurring within fifteen (15) trading days after the record
date set by Parent for its stockholders with respect to the spin-off of Parent's
cardiovascular business, then the date of filing of the Articles of Arrangement
and the completion of the Arrangement shall be postponed to a date that would
result in the Effective Date occurring no sooner than fifteen (15) trading days
after such record date.
SECTION 2.06 Effective Time. The Arrangement shall become effective
at the Effective Time.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.01 Exchange of Shares. At the Effective Time, the
following shall be deemed to occur in the order specified in the following
paragraphs, without any further authorization, act or formality:
(a) Subject to Section 4.1 of the Plan of Arrangement, each Common
Share of Company ("Company Common Share") issued and outstanding immediately
before the Effective Time shall be exchanged by Acquireco, for consideration
consisting of:
(i) the fraction of a share (calculated and rounded to the
nearest ten-thousandth of one share) of Common Stock, par value $1.00 per share,
of Parent ("Parent Common Stock"), (A) the numerator of which fraction shall be
$6.97 (the "Share Consideration"), and (B) the denominator of which shall be the
Parent Stock Price (as defined in Section 3.01(a)(iii) below); and
(ii) a cash payment of $.03 per Company Common Share (the "Cash
Consideration" together with the Share Consideration, the "Arrangement
Consideration");
provided, however, that in the event the Company Capitalization (as defined in
Section 4.03) shall be greater or less than the amount set forth in Section 4.03
by more than 10,000 Company Common Shares, the Share Consideration and Cash
Consideration shall each be adjusted by multiplying it by a fraction, the
numerator of which is the Company Capitalization as set forth in Section 4.03
and the denominator of which is the actual Company Capitalization at the
Effective Time.
(iii) The "Parent Stock Price" shall be an amount equal to the
average closing sale price of a share of Parent Common Stock as reported in The
Wall Street Journal under the caption New York Stock Exchange ("NYSE") Composite
Transactions or, if not available, such other authoritative publication as may
be reasonably selected by Parent, for the ten consecutive trading days ending on
and including the fifth trading day prior to the Effective Date. In the event
Parent changes (or establishes a record date for changing) the number shares of
Parent Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, distribution, recapitalization,
reclassification, reorganization or similar
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transaction with respect to the outstanding Parent Common Stock and the record
date therefor shall be prior to the Effective Time, the Share Consideration
shall be proportionately adjusted in such manner as Parent, Acquireco and the
Company shall agree, which adjustment may include, as appropriate, the issuance
of securities, property or cash on the same basis as any of the foregoing shall
have been issued, distributed or paid to the holders of shares of Parent Common
Stock generally.
(b) Subject to Section 4.1 of the Plan of Arrangement, each share of
Series A Preferred Stock, no par value per share, of Company ("Company Preferred
Share") issued and outstanding immediately before the Effective Time shall be
exchanged by Acquireco for consideration consisting of (i) the number of shares
of Parent Common Stock equal to the product of (x) the number of Company Common
Shares into which such Company Preferred Share is convertible immediately prior
to the Effective Time and (y) the Share Consideration divided by the Parent
Stock Price, and (ii) a cash payment equal to the product of (x) the Cash
Consideration and (y) the number of Company Common Shares into which such
Company Preferred Share is convertible immediately prior to the Effective Time.
(c) Each shareholder of the Company shall cease to be a holder of
Company Common Shares or Company Preferred Shares, as the case may be, and shall
have his, her or its name removed from the register of holders of Company Common
Shares or Company Preferred Shares, as the case may be.
(d) All Company Common Shares and Company Preferred Shares shall be
held by Acquireco and the name of Acquireco shall be added to the register of
holders of Company Common Shares and Company Preferred Shares.
(e) Certificates formerly representing Company Common Shares and
Company Preferred Shares shall represent only the right to receive the
consideration therefor, in accordance with Articles 3, 4 and 5 of the Plan of
Arrangement.
(f) Immediately following the exchange of shares as contemplated by
this Section 3.01, Company shall increase the stated capital of the Company
Common Shares by an amount equal to the difference between (i) the product of
the number of Company Common Shares exchanged pursuant to this Section 3.01
multiplied by $7.00 and (ii) the product of the paid-up capital of an issued and
outstanding Company Common Share as determined pursuant to the Income Tax Act
(Canada) immediately prior to the increase in stated capital pursuant to this
Section 3.01(g), multiplied by the number of Company Common Shares exchanged
pursuant to this Section 3.01.
(g) Immediately following the exchange of shares as contemplated by
this Section 3.01, the Company shall increase the stated capital of the Company
Preferred Shares by an amount equal to the difference between (i) the product of
the number of Company Preferred Shares exchanged pursuant to this Section 3.01
multiplied by the number of Company Common Shares into which each Company
Preferred Share is convertible immediately before the Effective Time multiplied
by $7.00 and (ii) the product of the paid-up capital of an issued and
outstanding Company Preferred Share as determined pursuant to the Income Tax Act
(Canada) immediately
11
prior to the increase in stated capital pursuant to this Section 3.01(g),
multiplied by the number of Company Preferred Shares exchanged pursuant to this
Section 3.01.
SECTION 3.02 No Fractional Share Certificates. No scrip or fractional
share of Parent Common Stock shall be issued upon the exchange of Company Common
Shares or Company Preferred Shares (collectively, "Company Shares"), and an
outstanding fractional share interest shall not entitle the owner thereof to
vote, to receive dividends or to any rights of a stockholder of Parent with
respect to such fractional share interest. As of the Effective Time, Parent
shall deposit with the Depository an amount in cash sufficient for the
Depository to pay each holder of Company Shares an amount in cash, rounded to
the nearest whole cent, equal to the product obtained by multiplying (i) the
fractional share interest to which such holder would otherwise be entitled
(after taking into account all Company Shares held at the Effective Time by such
holder) by (ii) the Parent Stock Price.
SECTION 3.03 Options and Warrants to Purchase Company Common Shares.
(a) Company shall take all reasonable actions necessary so that,
immediately prior to the Effective Time, (i) the options granted by Company to
purchase Company Common Shares ("Company Stock Options"), which are outstanding
and unexercised immediately prior to the Effective Time, shall be cancelled and
(ii) in consideration of such cancellation, Parent shall pay to such holders of
Company Stock Options at the Effective Time an amount in cash in respect thereof
equal to the product of (x) the excess, if any, of the Arrangement Consideration
(determined in accordance with Section 3.01) over the exercise price thereof and
(y) the number of Company Common Shares subject thereto (such payment to be net
of taxes required by law to be withheld with respect thereto), provided, that
the foregoing shall be subject to the obtaining of any necessary consents of
holders of Company Stock Options, it being agreed that Company and Parent will
use their reasonable efforts to obtain any such consents.
(b) Company shall take all reasonable actions necessary so that,
immediately prior to the Effective Time and in accordance with the Warrant
Termination Letter substantially in the form of Annex C ("Warrant Termination
Letter") executed as of the date hereof by the holder(s) of warrants to purchase
Company Common Shares ("Company Warrants"), (i) the Company Warrants which are
outstanding and unexercised immediately prior to the Effective Time shall be
cancelled and (ii) in consideration of such cancellation, Parent shall pay to
the holder(s) of Company Warrants at the Effective Time an amount in cash in
respect thereof equal to the product of (x) the excess of the Arrangement
Consideration (determined in accordance with Section 3.01) over the exercise
price thereof and (y) the number of Company Common Shares subject thereto.
SECTION 3.04 Certain Adjustments. If prior to the Effective Time,
Company Common Shares or Company Preferred Shares shall be changed into a
different number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, then the Arrangement Consideration established pursuant to the
provisions of Section 3.01(a)(i) or 3.01(b), as applicable, shall be adjusted
accordingly to provide to Parent and the holders of Company Shares the same
economic effect as contemplated by this Agreement and the Plan of Arrangement
prior to such reclassification, recapitalization, split-up, combination,
exchange, dividend or increase.
12
SECTION 3.05 Lost, Stolen or Destroyed Certificates. In the event any
certificates representing Company Shares shall have been lost, stolen or
destroyed, the Depository shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock (and cash in lieu of
fractional shares) and Cash Consideration as may be required pursuant to Section
3.01, provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to indemnify Parent against any claim that may be made
against Parent or the Depository with respect to the certificates alleged to
have been lost, stolen or destroyed.
SECTION 3.06 Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement, the officers and directors of Company,
Parent and Acquireco, as the case may be, are fully authorized in the name of
their corporation or otherwise to take, and will use good faith efforts to take,
all such lawful and necessary action, so long as such action is not inconsistent
with this Agreement. Without limiting the generality of the foregoing, as of the
Effective Time, Parent shall deposit with the Depositary that number of shares
of Parent Common Stock and that amount of cash that is necessary to make the
payments required pursuant to Section 3.01(a) and 3.01(b) hereof.
SECTION 3.07 Dissenting Shareholders. Company shall give Parent prompt
notice of any holders of shares who have not voted such shares for approval of
the Arrangement Resolution and who have perfected Dissent Rights (and shall also
give Parent prompt notice of any withdrawals of such demands for Dissent Rights)
and Parent shall have the right to direct all negotiations and proceedings with
respect to such demands. Company shall provide its shareholders with Dissent
Rights pursuant to and in the manner set forth in the Interim Order, Section 190
of the CBCA and the Plan of Arrangement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Acquireco,
subject to the exceptions specifically disclosed in writing in the Company
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article IV, that:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Each of Company and each directly and indirectly owned subsidiary
of Company (the "Company Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Company
and each Company Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing
13
necessary, except for such failures to be so qualified or licensed and in good
standing that may not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) Schedule 4.01 of the Company Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each Company Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Company Subsidiary and the percentage of each Company Subsidiary's outstanding
capital stock or other equity interests owned by Company or another Company
Subsidiary and (ii) an indication of whether each Company Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Schedule 4.01 of the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owns an equity interest in any partnership or
joint venture arrangement or other business entity.
SECTION 4.02 Certificate of Incorporation and Bylaws. The copies of
Company's certificate of incorporation and bylaws previously presented to Parent
by Company are true, complete and correct copies thereof. Such certificate of
incorporation and bylaws are in full force and effect, unamended as of the date
hereof. Company is not in violation of any of the provisions of its certificate
of incorporation or bylaws.
SECTION 4.03 Capitalization
(a) The authorized capital stock of Company consists of an unlimited
number of Company Common Shares and an unlimited number of Company Preferred
Shares. As of the date hereof, (i) 32,870,350 Company Common Shares are issued
and outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) 12,838,764 Company Common Shares are reserved for future issuance pursuant
to Company Stock Options, Company Warrants, Company Preferred Shares or any
other securities convertible or exercisable into Company Common Shares, and
(iii) 2,000,000 Company Preferred Shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable. The name of each holder
of a Company Stock Option or Company Warrant, the grant date of each Company
Stock Option or Company Warrant, the number of Company Common Shares for which
each Company Stock Option or Company Warrant is exercisable, the vesting or
exercise schedule and the exercise price of each Company Stock Option or Company
Warrant are set forth in Schedule 4.03 of the Company Disclosure Schedule.
Except for Company Common Shares issuable pursuant to Company Stock Plans and as
otherwise set forth in Schedule 4.03 of the Company Disclosure Schedule, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which Company or any Company Subsidiary is a
party or by which Company or any Company Subsidiary is bound relating to the
issued or unissued capital stock of Company or any Company Subsidiary or
obligating Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Company or any Company
Subsidiary. All Company Common Shares subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any Company Common Shares or any capital stock of
any Company Subsidiary. Each outstanding share of capital stock of each Company
Subsidiary is
14
duly authorized, validly issued, fully paid and nonassessable and each such
share owned by Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Company's or such other Company Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. Except as set
forth in Schedule 4.03 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of Company or any Company Subsidiary to
provide funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any Company Subsidiary or any other
entity or Person.
(b) Except as set forth in Schedule 4.03 of the Company Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which Company is a party, or to Company's Best Knowledge, any holder of
Company's securities is a party, with respect to the voting of voting securities
of the Company.
(c) The sum of (i) the total number of Company Common Shares issued
and outstanding as of the date hereof, and (ii) the total number of Company
Common Shares issuable pursuant to (x) Company Stock Options with exercise
prices not greater than $7.00 per share of Company Common Shares, (y) Company
Warrants with exercise prices not greater than $7.00 per share of Company Common
Shares and (z) the Company Preferred Shares, is equal to 37,667,850 (the
"Company Capitalization").
SECTION 4.04 Authority Relative to this Agreement. Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to complete the Arrangement in
accordance with this Agreement. The execution and delivery of this Agreement by
Company and the completion of the Arrangement in accordance with this Agreement
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Company are necessary to authorize
this Agreement or to complete the Arrangement in accordance with this Agreement
(other than the required court approvals to complete the Arrangement and the
approval of the Arrangement Resolution by the holders of the outstanding Company
Common Shares and Company Preferred Shares entitled to vote with respect thereto
at the Company Shareholders' Meeting in the manner set forth in the Interim
Order, the filing and certification of the Articles of Arrangement as required
by the CBCA, and receipt of the Interim Order and the Final Order). This
Agreement has been duly executed and delivered by Company and, assuming the due
authorization, execution and delivery by the other parties , constitutes the
legal, valid and binding obligation of Company, enforceable against Company in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Company does not,
and the performance by Company of its obligations hereunder, and the completion
of the Arrangement will not, (i) conflict with or violate any provision of the
certificate of incorporation or bylaws of Company or any equivalent
organizational documents of any Company Subsidiary, (ii) assuming that all
consents, approvals, filings and notifications described in Section 4.05(b)
15
have been obtained or made (as applicable), conflict with or violate any Law
applicable to Company or any Company Subsidiary or by which any property or
asset of Company or any Company Subsidiary is bound or affected or (iii) except
as otherwise set forth on Schedule 4.05(a) of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event which with the
giving of notice or lapse of time or both could reasonably be expected to become
a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation that may reasonably
be expected to, individually or in the aggregate, have a Company Material
Adverse Effect or adversely affect the ability of the parties hereto to
consummate, or materially delay the consummation of, the transactions
contemplated hereby.
(b) The execution and delivery of this Agreement by Company does not,
and the performance by Company of its obligations hereunder and the completion
of the Arrangement will not, require any consent, approval, authorization or
permit of, or filing by Company with or notification by Company to, any
Governmental Entity, except pursuant to applicable requirements of the Exchange
Act, the Securities Act, Blue Sky Laws, the CBCA, applicable Canadian securities
laws, if any, the rules and regulations of the ASE, the premerger notification
requirements of the HSR Act, if any, the requirements of the Investment Canada
Act, if any, the requirements of the Competition Act (Canada), if any, and the
filing and certification of the Articles of Arrangement as required by the CBCA.
SECTION 4.06 Permits; Compliance with Laws. Company and the Company
Subsidiaries are in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, approvals and
orders of any Governmental Entity necessary for Company or any Company
Subsidiary to own, lease and operate its properties and assets or otherwise to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), and, none of the Company Permits has been suspended or cancelled nor
is any such suspension or cancellation pending or, to the Best Knowledge of
Company, threatened. Except as set forth in Schedule 4.06 of the Company
Disclosure Schedule, neither Company nor any Company Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to Company or any
Company Subsidiary or by which any property or asset of Company or any Company
Subsidiary is bound or affected or (ii) any Company Permits, except for such
conflicts, defaults or violations that may not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Schedule
4.06 of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, all actions, proceedings, investigations or surveys pending or, to
the Best Knowledge of Company, threatened against Company or any Company
Subsidiary that could reasonably be expected to result in the suspension or
cancellation of any other Company Permit. Except as set forth in Schedule 4.06
of the Company Disclosure Schedule, since January 1, 1995, neither Company nor
any Company Subsidiary has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws.
16
SECTION 4.07 SEC Filings; Financial Statements.
(a) Company has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the ASE since January
1, 1995 (collectively, together with any such forms, reports, statements and
documents Company may file subsequent to the date hereof until the Effective
Time, the "Company Reports") and (B) since January 1, 1995 with any other
Governmental Entities. Each Company Report (i) was prepared in all material
respects in accordance with the requirements of the Securities Act, the Exchange
Act or the rules and regulations of the ASE, as the case may be, and (ii) did
not at the time it was filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each form, report, statement and
document referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law. No
Company Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the ASE, any other stock exchange or any other comparable Governmental
Entity.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the consolidated financial position of Company and the Company
Subsidiaries as at the respective dates thereof, and their consolidated results
of operations, stockholders' equity and cash flows for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Company and the Company Subsidiaries as of June
30, 1999 as reported in the Company Reports, none of Company or any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since June 30, 1999. Company is not "insolvent" as
such term is defined in Section 192 of the CBCA.
SECTION 4.08 Absence of Certain Changes or Events. Except as
otherwise set forth on Schedule 4.08 of the Company Disclosure Schedule, since
June 30, 1999, Company and the Company Subsidiaries have conducted their
businesses only in the ordinary course consistent with past practice and, since
such date, there has not been (i) any Company Material Adverse Effect, (ii) any
event that may reasonably be expected to prevent or materially delay the
performance of Company's obligations pursuant to this Agreement and the
completion of the Arrangement by Company, (iii) any change by Company in its
accounting methods, principles or practices, (iv) any declaration, setting aside
or payment of any dividend or distribution in respect of the Company Common
Shares or any redemption, purchase or other acquisition of any of Company's
securities, (v) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
17
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers, directors or
employees of Company or any Company Subsidiary, (vi) any issuance or sale of any
stock, notes, bonds or other securities other than pursuant to the exercise of
outstanding securities, or entering into any agreement with respect thereto,
(vii) any amendment to the Company's certificate of incorporation or bylaws,
(viii) other than in the ordinary course of business, any (x) purchase, sale,
assignment or transfer of any material assets, (y) mortgage, pledge or the
institution of any Encumbrance on any material assets or properties, tangible or
intangible, except for liens for taxes not yet delinquent and such other
Encumbrances which do not, individually or in the aggregate, have a Company
Material Adverse Effect, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (x) any incurrence of any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting the business or properties of
Company or any Company Subsidiary, or (xi) any entering into any transaction of
a material nature other than in the ordinary course of business, consistent with
past practices.
SECTION 4.09 Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit fund, plan, program,
arrangement or contract (including, without limitation, any "pension" plan, fund
or program, as defined in Section 3(2) of ERISA, and any "employee benefit
plan", as defined in Section 3(3) of ERISA) maintained, sponsored or contributed
to or required to be contributed to by Company or any Company Subsidiary or
other trade or business (whether or not incorporated) treated as a single
employer with Company (a "Company ERISA Affiliate") pursuant to Code Section
414(b), (c), (m) or (o) is a party, or with respect to which Company or any
Company ERISA Affiliate could incur liability under Section 4069, 4212(c) or
4204 of ERISA or Section 412 of the Code, or to which Company or any Company
ERISA Affiliate is a party (the "Company Benefit Plans"), Company has delivered
or made available to Parent a true, complete and correct copy of (i) such
Company Benefit Plan and the most recent summary plan description related to
such Company Benefit Plan, if a summary plan description is required therefor,
(ii) each trust agreement or other funding arrangement relating to such Company
Benefit Plan, (iii) the most recent annual report (Form 5500) filed with the IRS
with respect to such Company Benefit Plan, (iv) the most recent actuarial report
or financial statement relating to such Company Benefit Plan and (v) the most
recent determination letter issued by the IRS with respect to such Company
Benefit Plan, if it is qualified under Section 401(a) of the Code. Schedule
4.09(a) sets forth a true and complete list of each Company Benefit Plan.
Neither Company nor any Company ERISA Affiliate has any express or implied
commitment, whether legally enforceable or not, to modify, change or terminate
any Company Benefit Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Except as may not reasonably be expected to cause a Company
Material Adverse Effect, each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable laws,
including, without limitation, ERISA and the Code, and all contributions
required to be made under the terms of any of the Company Benefit
18
Plans as of the date of this Agreement have been timely made or have been
reflected on the most recent consolidated balance sheet filed or incorporated by
reference in the Company Reports prior to the date of this Agreement. With
respect to the Company Benefit Plans, no event has occurred and, to the Best
Knowledge of Company, there exists no condition or set of circumstances (other
than for routine benefit liabilities) under the terms of such Company Benefit
Plans, ERISA, the Code or any other applicable Law which may reasonably be
expected to cause a Company Material Adverse Effect..
(c) Company on behalf of itself and all of the Company ERISA
Affiliates hereby represents that: (i) each Company Benefit Plan which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS as to its qualified status under the
Code, and each trust established in connection with any Company which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
to Company's Best Knowledge no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status of
any such Company Benefit Plan or the exempt status of any such trust; (ii) to
Company's Best Knowledge there has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Company Benefit Plan; (iii) each Company Benefit Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability, other than (A) liability for ordinary administrative expenses
typically incurred in a termination event or (B) if the Company Benefit Plan is
a pension benefit plan subject to Part 2 of Title I of ERISA, liability for the
accrued benefits as of the date of such termination (if and to the extent
required by ERISA) to the extent that either there are sufficient assets set
aside in a trust or insurance contract to satisfy such liability or such
liability is reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date of this
Agreement. No suit, administrative proceeding, action or other litigation has
been brought, or to the Best Knowledge of Company is threatened, against or with
respect to any such Company Benefit Plan, including any audit or inquiry by the
Internal Revenue Service or United States Department of Labor (other than
routine benefits claims) that may reasonably be expected to cause a Company
Material Adverse Effect.
(d) No Company Benefit Plan is a multiemployer pension plan (as
defined in Section 3(37) of ERISA) or other pension plan subject to Title IV of
ERISA and neither the Company nor any Company ERISA Affiliate has sponsored or
contributed to or been required to contribute to a multiemployer pension plan or
other pension plan subject to Title IV of ERISA. No material liability under
Title IV of ERISA has been incurred by Company or any Company ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to Company or any Company ERISA Affiliate of incurring or being
subject (whether primarily, jointly or secondarily) to a material liability
thereunder. None of the assets of Company or any Company ERISA Affiliate is, or
may reasonably be expected to become, the subject of any lien arising under
ERISA or Section 412(n) of the Code.
(e) With respect to each Company Benefit Plan required to be set
forth in the Company Disclosure Schedule that is subject to Title IV or Part 3
of Title I of ERISA or Section 412 of the Code, (i) no reportable event (within
the meaning of Section 4043 of ERISA, other than an event that is not required
to be reported before or within 30 days of such event) has
19
occurred or is expected to occur, (ii) there was not an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, as of the most recently ended plan year of such
Company Benefit Plan; and (iii) there is no "unfunded benefit liability" (within
the meaning of Section 4001(a)(18) of ERISA).
(f) Company has scheduled on Schedule 4.09(f) of the Company
Disclosure Schedule and has delivered to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
agreements of Company and each Company ERISA Affiliate providing for annual
compensation in excess of $100,000, (ii) all severance plans, agreements,
programs and policies of Company and each Company ERISA Affiliate with or
relating to their respective employees, directors or consultants (whether or not
subject to ERISA), and (iii) all plans, programs, agreements and other
arrangements of Company and each Company ERISA Affiliate with or relating to
their respective employees, directors or consultants which contain "change of
control" provisions. No payment or benefit which will be made by Company under
any Company Benefit Plan or other arrangement will constitute an excess
parachute payment under Code Section 280G(b)(1), and the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or other service provider of Company or any Company ERISA
Affiliate to severance benefits or any other payment, compensation or benefit
(including forgiveness of indebtedness), except as expressly provided by this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation or benefit due any such employee or service provider
which may reasonably be expected to cause a Company Material Adverse Effect..
(g) Neither Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to Persons
employed by Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by Company or any Company Subsidiary. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Company or any Company Subsidiary pending or, to the Best Knowledge of
Company, threatened which may interfere with the respective business activities
of Company or any Company Subsidiary. As of the date of this Agreement, to the
Best Knowledge of Company, none of Company, any Company Subsidiary, or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of
Company or any Company Subsidiary, and there is no charge or complaint against
Company or any Company Subsidiary by the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing.
(h) Except as required by Law, no Company Benefit Plan provides any
of the following retiree or post-employment benefits to any Person: medical,
disability or life insurance benefits. To Company's Best Knowledge, Company and
the Company ERISA Affiliates are in compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations
(including proposed regulations) thereunder and (ii) the applicable requirements
of the Health Insurance Portability and Accountability Act of 1996 and the
regulations (including the proposed regulations) thereunder.
20
SECTION 4.10 Contracts
(a) Schedule 4.10 of the Company Disclosure Schedule sets forth a
true and correct list of any and all executory agreements, contracts, purchase
or installment agreements, indentures, leases, mortgages, licenses, plans,
arrangements, commitments (whether written or oral) and instruments in existence
as of the date hereof, that are, as of the date hereof, material (except as
provided in clause (v) below) to the business, assets, liabilities, financial
condition or results of operations of Company and the Company Subsidiaries (each
a "Material Contract"), including without limitation, the following types of
contracts to which the Company is a party:
(i) any contract which is not terminable by Company or a
Company Subsidiary upon 30 days' or less notice and which involves
scheduled annual payments by Company or any Company Subsidiary of more
than $150,000;
(ii) any oral contract which involves annual payments in excess
of $50,000 or an aggregate payment in excess of $200,000 or any
written contract, in either case, for the employment of any director,
officer, consultant or other Person or entity who is not an employee
on a full-time, part-time or other basis, including any severance or
other termination provisions with respect to such employment;
(iii) any non-competition agreement, other than customary
agreements with employees who are not officers, directors or key
employees;
(iv) any contract between Company and any of its Affiliates or
any of its officers or directors; and
(v) any agreement, contract, arrangement or commitment (whether
written or oral) with Biochem Pharma Inc. or its Affiliates,
regardless of the nature, amount or materiality of such agreement,
contract, arrangement or commitment.
True and complete copies of each written Material Contract, or form thereof,
have been made available to Parent by Company prior to the date hereof, and
neither Company nor any Company Subsidiary is a party to any oral Material
Contracts.
(b) Each Material Contract is a valid, binding and enforceable
agreement of Company and, to Company's Best Knowledge, the other parties
thereto, and, except as set forth on Schedule 4.10 of the Company Disclosure
Schedule, will continue to be valid, binding and enforceable immediately after
the Effective Time, except (i) as such enforcement may be subject to bankruptcy,
insolvency or similar laws now or hereafter in effect relating to creditors'
rights, (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) and (iii) as the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) There has not occurred, (i) since June 30, 1999, any material
default (or event which upon provision of notice or lapse of time or both would
become such a default) or, (ii)
21
prior to June 30, 1999, any uncured default (or event which upon provision of
notice or lapse of time or both would become such a default) under any Material
Contract on the part of Company.
SECTION 4.11 Litigation. Except as set forth on Schedule 4.11 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the Best Knowledge of Company, threatened against
Company or any Company Subsidiary that may reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or
materially interfere with Company's ability to consummate the transactions
contemplated herein. Company is not aware of any facts or circumstances which
could reasonably be expected to result in the denial of insurance coverage under
policies issued to Company and Company Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations, except in any case as may not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither Company nor any Company Subsidiary is subject
to any outstanding order, writ, injunction or decree which may reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or materially interfere with Company's ability to consummate the
transactions contemplated herein.
SECTION 4.12 Environmental Matters. Except as set forth in Schedule
4.12 of the Company Disclosure Schedule, (i) Company and the Company
Subsidiaries are in material compliance with all applicable Environmental Laws
and all Company Permits required by Environmental Laws; (ii) all past material
noncompliance of Company or any Company Subsidiary with Environmental Laws or
Environmental Permits has been resolved without any pending, ongoing or future
obligation, cost or liability; and (iii) neither Company nor any Company
Subsidiary has released a Hazardous Material at, or transported a Hazardous
Material to or from, any real property currently or formerly owned, leased or
occupied by Company or any Company Subsidiary, in material violation of any
Environmental Law.
SECTION 4.13 Intellectual Property.
(a) All trademarks, trade names, service marks, trade dress, Internet
domain names, and all goodwill associated with any of the foregoing, patents and
applications thereof (including, without limitation, divisional, continuations,
continuations-in-part, re-issues, re-examinations and patents by the addition of
identified patents), copyrights and any renewal rights therefor, technology,
supplier lists, trade secrets, know-how, computer software programs or
applications in both source and object code form, technical documentation of
such software programs, registrations and applications for any of the foregoing
and all other tangible or intangible proprietary information or materials
throughout the world that are or have been used in (including without limitation
in the development of) Company's or any Company Subsidiaries' business and/or in
any product, technology or process (i) currently being or formerly manufactured,
published or marketed by Company or any Company Subsidiary or (ii) previously or
currently under development for possible future manufacturing, publication,
marketing or other use by Company or any Company Subsidiary are hereinafter
referred to as the "Company Intellectual Property."
(b) The Company Disclosure Schedule contains a true and complete list
of Company's and the Company Subsidiaries' patents, patent applications,
trademarks, trademark applications, trade names, service marks, service xxxx
applications, Internet domain names,
22
Internet domain name applications, copyrights and copyright registrations and
applications all such existing worldwide, owned by Company or a Company
Subsidiary and includes details of all due dates for further filings,
maintenance, payments or other actions falling due within twelve (12) months of
the Effective Date. All of such patents, patent applications, registered
trademarks, and trademark applications, and registered copyrights remain in good
standing with all fees and filings due as of the Effective Date duly made and
the due dates specified in the Company Disclosure Schedule are accurate and
complete.
(c) The Company Intellectual Property consists solely of items and
rights which are: (i) owned by Company or a Company Subsidiary; or (ii)
rightfully used by Company or a Company Subsidiary pursuant to a valid license
(the "Company Licensed Intellectual Property"), the parties and date of each
such license agreement and each material agreement in which Company or any
Company Subsidiary is the licensor or owner of the subject rights in the
agreement being set forth on Schedule 4.13(c) of the Company Disclosure
Schedule. Company or a Company Subsidiary has all rights in Company Intellectual
Property necessary to carry out the current and proposed activities of Company
and the Company Subsidiaries (and, with respect to such Company Intellectual
Property, had all rights necessary to carry out their former activities at the
time such activities were being conducted), including without limitation, to the
extent required to carry out such activities, rights to make, use, reproduce,
modify, adopt, create derivative works based on, translate, distribute (directly
and indirectly), transmit, display and perform publicly, license, rent and lease
and, other than with respect to the Company Licensed Intellectual Property,
assign and sell, the Company Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing or sale of any Company Intellectual Property, now used or offered
or proposed for use, licensing or sale by Company or any Company Subsidiary does
not infringe on any valid claim of any patent, copyright, trademark, service
xxxx, trade name, trade dress or logo, of any Person and does not constitute a
misappropriation of any trade secret. Except as set forth on Schedule 4.13(d),
no claims (i) challenging the validity, effectiveness or ownership by Company or
any Company Subsidiary of any of the Company Intellectual Property, or (ii) to
the effect that the use, distribution, licensing, sublicensing or sale of the
Company Intellectual Property as now used or offered or proposed for use,
licensing, sublicensing or sale by Company or any Company Subsidiary infringes
or will infringe on any intellectual property or other proprietary right of any
Person have been asserted or, to the Best Knowledge of Company, are threatened
by any Person or have been made or threatened by any Person against the
Company's and the Company Subsidiaries' distributors. Except as set forth on
Schedule 4.13(d), to the Best Knowledge of Company, there is no unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property by any third party, employee or former employee. To the Best Knowledge
of Company, Company does not infringe on any patents owned by ITC
Pharmaceuticals, including, without limitation, U.S. Patents Nos. 4,980,281,
5,266,464, 5,688,655, 5,877,007 and the related U.S. and foreign patents.
(e) All Company Intellectual Property which is not licensed-in by
Company or a Company Subsidiary has been solely developed by full time employees
within the scope of his or her employment with the Company or a Company
Subsidiary and under a written employee assignment of inventions agreement. All
employee contribution or participation in the conception and development of the
Company Intellectual Property on behalf of Company and
23
the Company Subsidiaries constitutes work prepared by an employee within the
scope of his or her employment in accordance with applicable federal and state
law that has accorded Company or the Company Subsidiaries ownership of all
tangible and intangible property thereby arising. To the Best Knowledge of
Company, the licensor of any Company Licensed Intellectual Property has a
perfected interest in the intellectual property underlying such Company Licensed
Intellectual Property, except as covered by the License Agreement dated October
27, 1999 between Company and Rockefeller University relating to rPorB
technology.
(f) Except for agreements for Company Licensed Intellectual Property
listed on Schedule 4.05(a), neither Company nor any Company Subsidiary is, or as
a result of the execution or delivery of this Agreement, or performance of
Company's obligations hereunder, will be, in violation of any material license,
sublicense, agreement or instrument to which Company or any Company Subsidiary
is a party or otherwise bound, nor will execution or delivery of this Agreement,
or performance of Company's obligations hereunder, cause the diminution,
termination or forfeiture of any material Company Intellectual Property.
(g) Schedule 4.13(g) of the Company Disclosure Schedule contains a
true and complete list of all of the internally-developed software programs of
Company and the Company Subsidiaries (the "Company Software Programs"). Company
or a Company Subsidiary owns full and unencumbered right and good, valid and
marketable title to such Company Software Programs and all material Company
Intellectual Property free and clear of all mortgages, pledges, liens, security
interests, conditional sales agreements or encumbrances.
(h) The source code and system documentation relating to the Company
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by Company and the Company Subsidiaries only to
employees on a need to know basis in connection with the performance of their
duties to Company, and (iii) to the Company's Best Knowledge, have not been
disclosed to any third party.
(i) The Company Software Programs (i) have been designed to ensure
year 2000 compatibility, which includes, but is not limited to, being able to
provide specific dates and calculate spans of dates within and between twentieth
century and twenty-first century, prior to, including and following January 1,
2000; (ii) operate and will operate in accordance with their specifications and
correctly process day and date calculations for dates prior and up to December
31, 1999, and on and after January 1, 2000, prior to, during and after the
calendar year 2000; and (iii) shall not end abnormally or provide invalid or
incorrect results as a result of date data, specifically including date data
which represents or references different centuries or more than one century.
(j) Except as set forth in the Company Disclosure Schedule, neither
Company nor any Company Subsidiary owes any outstanding or past due royalties or
other payments to third parties in respect of Company Licensed Intellectual
Property. All royalties or other payments set forth in the Company Disclosure
Schedule that have accrued prior to the Effective Date have been paid.
(k) To the Company's Best Knowledge, the Company Software Programs
contain no "viruses". For the purposes of this Agreement, "virus" means any
computer code
24
intentionally designed to disrupt, disable or harm in any manner the operation
of any software or hardware.
SECTION 4.14 Taxes.
(a) Company and each of Company Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Company or any
Company Subsidiary is or has been a member, have properly completed (in all
material respects) and timely filed all material Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. Company has
provided adequate accruals in accordance with generally accepted accounting
principles in its June 30, 1999 balance sheet contained in the Company Reports
(the "June 1999 Balance Sheet") for any Taxes that were not paid as of June 30,
1999, whether or not shown as being due on any Tax Returns. Company and the
Company Subsidiaries have no material liability for unpaid Taxes accruing after
June 30, 1999 other than Taxes incurred in the ordinary course of business
consistent with past practice or in connection with the transactions
contemplated by this Agreement.
(b) There is (i) no material claim for Taxes that is a lien against
the property of Company or any Company Subsidiary or is being asserted against
Company or any Company Subsidiary other than liens for Taxes not yet due and
payable, (ii) no audit of any Tax Return of Company or any Company Subsidiary
being conducted by a Tax Authority; and (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by Company or any Company
Subsidiary and currently in effect.
(c) None of the losses of the Company or any Company Subsidiary are
presently subject to a limitation on their utilization resulting from an
ownership change under Section 382 of the Code. Any loss carryovers reflected on
the June 1999 Balance Sheet are properly computed and reflected in all material
respects.
(d) Except as set forth on Schedule 4.14(d) of the Company Disclosure
Schedule, Company and the Company Subsidiaries have not been and will not be
required to include any material adjustment in taxable income for a Tax period
(or portion thereof) beginning after the Effective Time pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions, events or accounting methods employed prior to the
Arrangement.
(e) Neither Company nor any Company Subsidiary has filed or will file
prior to the Effective Date any consent to have the provisions of Section
341(f)(2) of the Code (or comparable provisions of any state Tax laws) apply to
Company or any Company Subsidiary.
(f) Neither Company nor any Company Subsidiary is a party to any Tax
sharing or Tax allocation agreement nor does Company or any Company Subsidiary
have any liability or potential liability to another party under any such
agreement.
(g) Neither Company nor any Company Subsidiary has filed any
disclosures under Section 6662 of the Code or comparable provisions of state,
local or foreign law to prevent the imposition of penalties with respect to any
Tax reporting position taken on any Tax Return.
25
(h) Neither Company nor any Company Subsidiary has ever been a member
of a consolidated, combined or unitary group of which Company was not the
ultimate parent corporation.
(i) Company and each Company Subsidiary has in its possession
receipts or other evidence of payment for any Taxes paid to foreign Tax
authorities. Neither Company nor any Company Subsidiary has ever been a
"personal holding company" within the meaning of Section 542 of the Code or a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
SECTION 4.15 Insurance. Company and each Company Subsidiary is
presently insured, and during each of the past five calendar years has been
insured, against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of
fire, theft, liability and other insurance maintained with respect to the assets
or businesses of Company and Company Subsidiaries provide reasonably adequate
coverage against loss. Company has heretofore furnished to Parent a complete and
correct list as of the date hereof of all insurance policies maintained by
Company or the Company Subsidiaries, and has made available to Parent complete
and correct copies of all such policies, together with all riders and amendments
thereto. All such policies are in full force and effect and all premiums due
thereon have been paid to the date hereof and will be paid as of the Effective
Date. Company and the Company Subsidiaries have complied in all material
respects with the terms of such policies.
SECTION 4.16 Properties. Company and the Company Subsidiaries have
good and valid title, free and clear of all Encumbrances, except for Permitted
Encumbrances as listed on Schedule 4.16 of the Company Disclosure Schedule, to
all their properties and assets, whether tangible or intangible, real, personal
or mixed, reflected in the Company's consolidated financial statements contained
in the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1999 as being owned by Company and the Company Subsidiaries as of the date
thereof, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements and (iii) liens arising in the ordinary course of business after the
date of such financial statements. All buildings, and all fixtures, equipment
and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Company or any Company
Subsidiary are held under valid instruments enforceable in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general principles
of equity (whether applied in a proceeding in law or equity). Substantially all
of Company's and the Company Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 4.17 Affiliates. Schedule 4.17 of the Company Disclosure
Schedule sets forth the names and addresses of each Person who is, in Company's
reasonable judgment, an affiliate (as such term is used in Rule 145 under the
Securities Act).
26
SECTION 4.18 Opinion of Financial Advisor. Xxxxxx Xxxxxxx & Co.
Incorporated ("Company Financial Advisor") has delivered to the board of
directors of Company its opinion to the effect that the consideration to be
received under the Arrangement by the holders of Company Common Shares is fair
to such holders from a financial point of view.
SECTION 4.19 Brokers.
(a) No broker, finder or investment banker (other than the Company
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the Arrangement based upon arrangements made by or
on behalf of Company.
(b) Attached hereto as Schedule 4.19(b) of the Company Disclosure
Schedule are true, complete and correct copies of all agreements between Company
and the Company Financial Advisor. Other than as attached hereto as Schedule
4.19(b) of the Company Disclosure Schedule, there are no other agreements
between Company and the Company Financial Advisor.
SECTION 4.20 Certain Business Practices. Neither Company nor any
Company Subsidiary nor any directors, officers, agents or employees of Company
or any Company Subsidiary (in their capacities as such) has (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity or (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.
SECTION 4.21 Business Activity Restriction. Except as set forth in
Schedule 4.21 of the Company Disclosure Schedule, there is no non-competition or
other similar agreement, commitment, judgment, injunction, order or decree to
which Company or any Company Subsidiary is a party or subject to that has or
could reasonably be expected to have the effect of prohibiting or impairing the
conduct of business by Company. Company has not entered into any agreement under
which Company is restricted from selling, licensing or otherwise distributing
any of its technology or products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
SECTION 4.22 WARN Act. Since the enactment of the Worker Adjustment
and Retraining Notification Act of 1988 ("WARN Act"), none of Company or any of
the Company Subsidiaries has effectuated (i) a plant closing as defined in the
WARN Act affecting any site of employment or one or more operating units within
any site of employment of Company or any Company Subsidiary, or (ii) a mass
layoff as defined in the WARN Act affecting Company or any Company Subsidiary,
nor has Company or any Company Subsidiary been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law. None of the employees of Company
or any Company Subsidiary has suffered an employment loss as defined in the WARN
Act during the ninety-day period prior to the Effective Date.
SECTION 4.23 FDA Matters. Except as set forth on Schedule 4.23 of the
Company Disclosure Schedule, Company and each of the Company Subsidiaries is in
27
compliance with all statutes, rules and regulations of the U.S. Food and Drug
Administration or similar United States or foreign governmental authority
("FDA") with respect to the manufacturing of all of its products, to the extent
that the same are applicable to Company's and each of the Company Subsidiaries'
business as it is currently conducted. Company and each of the Company
Subsidiaries adheres to "Good Laboratory Practices" and "Good Clinical
Practices," as required by the FDA. Company and each of the Company Subsidiaries
has all requisite FDA permits, approvals or the like to conduct Company's and
each of the Company Subsidiaries' business as it is currently conducted. Company
has previously delivered to Parent an index of all information concerning all
Investigational New Drug Applications obtained by the Company and each of the
Company Subsidiaries from the FDA or required in connection with the conduct of
the Company's and each of the Company Subsidiaries' business as it is currently
conducted and has made all such information available to Parent. Except as set
forth on Schedule 4.23 of the Company Disclosure Schedule, there are no pending
or threatened actions, proceedings or complaints by the FDA which would prohibit
or impede the conduct of the Company's or each of the Company Subsidiaries'
business as it is currently conducted. Section 4.23 of the Company Disclosure
Schedule contains a list of all communications between the Company and each of
the Company Subsidiaries and the FDA from January 1, 1995 through the date
hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUIRECO
Each of Parent and Acquireco hereby represents and warrants to
Company, subject to the exceptions specifically disclosed in the Parent
Disclosure Schedule, all such exceptions to be referenced to a specific
representation set forth in this Article V, that:
SECTION 5.01 Organization and Qualification; Subsidiaries.
(a) Each of Parent and Acquireco has been duly organized and is
validly existing and in good standing (to the extent applicable) under the laws
of the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted. Each of Parent and Acquireco is duly
qualified or licensed to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that may not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
(b) Schedule 5.01 of the Parent Disclosure Schedule sets forth, as of
the date of this Agreement, a true and complete list of each subsidiary of
Parent that is a "Significant Subsidiary" as defined in Regulation S-X under the
Exchange Act.
28
SECTION 5.02 Certificate of Incorporation and Bylaws. The copies of
each of Parent's and Acquireco's certificate of incorporation and bylaws
previously provided to Company by Parent are true, complete and correct copies
thereof. Such certificates of incorporation and bylaws are in full force and
effect, unamended as of the date hereof. Parent is not in violation of any of
the provisions of its certificate of incorporation or bylaws.
SECTION 5.03 Capitalization. The authorized capital stock of Parent
consists of 350,000,000 shares of Parent Common Stock and 100,000,000 shares of
preferred stock, no par value per share ("Parent Preferred Stock"), including
3,500,000 shares of Series A Junior Participating Stock, no par value per share.
As of September 30, 1999 (i) 294,363,251 shares of Parent Common Stock were
issued and outstanding, (ii) 7,662,187 shares of Parent Common Stock were held
in the treasury of Parent, (iii) no shares of Parent Preferred Stock were issued
and outstanding, and (iv) 27,070,672 shares of Parent Common Stock were reserved
for future issuance pursuant to outstanding options and warrants to purchase
Parent Common Stock. The authorized capital stock of Acquireco consists of
100,000 shares without nominal or par value, one share of which is issued and
outstanding, fully paid and nonassessable and is owned by Parent.
SECTION 5.04 Authority. Each of Parent and Acquireco has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each of
Parent and Acquireco, and the consummation by Parent and Acquireco of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Parent or Acquireco are necessary to authorize this Agreement or to consummate
such transactions (other than the filing and certification of the Articles of
Arrangement as required by the CBCA and receipt of the Final Order). This
Agreement has been duly executed and delivered by each of Parent and Acquireco
and, assuming the due authorization, execution and delivery by Company,
constitutes a legal, valid and binding obligation of each of Parent and
Acquireco, enforceable against Parent and Acquireco in accordance with its
terms, except to the extent that enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
SECTION 5.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Acquireco does not, and the performance by Parent and Acquireco of their
obligations hereunder and the consummation of the transactions contemplated
hereby will not, (i) conflict with or violate any provision of the certificate
of incorporation or bylaws of Parent or any equivalent organizational documents
of any Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 5.05(b) have been obtained and
all filings and notifications described in Section 5.05(b) have been made,
conflict with or violate any Law applicable to Parent or any other Parent
Subsidiary or by which any property or asset of Parent or any Parent Subsidiary
is bound or affected or (iii) result in any breach of or constitute a default
(or an event which with the giving of notice or lapse of time or both could
reasonably be expected to become a default) under, or give to others any right
of termination, amendment, acceleration or
29
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or any Parent Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation that may reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect, or
adversely affect the ability of the parties hereto to consummate, or materially
delay the consummation of, the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by Parent and
Acquireco does not, and the performance by Parent and Acquireco of their
obligations hereunder and the consummation of the transactions contemplated
hereby will not, require any consent, approval, authorization or permit of, or
filing by Parent with or notification by Parent or Acquireco to, any
Governmental Entity, except pursuant to applicable requirements of the Exchange
Act, the Securities Act, Blue Sky Laws, the CBCA, applicable Canadian securities
laws, if any, the rules and regulations of the NYSE, the premerger notification
requirements of the HSR Act, if any, the requirements of the Investment Canada
Act, if any, the requirements of the Competition Act (Canada), if any, and the
filing and certification of the Articles of Arrangement as required by the CBCA.
SECTION 5.06 Absence of Certain Changes or Events. Except as
otherwise set forth on Schedule 5.06 of the Parent Disclosure Schedule, since
September 30, 1999, Parent has conducted its businesses only in the ordinary
course consistent with past practice and, since such date, there has not been
(i) any Parent Material Adverse Effect, (ii) any event that may reasonably be
expected to prevent or materially delay the performance of Parent's obligations
pursuant to this Agreement and the consummation of the transactions contemplated
hereby by Parent, or (iii) any material undisclosed change by Parent in its
accounting methods, principles or practices.
SECTION 5.07 SEC Filings; Financial Statements.
(a) Parent has timely filed all forms, reports, statements and
documents required to be filed by it (A) with the SEC and the NYSE since January
1, 1995 (collectively, together with any such forms, reports, statements and
documents Parent may file subsequent to the date hereof until the Effective
Time, the "Parent Reports") and (B) with any other Governmental Entities. Each
Parent Report (i) was prepared in accordance with the requirements of the
Securities Act, the Exchange Act or the NYSE, as the case may be, and (ii) did
not at the time it was filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each form, report, statement and
document referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the consolidated financial position of Parent and its subsidiaries as at
the respective dates thereof, and their consolidated results of operations,
stockholders' equity and cash flows for the respective periods indicated
therein, except as
30
otherwise noted therein (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Parent and its subsidiaries as of June 30, 1999 as
reported in the Parent Reports, none of Parent or any Parent Subsidiary has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with U.S. GAAP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since June 30, 1999.
SECTION 5.08 Brokers. No broker, finder or investment banker (other
than Banc of America Securities (the "Parent Financial Advisor")) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Arrangement based upon arrangements made by or on behalf of Parent.
SECTION 5.09 No Prior Activities. Except for liabilities incurred in
connection with its incorporation or organization, and consummation of this
Agreement and the transactions contemplated hereby, Acquireco has not incurred
any liabilities or obligations, and has not engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person or entity. Acquireco is a wholly owned Subsidiary
of Parent.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Company Pending the Effective
Time. Company agrees that, between the date of this Agreement and the Effective
Time, unless Parent shall otherwise agree in writing, (x) the respective
businesses of Company and the Company Subsidiaries shall be conducted only in,
and Company and the Company Subsidiaries shall not take any action except in,
the ordinary course of business consistent with past practice and (y) Company
shall use reasonable efforts to keep available the services of such of the
current officers, significant employees and consultants of Company and the
Company Subsidiaries and to preserve the current relationships of Company and
the Company Subsidiaries with such of the corporate partners, customers,
suppliers and other Persons with which Company or any Company Subsidiary has
significant business relations in order to preserve substantially intact its
business organization. Without limitation, except as expressly required or
permitted by this Agreement or as set forth on Schedule 6.01, neither Company
nor any Company Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
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(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any
shares of capital stock of Company or any Company Subsidiary of any class,
or securities convertible into or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights of
any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest),
of Company or any Company Subsidiary, other than the issuance of Company
Common Shares pursuant to the exercise of stock options or warrants
therefor outstanding as of the date of this Agreement or (ii) any material
property or assets of Company or any Company Subsidiary (including, without
limitation, Company Intellectual Property) except (A) transactions pursuant
to existing contracts, and (B) dispositions, leases or licenses of
inventory in the ordinary course of business consistent with past practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or Person or any
division thereof, other than the purchase of assets in the ordinary course
of business consistent with past practice; (ii) incur any indebtedness for
borrowed money (other than indebtedness with respect to working capital in
amounts consistent with past practice and indebtedness incurred pursuant to
the Interim Financing Documents) or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any Person (other than a Company Subsidiary) for
borrowed money or make any loans or advances material to the business,
assets, liabilities, financial condition or results of operations of
Company and the Company Subsidiaries, taken as a whole; (iii) terminate,
cancel or request any material change in, or agree to any material change
in, any Material Contract; (iv) make or authorize any capital expenditures,
other than capital expenditures that are not, in the aggregate, in excess
of $500,000 for Company and the Company Subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this Section
6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except that any Company Subsidiary may pay
dividends or make other distributions to Company or any other Company
Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock except
repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option
or purchase agreements in effect on the date hereof;
(f) amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted under the Company
Stock Plans or authorize cash payments in exchange for any Company Stock
Options granted under any of such plans;
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(g) amend the terms of, repurchase, redeem or otherwise acquire,
or permit any Company Subsidiary to repurchase, redeem or otherwise
acquire, any of its securities or any securities of any Company Subsidiary;
(h) increase the compensation payable or to become payable to
its directors, officers, consultants or employees, grant any rights to
severance or termination pay to, or enter into any employment or severance
agreement which provides benefits upon a change in control of Company that
would be triggered by the Arrangement with, any director, officer,
consultant or other employee of Company or any Company Subsidiary who is
not currently entitled to such benefits from the Arrangement, establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer, consultant or employee of Company or any Company
Subsidiary, except to the extent required by applicable Law or the terms of
a collective bargaining agreement, or enter into or amend any contract,
agreement, commitment or arrangement between Company or any Company
Subsidiary and any of Company's directors, officers, consultants or
employees; provided, however, that notwithstanding the foregoing, Company
may, after consultation with Parent, provide additional benefits (including
increases in compensation or bonuses) to key employees to the extent
reasonably necessary to retain such employees until the Effective Date, so
long as such payments may not reasonably be expected to result in a
material change to Company's present or future performance from the
performance set forth in the Company Projections;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of claims,
liabilities or obligations (A) in the ordinary course of business and
consistent with past practice or (B) claims, liabilities or obligations
reflected on the June 1999 Balance Sheet or (C) as otherwise set forth on
Schedule 6.01 of the Company Disclosure Schedule;
(j) except as required by any Governmental Entity, make any
change with respect to Company's accounting policies, principles, methods
or procedures, including, without limitation, revenue recognition policies,
other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any
action which would make any of the representations or warranties of Company
contained in this Agreement untrue or incorrect or prevent Company from
performing or cause Company not to perform its covenants hereunder or
result in any of the conditions to the Arrangement set forth herein not
being satisfied.
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SECTION 6.02 Notices of Certain Events. Each of Parent and Company
shall give prompt notice to the other of (i) any notice or other communication
from any Person alleging that the consent of such Person is or may be required
in connection with the Arrangement; (ii) any notice or other communication from
any Governmental Entity in connection with the Arrangement; (iii) any actions,
suits, claims, investigations or proceedings commenced or, to its Best
Knowledge, threatened against, relating to or involving or otherwise affecting
Parent or Acquireco, or Company or the Company Subsidiaries, respectively,
which, if pending on the date hereof, would have been required to have been
disclosed in this Agreement, or that relate to the completion of the
Arrangement; (iv) the occurrence of a default or event that, with the giving of
notice or lapse of time or both, will become a default under any Material
Contract; and (v) any change that may reasonably be expected to have a Company
Material Adverse Effect or Parent Material Adverse Effect or to delay or impede
the ability of either Parent or Company, respectively, to perform their
respective obligations pursuant to this Agreement, the Plan of Arrangement or to
effect the completion of the Arrangement.
SECTION 6.03 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Company or any of the Company
Subsidiaries is a party or pursuant to applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules a party hereto is required to comply, from the date of this Agreement to
the Effective Time, Company shall (and shall cause the Company Subsidiaries to)
(i) provide to Parent (and its officers, directors, employees, accountants,
consultants, legal counsel, financial advisors, agents and other representatives
(collectively, "Representatives")) access at reasonable times upon prior notice
to the officers, employees, agents, properties, offices and other facilities of
Company and the Company Subsidiaries, and to the books and records thereof, and
(ii) furnish promptly such information concerning the business, properties,
contracts, assets, liabilities and personnel of Company and the Company
Subsidiaries as Parent or its Representatives may reasonably request. No
investigation conducted pursuant to this Section 6.03 shall affect or be deemed
to modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to the information disclosed
pursuant to this Section 6.03.
SECTION 6.04 No Solicitation of Transactions. Company shall not,
directly or indirectly, and shall cause its Representatives not to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
or disclosing nonpublic information) any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
shareholders) that constitutes, or may reasonably be expected to lead to, any
Company Competing Transaction, or (ii) knowingly encourage or otherwise enter
into or maintain or continue discussions or negotiate with any Person with
respect to such inquiries or to obtain a Company Competing Transaction, or agree
to or endorse any agreement, arrangement or understanding with respect to any
Company Competing Transaction, or authorize or permit any of Company's
Representatives or the Company Subsidiaries, or any Representative retained by
the Company Subsidiaries, to take any such action; provided, however, that
nothing contained in
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this Section 6.04 shall prohibit the board of directors of Company (i) from
complying with Rule 14d-9 or 14e-2(a) promulgated under the Exchange Act with
regard to a tender or exchange offer not made in violation of this Section 6.04,
or (ii) prior to receipt of the approval by the shareholders of Company of the
filing of any Articles of Arrangement and any other matters incidental to the
Arrangement from providing information (subject to a confidentiality agreement
at least as restrictive as the Confidentiality Agreement) in connection with,
and negotiating, another unsolicited, bona fide written proposal regarding a
Company Competing Transaction that (x) Company's board of directors shall have
concluded in good faith, after considering applicable Law, on the advice of
independent outside counsel of nationally recognized reputation, that failure to
take such action would reasonably be expected to be a breach of the Company's
board of directors' fiduciary duties to Company's shareholders under applicable
Law, (y) if any cash consideration is involved, shall not be subject to any
financing contingency, and with respect to which Company's board of directors
shall have determined in the proper exercise of its fiduciary duties to
Company's shareholders that the acquiring party is capable of consummating such
Company Competing Transaction on the terms proposed, and (z) Company's board of
directors shall have determined (based upon the opinion of Company's independent
financial advisors of nationally recognized reputation) in the proper exercise
of its fiduciary duties to Company's shareholders that such Company Competing
Transaction provides greater value to the shareholders of Company than the
Arrangement (and Company's independent financial advisors of nationally
recognized reputation opine in writing that such Company Competing Transaction
is superior from a financial point of view) (any such Company Competing
Transaction being referred to herein as a "Company Superior Proposal"). Company
shall notify Parent promptly if any proposal or offer, or any inquiry or contact
with any Person with respect thereto, regarding a Company Competing Transaction
is made. In addition, Company shall notify Parent promptly if at any time the
Company`s board of directors determines that it believes any such proposal
fulfills the requirements of clause (ii) (x), (y) and (z) above. Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Company
Competing Transaction. Company shall not release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which it is a
party.
SECTION 6.05 Control of Operations. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the operations of Company and the Company Subsidiaries prior to the
Effective Time. Prior to the Effective Time, Company shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its operations.
SECTION 6.06 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use reasonable efforts to (i) take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to complete the
Arrangement, (ii) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or Company or any of their respective Subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
completion of the Arrangement, (iii) assist Rockefeller University in perfecting
its title in the Company Licensed Intellectual Property
35
covered by the License Agreement dated October 27, 1993 between Rockefeller
University and Company and relating to the rPorB technology (the "rPorB
Invention") (it being understood that neither Parent nor Company shall be
required to undertake any action that may give rise to a conflict of interest
for Parent or Company or any of their respective officers, directors, agents or
advisors), and Company will periodically communicate with Rockefeller University
and report to Parent if Company becomes aware that the U.S. government has
requested Rockefeller convey its title to the U.S. government; (iv) obtain an
agreement from Frost-Nevada Limited Partnership and Ivax Corporation
substantially on the terms set forth in Annex H hereto; and (v) make all
necessary filings, and thereafter make any other required or appropriate
submissions, including to the Court in connection with the application for the
Interim Order and the Final Order, and with respect to this Agreement and the
Arrangement required under (A) the rules and regulations of the NYSE and the
ASE, (B) the Securities Act, the Exchange Act and any other applicable federal,
state or provincial securities Laws, (C) the HSR Act, the Investment Canada Act
and the Competition Act (Canada), if any, and (D) any other applicable Law. The
parties hereto shall cooperate and consult with each other in connection with
the making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and none
of the parties shall file any such document if any of the other parties shall
have reasonably objected to the filing of such document. No party shall consent
to any voluntary extension of any statutory deadline or waiting period or to any
voluntary delay of the completion of the Arrangement at the behest of any
Governmental Entity without the consent and agreement of the other parties
hereto, which consent shall not be unreasonably withheld or delayed.
(b) Each of Company and Parent will give (or will cause their
respective Subsidiaries to give) any notices to third Persons, and use, and
cause their respective Subsidiaries to use, reasonable efforts to obtain any
consents from third Persons necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including, but not limited to,
those consents and approvals set forth on Schedule 8.03(f) of the Company
Disclosure Schedule.
(c) (c) The parties acknowledge that Parent and Acquireco have
entered into this Agreement with the understanding that U.S. federal income
taxes payable by reason of the election under Section 338(g) of the Code will be
eligible to be creditable in Canada against Canadian federal income taxes
payable with respect to the period beginning on the Effective Date, including,
without limitation, any gain recognized under the Laws of Canada by reason of
(i) the transactions contemplated in connection with this Agreement and(ii) the
domestication of Company into a Delaware corporation. In this regard, Company
has filed an application for an advance income tax ruling on or about November
8, 1999 (the "Ruling Application") with the Canada Customs and Revenue Agency
("Revenue Canada"). The parties agree to cooperate with each other and provide
such information, documents and other material as may be necessary to obtain the
rulings requested in the Ruling Application confirming the anticipated tax
consequences and use their reasonable efforts, for a period not to exceed thirty
(30) days after the failure to receive such favorable rulings, to mutually agree
on a plan to restructure the transactions contemplated in connection with the
Agreement to achieve substantially similar tax and economic consequences to the
parties as if such a ruling had been obtained.
36
(d) Upon the request of Company prior to the Effective Date, Parent
will request its board of directors to provide additional funding to Company on
commercially reasonable terms, if and only if, at the time of Company's request,
(i) there shall have occurred a delay in the consummation of the transactions
contemplated by this Agreement, (ii) Company shall not have breached any
representation, warranty or covenant of this Agreement in any material respect,
and (iii) there shall not have been any change in Company's present or future
performance from the performance set forth in the Company Projections, it being
understood that any decision by Parent's board of directors with respect to such
funding shall be wholly within the board's discretion.
SECTION 6.07 Additional Reports. Company and Parent shall each
furnish to the other copies of any reports of the type referred to in Sections
4.07 and 5.07, which it files with the SEC on or after the date hereof, and
Company and Parent, as the case may be, covenant and warrant that as of the
respective dates thereof, such reports will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any unaudited consolidated interim
financial statements included in such reports (including any related notes and
schedules) will fairly present the financial position of Company and its
consolidated Subsidiaries or Parent and its consolidated Subsidiaries, as the
case may be, as of the dates thereof and the results of operations and changes
in financial position or other information including therein for the periods or
as of the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and U.S. GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).
SECTION 6.08 Company Stock Plans and Warrants. Company shall, prior
to the Effective Time, amend the Company Stock Plans and Company Warrants and
shall use reasonable efforts to amend the agreements governing the Company Stock
Options and Company Warrants (to the extent required) in order to effectuate the
transactions contemplated by this Agreement and shall use reasonable efforts to
obtain any shareholder consents required in connection therewith.
SECTION 6.09 United Kingdom Filings.
(a) Company shall use reasonable efforts (i) to submit a Marketing
Authorization Application to the MCA by January 21, 1999 in order for the
Medicines Control Agency ("MCA") to prepare the assessment report of NeisVac-C,
the Company's group C meningococcal vaccine, (ii) to obtain the regulatory
approvals for NeisVac-C necessary to perform its obligations under the Supply
Agreement on or before Xxxxx 0, 0000, (xxx) to manufacture, fill and prepare for
shipping such number of doses of NeisVac-C as shall equal the minimum
requirements for delivery for the months of April and May, 2000 under the Supply
Agreement prior to April 1, 2000, and (iv) to ensure that it is not prohibited
by U.S. governmental authorities from exporting NeisVac-C on or before April 1,
2000, provided, however, that the dates above may be subject to change based
upon the request of the regulatory authorities and not through any fault of the
Company.
37
(b) Parent shall use commercially reasonable efforts to assist
Company in preparation of the product license application described in paragraph
(a) of this Section 6.10, at no cost or expense to Company. Parent shall not be
liable to Company for any actions taken pursuant to this Section 6.10(b), except
for any liability resulting from Parent's gross negligence or willful
misconduct, nor shall Parent's conduct under this Section 6.10(b) excuse or
constitute a waiver of the failure to satisfy any closing condition set forth in
Article VIII, unless such failure is directly the result of Parent's gross
negligence or willful misconduct hereunder.
SECTION 6.10 Company Indebtedness.
As promptly as practicable after the Effective Date, Parent and
Company shall purchase the Company's outstanding (i) 6.5% Convertible
Subordinated Notes due May 1, 2003 pursuant to the terms of the Indenture dated
as of May 7, 1996 between Company and Marine Midland Bank, as Trustee, and (ii)
4.5% Convertible Secured Notes due November 13, 2003 pursuant to the terms of
the Indenture dated as of November 12, 1998 between Company and Bankers Trust
Company, as Trustee.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and shall file with the SEC a document
or documents that will constitute (i) the prospectus forming part of the
registration statement on Form S-4 of Parent (together with all amendments
thereto, the "Registration Statement"), in connection with the registration
under the Securities Act of Parent Common Stock to be issued to Company's
shareholders pursuant to the Arrangement and (ii) the proxy statement with
respect to the Arrangement (the "Proxy Statement") relating to the special
meeting of Company's shareholders to be held to consider approval of the
Arrangement Resolution (the "Company Shareholders' Meeting"). Copies of the
Proxy Statement shall be provided to the NYSE and the ASE in accordance with
their respective rules. Each of the parties hereto shall use reasonable efforts
to cause the Registration Statement to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
Registration Statement, the parties hereto shall take all action required under
any applicable Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Arrangement. Parent or Company, as the case may be, shall
furnish all information concerning Parent or Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement and the Proxy Statement. Each of Parent and Company shall
notify the other of the receipt of any comments from the SEC on the Registration
Statement and the Proxy Statement and of any requests by the SEC for any
amendments or supplements thereto or for additional information and shall
provide to each other promptly copies of all correspondence between Parent,
Company or any of their representatives and advisors and the SEC. As promptly as
practicable after the later of the
38
effective date of the Registration Statement or the obtaining of the Interim
Order, the Proxy Statement shall be mailed to the shareholders of Company.
Company shall cause the Proxy Statement to comply as to form and substance in
all material respects with the applicable requirements of (i) the Exchange Act,
(ii) the Securities Act, (iii) applicable Canadian law and (iv) the rules and
regulations of the NYSE and the ASE.
(b) The Proxy Statement shall include (i) the recommendation of the
board of directors of Company to Company's shareholders that they vote in favor
of approval of the Arrangement Resolution and (ii) the opinion of Company
Financial Advisor referred to in Section 4.18; provided, however, that the board
of directors of Company shall submit the Arrangement Resolution to Company's
shareholders whether or not at any time subsequent to the date hereof such board
determines that it can no longer make such recommendation, unless this Agreement
has been terminated in accordance with Article IX.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement shall be made without the approval of Parent and Company,
which approval shall not be unreasonably withheld or delayed. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Arrangement for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) None of the information supplied by Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company, at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, 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 light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Company or any Company
Subsidiary, or their respective officers or directors, should be discovered by
Company that should be set forth in an amendment or a supplement to the
Registration Statement or the Proxy Statement, Company shall promptly inform
Parent. All documents that Company is responsible for filing with the SEC in
connection with the Arrangement will comply as to form in all material respects
with the applicable requirements of the rules and regulations of the Securities
Act, the Exchange Act, applicable Canadian securities law and the CBCA.
(e) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
shall, at the respective times filed with the SEC or other regulatory agency
and, in addition, (A) in the case of the Proxy Statement, at the date it or any
amendments or supplements thereto are mailed to shareholders of Company, at the
time of the Company Shareholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the
39
Effective Time, 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 light of the circumstances under which they are made,
not misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Parent Subsidiary, or their respective
officers or directors, should be discovered by Parent that should be set forth
in an amendment or a supplement to the Registration Statement or the Proxy
Statement, Parent shall promptly inform Company. All documents that Parent is
responsible for filing with the SEC in connection with the Arrangement will
comply as to form in all material respects with the applicable requirements of
the rules and regulations of the Securities Act and the Exchange Act.
SECTION 7.02 Shareholders' Meeting. Company shall call and hold the
Company Shareholders' Meeting as promptly as practicable after the Interim Order
has been issued for the purpose of voting upon the approval of the Arrangement
Resolution pursuant to the Proxy Statement, and Company shall use reasonable
efforts to hold the Company Shareholders' Meeting as soon as practicable after
the date on which the Registration Statement becomes effective. Company shall
use reasonable efforts to solicit from its shareholders proxies in favor of the
approval of the Arrangement Resolution pursuant to the Proxy Statement and shall
take all other action necessary or advisable to secure the vote or consent of
shareholders required by the CBCA or applicable other stock exchange
requirements to obtain such approval. Each of the parties hereto shall take all
other action necessary or, in the opinion of the other parties hereto, advisable
to promptly and expeditiously secure any vote of shareholders required by
applicable Law to effect the Arrangement.
SECTION 7.03 Affiliates. Company will use reasonable efforts to
obtain an executed letter agreement substantially in the form of Annex D (an
"Affiliate Letter") hereto from (i) each Person identified in Schedule 4.17 of
the Company Disclosure Schedule within 15 days following the execution and
delivery of this Agreement and (ii) from any Person who, to the Best Knowledge
of Company, may be deemed to have become an affiliate (as such term is used in
Rule 145 under the Securities Act) of Company after the date of this Agreement
and prior to the Effective Time as soon as practicable after attaining such
status. The foregoing notwithstanding, Parent shall be entitled to place legends
as specified in the Affiliate Letter on the certificates evidencing any of the
Parent Common Stock to be received by (i) any affiliate of Company or (ii) any
Person Parent reasonably identifies (by written notice to Company) as being a
Person who may be deemed an "affiliate" within the meaning of Rule 145
promulgated under the Securities Act, and to issue appropriate stop transfer
instructions to the transfer agent for such Parent Common Stock, consistent with
the terms of the Affiliate Letter, regardless of whether such Person has
executed an Affiliate Letter and regardless of whether such Person's name and
address appear on Schedule 4.17 of the Company Disclosure Schedule.
SECTION 7.04 Directors' and Officers' Indemnification and Insurance.
(a) The provisions with respect to indemnification that are set forth
in the bylaws of the Company shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at any
time prior to the Effective Time were directors, officers, employees or agents
of Company.
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(b) For a period of five years after the Effective Time, Parent shall
use its reasonable efforts to maintain in effect the directors' and officers'
liability insurance policies maintained by Company or shall provide
substantially similar coverage pursuant to policies maintained by Parent,
provided that Company's directors and officers promptly supply Parent with
underwriting information; provided, however, that in no event shall Parent be
required to expend in any one year in excess of 150% of the annual premium
currently paid by Company for such coverage, which current premium amount is set
forth in Schedule 7.04 of the Company Disclosure Schedule, and provided further,
that if the premium for such coverage exceeds such amount, Parent shall purchase
a policy with the greatest coverage available for such 150% of the annual
premium.
(c) If Company or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any Person,
then and in each such case, proper provision shall be made so that the
successors and assigns of Company assume the obligations set forth in this
Section 7.04.
SECTION 7.05 No Shelf Registration. Parent shall not be required to
amend or maintain the effectiveness of the Registration Statement for the
purpose of permitting resale of the shares of Parent Common Stock received
pursuant hereto by the Persons who may be deemed to be "affiliates" of Company
within the meaning of Rule 145 promulgated under the Securities Act.
SECTION 7.06 Public Announcements. Parent and Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Plan of Arrangement and shall
not issue any such press release or make any such public statement without the
prior written approval of the other, except to the extent required by applicable
Law or the requirements of the rules and regulations of the ASE or the NYSE, in
which case the issuing party shall use reasonable efforts to consult with the
other party before issuing any such release or making any such public statement.
SECTION 7.07 NYSE Listing. Parent shall use its reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Arrangement in
accordance with this Agreement and the Plan of Arrangement to be listed on the
NYSE and on each national securities exchange on which shares of Parent Common
Stock may at such time to be admitted for trading or listed, subject to official
notice of issuance, prior to the Effective Time.
SECTION 7.08 Blue Sky. Parent shall use reasonable efforts to obtain
prior to the Effective Time all necessary permits and approvals required under
Blue Sky Laws to permit the distribution of the shares of Parent Common Stock to
be issued in accordance with the provisions of this Agreement.
41
ARTICLE VIII
CONDITIONS
SECTION 8.01 Conditions to the Obligations of Each Party. The
obligations of the parties hereto to complete the Arrangement by filing Articles
of Arrangement to give effect to the Plan of Arrangement are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared effective by
the SEC under the Securities Act and no stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC and not
concluded or withdrawn;
(b) the Plan of Arrangement shall have been duly approved by the
requisite vote of shareholders of Company in accordance with the provisions of
the Interim Order and the CBCA;
(c) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, promulgated or
enforced by any court or Governmental Entity which prohibits or prevents the
completion of the Arrangement which has not been vacated, dismissed or withdrawn
prior to the Effective Time. Company and Parent shall use their reasonable best
efforts to have any of the foregoing vacated, dismissed or withdrawn by the
Effective Time;
(d) any waiting period (and any extension thereof) applicable to the
completion of the Arrangement under the HSR Act or the Competition Act (Canada)
or any other applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all consents, approvals and authorizations legally required to be
obtained to complete the Arrangement shall have been obtained from all
Governmental Entities, except where the failure to obtain any such consent,
approval or authorization may not reasonably be expected to result in a Parent
Material Adverse Effect or a Company Material Adverse Effect;
(f) the board of directors of Company shall not have revoked, amended
or modified, in any adverse respect, its approval of the Arrangement or its
recommendation to Company's shareholders described in Section 7.01(b)(i);
(g) the shares of Parent Common Stock to be issued pursuant to this
Agreement and the Plan of Arrangement shall have been authorized for listing on
the NYSE, subject to notice of issuance;
(h) the Interim Order, in form reasonably satisfactory to Parent,
Acquireco and Company, shall have been received; and
(i) the Final Order, in form reasonably satisfactory to Parent,
Acquireco and Company shall have been received.
42
SECTION 8.02 Conditions to the Obligations of Company. The
obligations of Company to complete the Arrangement by filing Articles of
Arrangement to give effect to the Plan of Arrangement are subject to the
satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained in
this Agreement shall be true, complete and correct in all material respects both
when made and on and as of the Effective Time as if made at and as of the
Effective Time (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and Company shall have received a certificate of an officer of
Parent to such effect;
(b) Parent shall have performed or complied in all material respects
with all covenants required by this Agreement and the Plan of Arrangement to be
performed or complied with by it on or prior to the Effective Time and Company
shall have received a certificate of an officer of Parent to that effect;
(c) there shall have been no Parent Material Adverse Effect since the
date of this Agreement; and
(d) Company shall have received an opinion (i) from Xxxxxx X.
Xxxxxxxx, Xx., Corporate Vice President and General Counsel of Parent,
substantially in the form of Annex E attached hereto and (ii) from Nova Scotia
counsel to Acquireco relating to organization and authority matters.
SECTION 8.03 Conditions to the Obligations of Parent and Acquireco.
The obligations of Parent and Acquireco to complete the Arrangement are subject
to the satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Company contained
in this Agreement shall be true, complete and correct in all material respects
both when made and on and as of the Effective Time as if made at and as of the
Effective Time (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and Parent shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Company to such effect;
(b) Company shall have performed or complied in all material respects
with all covenants required by this Agreement and the Plan of Arrangement to be
performed or complied with by it on or prior to the Effective Time and Parent
shall have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Company to that effect;
(c) there shall have been no Company Material Adverse Effect since
the date of this Agreement;
(d) Parent and Acquireco shall have received an opinion from (i)
Xxxxxx & Xxxxxxxx LLP, special patent counsel to Company, and Sterne, Kessler,
Xxxxxxxxx & Fox P.L.L.C, special patent counsel to Company, substantially in the
form of Annex F, (ii) Xxxxxxxxxxx & Xxxxxxxx LLP, U.S. counsel to Company,
substantially in the form of Annex G-1, (iii) Blake, Xxxxxxx & Xxxxxxx, Canadian
counsel to Company, substantially in the form of
43
Annex G-2 and (iv) an opinion from U.K. counsel to Company to the effect that
the sale of NeisVac-C in the United Kingdom will not infringe a valid claim of
EP Patent 245 045 B1;
(e) the aggregate number of Company Shares held by Persons who have
exercised Dissent Rights with respect to such shares in accordance with the
provisions of the CBCA shall be less than five percent (5%) of the outstanding
Company Shares immediately prior to the Effective Time;
(f) Company shall have obtained all consents, approvals,
authorizations and permits set forth in Schedule 8.03(f) of the Company
Disclosure Schedules;
(g) there shall not have occurred any Default or Event of Default (as
such terms are defined in the Interim Financing Documents) under the Interim
Financing Documents, other than a Default or Event of Default that occurs solely
pursuant to Paragraph 5(h) of the Letter Loan Agreement dated as of November 1,
1999 between Bank of America, N.A. and Company;
(h) Frost-Nevada Limited Partnership and Ivax Corporation shall have
executed and delivered an agreement substantially on the terms set forth in
Annex H hereto;
(i) Company shall have provided Parent with written documentation (i)
that Rockefeller University shall have taken the steps required to retain title
in the rPorB Invention and (ii) that Rockefeller University has not received any
correspondence from the U.S. government requesting title to the rPorB Invention
in accordance with 37CFR401.14; and
(j) subject to Section 6.06(c), Parent and Acquireco shall have
received the favorable rulings from Revenue Canada requested in the Ruling
Application.
SECTION 8.04 Merger of Conditions. The conditions set out in Sections
8.01, 8.02 and 8.03 hereof shall be conclusively deemed to have been satisfied,
waived or released upon the issuance of the certificate of arrangement giving
effect to the Arrangement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Arrangement may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption and approval of the Arrangement by the
shareholders of the Company or the Court, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and Company;
(b) by either Parent or Company, if the Effective Time shall not have
occurred on or before May 31, 2000, unless the Effective Time shall not have
occurred on or before such date solely because the filing of the Articles of
Arrangement has been postponed in accordance with Section 2.05 (provided that
such date shall not be extended more than fifteen (15) trading days);
44
provided, however, that the right to terminate this Agreement under this
Section 9.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have caused, or resulted
in, the failure of the Effective Time to occur on or before such date;
(c) by either Parent or Company, if any Governmental Order, writ,
injunction or decree preventing the completion of the Arrangement shall
have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Parent, if (i) the board of directors of Company
withdraws, modifies or changes its recommendation of this Agreement or the
Arrangement Resolution in a manner adverse to Parent or its stockholders or
shall have resolved to do so, (ii) the board of directors of Company shall
have recommended to the shareholders of Company a Company Competing
Transaction, (iii) Company fails to comply in any respect with Section
6.04; (iv) a Company Competing Transaction shall have been announced or
otherwise publicly known and the board of directors of Company shall have
(A) failed to recommend against acceptance of such by its shareholders
(including by taking no position, or indicating its inability to take a
position, with respect to the acceptance of a Company Competing Transaction
involving a tender offer or exchange offer by its shareholders), (B) failed
to reconfirm its approval and recommendation of the Arrangement Resolution
within 5 Business Days of the first announcement or other public knowledge
of such Company Competing Transaction or (C) determined that such Company
Competing Transaction was a Company Superior Proposal and to take any of
the actions allowed by clause (ii) of the proviso in Section 6.04, or (v)
the board of directors of Company resolves to take any of the actions
described above;
(e) by Parent or Company, if the Arrangement Resolution shall
fail to receive the requisite votes for approval at the Company
Shareholders' Meeting or any adjournment or postponement thereof;
(f) by Parent, 10 days after receipt by Company of a written
notice from Parent of (i) a breach of any representation, warranty,
covenant or agreement in any material respect on the part of Company set
forth in this Agreement, or if any representation or warranty of Company
shall have become untrue, incomplete or incorrect in any material respect,
in either case such that the conditions set forth in Section 8.03 would not
be satisfied, or (ii) the occurrence of a Default or Event of Default (as
such terms are defined in the Interim Financing Documents) under the
Interim Financing Documents (each, a "Terminating Company Breach");
provided, however, that if such Terminating Company Breach is curable by
Company through the exercise of its reasonable efforts within 10 days and
for so long as Company continues to exercise such reasonable efforts,
Parent may not terminate this Agreement under this Section 9.01(f); and
provided, further that the preceding proviso shall not in any event be
deemed to extend any date set forth in paragraph (b) of this Section 9.01;
(g) by Company, 10 days after receipt by Parent of a written
notice from Company of a breach of any representation, warranty, covenant
or agreement in any material respect on the part of Parent set forth in
this Agreement, or if any representation or warranty of Parent shall have
become untrue, incomplete or incorrect in any material respect, in either
case such that the conditions set forth in Section 8.02 would not be
satisfied (a "Terminating Parent Breach"); provided, however, that if such
Terminating Parent Breach is curable by Parent
45
through the exercise of its reasonable efforts within 10 days and for so
long as Parent continues to exercise such reasonable efforts, Company may
not terminate this Agreement under this Section 9.01(g); and provided,
further that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01;
(h) by either Parent or Company, 30 days after receipt of an
unfavorable ruling from Revenue Canada as provided in Section 8.03(j),
unless the parties shall have agreed to a plan to restructure the
transactions contemplated by this Agreement pursuant to Section 6.06(c),
provided, that the terminating party shall have complied with the
provisions of Section 6.06(c);
(i) The right of any party hereto to terminate this Agreement
pursuant to this Section 9.01 will remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any Person controlling any such party or any of their respective
officers, directors, representatives or agents, whether prior to or after
the execution of this Agreement.
SECTION 9.02 Effect of Termination.
(a) Except as provided in Section 9.05, in the event of
termination of this Agreement pursuant to Section 9.01, this Agreement
shall forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any of its Affiliates or any
of its or their officers or directors, and all rights and obligations of
each party hereto shall cease; provided, however, that nothing herein shall
relieve any party hereto from liability for the willful or intentional
breach of any of its representations and warranties or the willful or
intentional breach of any of its covenants or agreements set forth in this
Agreement.
(b) In the event of a termination of this Agreement pursuant to
Section 9.01 (other than pursuant to Section 9.01(g)), paragraphs Seven and
Eight of the Confidentiality Agreement shall automatically terminate and
become null and void, and the rights and obligations contained therein
shall cease.
SECTION 9.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards of
directors at any time prior to the Effective Time; provided, however, that,
after the approval of this Agreement by the shareholders of Company, no
amendment may be made that changes the amount or type of consideration into
which Company Shares will be converted pursuant to this Agreement. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 9.04 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 9.05 Termination Fee; Expenses.
46
(a) Except as set forth in this Section 9.05, all Expenses
incurred in connection with this Agreement and the Arrangement shall be
paid by the party incurring such Expenses, whether or not the Arrangement
is completed, except that Parent and Company each shall pay one-half of all
Expenses incurred solely for printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing
fees incurred in connection with the Registration Statement and the Proxy
Statement, any fees required to be paid under the HSR Act and the
Competition Act (Canada), if any and any fees and expenses payable in
connection with obtaining the Interim Order and the Final Order.
(b) Without limiting any other remedies available to Parent, in
the event that (i) Parent shall terminate this Agreement pursuant to
Section 9.01(d), (ii) this Agreement shall be terminated pursuant to (x)
Section 9.01(b) or (y) Section 9.01(e) as a result of the failure to obtain
the requisite approval of Company's shareholders and, in the case of either
(x) or (y), at the time of such termination or failure to so approve this
Agreement, there shall exist or have been proposed a Company Competing
Transaction with respect to Company, or (iii) Parent shall terminate this
Agreement pursuant to Section 9.01(f) as a result of either a breach of any
covenant contained in this Agreement or an intentional breach of any
representation or warranty contained in this Agreement and, at the time of
such termination, either (A) there shall exist or have been proposed a
Company Competing Transaction with respect to Company or (B) within one
year after such termination, Company shall enter into a definitive
agreement with respect to any Company Competing Transaction or any Company
Competing Transaction involving Company shall be consummated, then, in the
case of (i) or (ii), promptly after such termination or failure to obtain
shareholder approval, or, in the case of (iii), immediately before the
execution and delivery of such agreement or such consummation, Company
shall pay to Parent an amount in cash equal to $14,000,000 plus, in the
case of (i), (ii) or (iii) above (regardless of whether the conditions
contained in (A) or (B) shall have been satisfied), an amount in cash equal
to Parent's Expenses up to $1,000,000 in the aggregate, payable at the time
of such termination or failure to obtain shareholder approval.
(c) Parent and Company agree that the agreements contained in
Section 9.05(b) above are an integral part of the transaction contemplated
by this Agreement and constitute liquidated damages and not a penalty. If
Company fails to pay to Parent any fee due under Section 9.05(b), Company
shall pay the cash and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit of other
legal action, taken to collect payment.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. This Section 10.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
47
SECTION 10.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or facsimile, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier
service to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in
accordance with this Section 10.02):
(a) if to Company:
North American Vaccine, Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to Parent or Acquireco:
Xxxxxx International Inc.
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
48
SECTION 10.03 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Arrangement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner to
the fullest extent permitted by applicable Law in order that the Arrangement may
be completed as originally contemplated to the fullest extent possible.
SECTION 10.04 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties hereto. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
other than Section 7.04, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
SECTION 10.05 Incorporation of Exhibits. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Annexes attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.
SECTION 10.06 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF
ANY LAW OTHER THAN THAT OF NEW YORK.
SECTION 10.07 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08 Specific Performance. In addition to any other
remedies available at law, or in equity, it is agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in New York state
court. In addition, each of the parties hereto (a) consents to commit itself to
the personal jurisdiction of any federal court located in the State of New York
or any New York state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such
49
personal jurisdiction by motion or other request for leave from any court and
(c) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than
federal or state court sitting in the State of New York
SECTION 10.09 Headings; Interpretation. The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
SECTION 10.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 10.11 Entire Agreement. This Agreement (including the
Annexes, the Parent Disclosure Schedule and the Company Disclosure Schedule) and
the Confidentiality Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
XXXXXX INTERNATIONAL INC.
By: /s/ Xxxxxx Glanzmann___________
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Designee
NORTH AMERICAN VACCINE, INC.
By: /s/ Xxxxxxx Chase______________
Name: Xxxxxxx Xxxxx, Ph.D.
Title: Chief Executive Officer
& President
NEPTUNE ACQUISITION CORP.
By: /s/ Xxxxxxxxx Xxxxxx
Name: Xxxxxxxxx Xxxxxx
Title: President
