1
Exhibit 99.1
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
AMONG
GENE LOGIC INC.,
GENE LOGIC ACQUISITION CORP.
AND
ONCORMED, INC.
----------------------
JULY 6, 1998
----------------------
2
TABLE OF CONTENTS
PAGE
ARTICLE 1 DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger of the Company into Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Closing of the Company's Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Exchange of Company Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Stock Subject to Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 Accounting Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Organization; Subsidiaries; Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Proprietary Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Employees; Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.13 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.14 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
i
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.16 Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.17 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.18 Governmental Consents; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.19 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.20 Company Preferred Stock Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.21 No Existing Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.22 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.23 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB . . . . . . . . . . . . . . . . . . . 18
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 Compliance with Legal Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.7 Valid Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.8 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.9 Parent Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.10 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11 Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.13 Governmental Consent; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.15 Interim Operations of Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.16 Parent Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4 COVENANTS; ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Parent Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.2 Company Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ii
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Conduct of the Company's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Conduct by Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.7 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.8 Registration Statement; Prospectus/Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . 29
4.9 Company Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.10 Parent Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.11 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.14 Letter of the Company's Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.15 Company Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.17 Employment or Consulting Agreement and Noncompetition Agreement . . . . . . . . . . . . . . . . 33
4.18 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.19 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.20 Nasdaq Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.21 Blue Sky Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.22 Resignation of Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB . . . . . . . . . . . . . . . . 35
5.1 Representations and Warranties Accurate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.2 Compliance With Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.3 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.4 Effectiveness of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.5 Company Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.6 Parent Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.7 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
iii
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.9 No Governmental Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.10 Other Required Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.11 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . 37
6.1 Representations and Warranties Accurate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Compliance With Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.3 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Effectiveness of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Company Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.6 Parent Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.7 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.8 Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.11 No Governmental Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 No Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4 Entire Agreement; Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.5 Applicable Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.6 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.9 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
iv
6
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of July 6, 1998, by and among GENE LOGIC INC., a
Delaware corporation ("Parent"); GENE LOGIC ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"); and
ONCORMED, INC., a Delaware corporation (the "Company"). Certain capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger
of the Company with and into Merger Sub (the "Merger") in accordance with this
Agreement and the Delaware General Corporation Law (the "DGCL"). Upon
consummation of the Merger, the Company will cease to exist, and Merger Sub
will remain a wholly-owned subsidiary of Parent.
B. This Agreement and the Merger have been unanimously approved
by the respective Boards of Directors of Parent, Merger Sub and the Company.
C. Pursuant to the Merger, among other things, the outstanding
shares of Common Stock of the Company will be converted into shares of Common
Stock of the Parent at the rate provided herein.
D. It is intended that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). For financial reporting purposes, it is
intended that the Merger be accounted for as a "purchase."
AGREEMENT
Parent, Merger Sub and the Company, in consideration of the foregoing
and the mutual covenants and agreements herein contained, and intending to be
legally bound, agree as follows:
ARTICLE 1
DESCRIPTION OF TRANSACTION
1.1 MERGER OF THE COMPANY INTO MERGER SUB. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time
(as defined in Section 1.3), the Company shall be merged with and into Merger
Sub and the separate existence of the Company shall cease. Merger Sub will be
the surviving corporation in the Merger (the "Surviving Corporation") and a
wholly-owned subsidiary of Parent.
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the DGCL.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000, on the second business day following
1.
7
the date as of which each of the conditions set forth in Articles 5 and 6 has
been fulfilled or waived or on such other date as may be mutually agreed upon
by Parent and the Company (the "Closing Date"). Contemporaneously with or as
soon as practicable after the Closing, a properly executed certificate of
merger conforming to the requirements of the DGCL (the "Certificate of Merger")
shall be filed with the office of the Secretary of State of the State of
Delaware. The Merger shall become effective at the time the Certificate of
Merger is filed with the office of the Secretary of State of the State of
Delaware or at such later time as may be specified in the Certificate of Merger
(the "Effective Time"), which shall be no later than the second business day
following the date on which each of the conditions set forth in Articles 5 and
6 has been fulfilled or waived or on such other date as may be mutually agreed
upon by Parent and the Company.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. The Certificate of Incorporation of Merger Sub shall be the
Certificate of Incorporation of the Surviving Corporation as of the Effective
Time. The Bylaws of Merger Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation as of the Effective Time.
The directors and officers of the Surviving Corporation immediately after the
Effective Time shall be the respective individuals set forth on Exhibit C.
1.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger (and
without any action on the part of Parent, Merger Sub, the Company or any
stockholder of the Company (the "Company Stockholders")):
(i) each share of the common stock, $.01 par
value per share, of the Company ("Company Common Stock") and each share of the
6% Series A Convertible Preferred Stock, $.01 par value per share, of the
Company ("Company Preferred Stock") then held by the Company or any subsidiary
of the Company (or held in the Company's treasury) shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor;
(ii) each share of Company Common Stock and
Company Preferred Stock then held by Parent or Merger Sub shall be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor;
(iii) except as provided in clauses (i) and (ii)
above and subject to Sections 1.5(c) and 1.5(d), each share of Company Common
Stock then outstanding shall be converted into the right to receive (A) one
share of the common stock, $.01 par value per share, of Parent ("Parent Common
Stock"), multiplied by (B) the Exchange Ratio (as defined in Section
1.5(b)(ii)); and
(iv) each share of the common stock, par value
$.01 per share, of Merger Sub then outstanding shall remain outstanding.
2.
8
(b) For purposes of this Agreement:
(i) The term "Total Merger Shares" shall mean
the whole number of shares of Parent Common Stock equal to (A) $33,221,235,
divided by (B) $6.85, which shall initially equal 4,849,815; provided, however,
that in the event the average closing price of the Parent's Common Stock as
reported on the Nasdaq National Market System (the "Nasdaq NMS") for the
fifteen (15) trading days ending the second day prior to the day of the Parent
Stockholders' Meeting (as defined in Section 4.10(a)) called for the purpose of
approving the Merger (the "Closing Price") is more than $7.88, then Total
Merger Shares shall equal (x) $38,204,420, divided by (y) the Closing Price.
(ii) The term "Exchange Ratio" shall mean a
fraction (as may be adjusted in accordance with Section 1.5(c)) equal to (A)
the Total Merger Shares divided by (B) the number of Outstanding Shares (as
defined in Section 1.5(b)(iii)) outstanding immediately prior to the Effective
Time.
(ii) The term "Outstanding Shares" shall mean, at
the Effective Time, the sum of (A) the total number of outstanding shares of
Company Common Stock, and (B) the total number of shares of Company Common
Stock into which all outstanding Company Preferred Stock is then convertible in
accordance with the Company Certificate of Incorporation.
(c) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock, Company
Preferred Stock or Parent Common Stock are changed into a different number or
class of shares by reason of any stock, cash or property dividend or
distribution, stock split, reverse stock split, reclassification,
recapitalization, or similar transaction, then the Exchange Ratio shall be
appropriately adjusted.
(d) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. In lieu of such fractional shares, any
holder of Company Common Stock or Company Preferred Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, upon surrender of such holder's Company Stock Certificate(s) (as
defined in Section 1.6), be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such fraction
by the closing sales price of a share of Parent Common Stock as quoted on the
Nasdaq NMS on the Closing Date (and if such day is not a trading day, then the
trading day immediately preceding the Closing Date).
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time (a) all shares of Company Common Stock and Company Preferred Stock
outstanding immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist, and holders of certificates
representing shares of Company Common Stock or Company Preferred Stock shall
cease to have any rights as stockholders of the Company; and (b) the stock
transfer books of the Company shall be closed with respect to all shares of
Company Common Stock and Company Preferred Stock outstanding immediately prior
to the Effective Time. No further transfer of any such shares of Company
Common Stock or Company Preferred Stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate
3.
9
previously representing any of such shares of Company Common Stock or Company
Preferred Stock (a "Company Stock Certificate") is presented to the Exchange
Agent (as defined in 1.7(a)) or to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and exchanged as provided in
Section 1.7.
1.7 EXCHANGE OF COMPANY STOCK CERTIFICATES.
(a) Prior to the Closing Date, Parent shall select
ChaseMellon Shareholder Services or another reputable bank or trust company to
act as exchange agent in the Merger (the "Exchange Agent"). Promptly after the
Effective Time, Parent shall deposit with the Exchange Agent (i) certificates
representing the number of shares of Parent Common Stock to be issued to the
Company Stockholders in the Merger and (ii) cash sufficient to make payments in
lieu of fractional shares in accordance with Section 1.5(d). The shares of
Parent Common Stock and cash amounts so deposited with the Exchange Agent,
together with any dividends or distributions received by the Exchange Agent
with respect to such shares, are referred to collectively herein as the
"Exchange Fund."
(b) As soon as practicable after the Effective Time, the
Exchange Agent will mail to the registered holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify (including a provision confirming
that delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent), and (ii) instructions for
use in effecting the surrender of Company Stock Certificates in exchange for
certificates representing Parent Common Stock. Subject to Section 1.5(d), upon
surrender of a Company Stock Certificate to the Exchange Agent for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by the Exchange Agent, (i) the holder of such
Company Stock Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of Parent Common Stock that
such holder has the right to receive pursuant to the provisions of this Article
1, and (ii) the Company Stock Certificate so surrendered shall be canceled.
Until surrendered as contemplated by this Section 1.7, each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive upon such surrender a certificate representing shares
of Parent Common Stock (and cash in lieu of any fractional share of Parent
Common Stock) as contemplated by this Article 1. If any Company Stock
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Exchange Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such holder, until
such holder surrenders such Company Stock Certificate in accordance with
4.
10
this Section 1.7 (at which time such holder shall be entitled to receive all
such dividends and distributions and such cash payment).
(d) Any portion of the Exchange Fund that remains
undistributed to former stockholders of the Company as of the date 270 days
after the Effective Time shall be delivered to Parent upon demand, and any
holders of Company Common Stock who have not theretofore surrendered their
Company Stock Certificates in accordance with this Section 1.7 shall thereafter
look only to Parent for payment of their claims for Parent Common Stock, cash
in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(e) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of shares of Company Common Stock,
Company Preferred Stock or Parent Common Stock with respect to any shares (or
dividends or distributions with respect thereto) or cash amounts comprising the
Exchange Fund which are delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.8 STOCK OPTIONS. Parent shall not assume any option to purchase
capital stock of the Company outstanding at the Effective Time under any stock
option plan or agreement of the Company. The Company has delivered to Parent a
list of all options to purchase capital stock of the Company outstanding under
stock option plans and agreements of the Company (the "Company Options").
Under the terms (as in effect as of the date hereof) of each stock option plan
under which any Company Option was issued and each stock option agreement by
which any Company Option is evidenced, as applicable, in connection with the
Merger, all outstanding Company Options shall automatically accelerate and
become fully exercisable for all of the shares of Company Common Stock subject
to such Company Options and, to the extent such Company Options are not
exercised prior to the Effective Time, shall terminate and cease to remain
outstanding immediately after the Effective Time. The Company shall take all
action that may reasonably be necessary (under the stock option plans pursuant
to which Company Options are outstanding and otherwise) to effectuate the
provisions of this Section 1.8.
1.9 WARRANTS. At the Effective Time, Parent shall assume each
warrant to purchase Company Common Stock then outstanding as set forth on a
list delivered to Parent (the "Company Warrants") in accordance with the terms
(as in effect as of the date hereof) of such Company Warrants. From and after
the Effective Time, (a) each Company Warrant assumed by Parent may be exercised
solely for shares of Parent Common Stock, (b) the number of shares of Parent
Common Stock subject to each Company Warrant shall be equal to the number of
shares of Company Common Stock subject to such Company Warrant immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounding down to
the nearest whole share (with cash, less the applicable exercise price, being
payable for any fraction of a share), (c) the per share exercise price under
each such Company Warrant shall be equal to the per share exercise price under
such Company Warrant divided by the Exchange Ratio, rounding up to the nearest
cent and (d) any restriction on the exercise of any Company Warrant shall
continue in full force and effect and the term, exercisability and other
provisions of such Company Warrant shall otherwise remain unchanged. The
Company shall take all action that may be necessary (under the Company Warrants
and otherwise) to effectuate the provisions of this Section 1.9 and
5.
11
to ensure that, from and after the Effective Time, holders of Company Warrants
have no rights with respect thereto other than those specifically provided
herein.
1.10 STOCK SUBJECT TO CONDITIONS. If any shares of Company Common
Stock or Company Preferred Stock outstanding immediately prior to the Effective
Time are unvested or are subject to a repurchase option, risk of forfeiture or
other condition under any applicable stock purchase agreement, restriction
agreement or other agreement with the Company, then (unless such condition
terminates by virtue of the Merger pursuant to the express terms of such
agreement) the shares of Parent Common Stock issued in exchange for such shares
of Company Common Stock or Company Preferred Stock will also be unvested or
subject to the same repurchase option, risk of forfeiture or other condition,
and the certificates evidencing such shares of Parent Common Stock may
accordingly be marked with appropriate legends.
1.11 TAX CONSEQUENCES. For federal income tax purposes, the Merger
is intended to constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code. The parties to this Agreement intend this
Agreement to be treated as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.12 ACCOUNTING CONSEQUENCES. For financial reporting purposes,
the Merger is intended to be accounted for as a "purchase."
1.13 FURTHER ACTION. If at any time after the Effective Time any
further action is determined by Parent to be reasonably necessary or desirable
to carry out the purposes of this Agreement or to vest the Surviving
Corporation with the full right, title and possession of and to all assets,
property, rights, privileges, immunities, powers and franchises of Merger Sub
and the Company, the officers and directors of the Surviving Corporation shall
be fully authorized (in the name of Merger Sub, in the name of the Company and
otherwise) to take such action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the disclosure schedule delivered by the Company to
Parent dated and signed as of the date of this Agreement by the President of
the Company (the "Company Disclosure Schedule"):
2.1 ORGANIZATION; SUBSIDIARIES; CAPITALIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to (i) own and use its
assets in the manner in which its assets are currently owned and used, (ii) to
carry on its business as presently conducted, and (iii) to perform all of its
obligations under all Company Contracts. The Company does not own or hold,
directly or indirectly, any debt or equity securities of, or have any other
interest in, any Entity, and the Company has not entered into any Contract or
otherwise become obligated to acquire any such interest.
6.
12
(b) The Company is qualified to do business as a foreign
corporation and is in good standing under the laws of all jurisdictions where
the nature of its business requires such qualification and where the failure to
be so qualified would have a Material Adverse Effect on the Company.
(c) As of the date of this Agreement, the authorized
capital stock of the Company consists of: 40,000,000 shares of Company Common
Stock, par value $.01 per share, of which, 7,887,300 shares are issued and
outstanding; and 2,000,000 shares of preferred stock, par value $.01 per share,
of which 333 shares have been designated as 6% Series A Convertible Preferred
Stock, 333 of which are issued and outstanding. All the issued and outstanding
shares of Company Common Stock and Company Preferred Stock are validly issued,
fully paid and nonassessable and were issued in compliance with all state and
federal securities laws and all requirements set forth in applicable Contracts.
None of the outstanding shares of Company Common Stock or Company Preferred
Stock is entitled or subject to (i) any preemptive right, right of
participation, right of maintenance or any similar right, or (ii) any right of
first refusal in favor of any Person. There is no Company Contract relating to
the voting or registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or granting any option or similar
right with respect to), any shares of Company Common Stock or Company Preferred
Stock.
(d) As of the date of this Agreement, the Company has
outstanding Company Options to purchase a total of 1,581,042 shares of Company
Common Stock (minus any Company Options exercised on the date hereof), and
outstanding Company Warrants to purchase a total of 1,088,896 shares of Company
Common Stock (minus any Company Warrants exercised on the date hereof). Part
2.1(d) of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, with respect to the Company Options: (i) the name of each optionee;
(ii) the number of shares of Company Common Stock subject to each Company
Option; (iii) the date of grant; (iv) the exercise price; (v) the applicable
vesting schedule(s); and (vi) the particular plan, if any, pursuant to which
such Company Option was granted. Part 2.1(d) of the Company Disclosure
Schedule sets forth, as of the date of this Agreement, each option plan and
agreement under which the Company Options have been granted, and the Company
has delivered to Parent complete and accurate copies of all such plans. Part
2.1(d) of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, with respect to the Company Warrants: (i) the number of shares of
Company Common Stock issuable upon exercise; (ii) the exercise price per share;
and (iii) the expiration date of each Company Warrant. All outstanding Company
Options have been issued under and are evidenced by a stock option agreement
identical to that form of stock option agreement attached hereto as Exhibit D,
except with respect solely to the name of the optionee, the grant date, the
number of shares subject to the Company Option, the vesting schedule and the
exercise price.
(e) Except as set forth above, as of the date of this
Agreement, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no outstanding subscriptions, options,
warrants, stock appreciation right plans, calls, rights, convertible
securities, stockholder rights plans (or similar plans commonly referred to as
"poison pills") or other agreements or commitments of any character relating to
issued or unissued capital stock or other securities of the Company, or
obligating the Company or, to the Company's knowledge, any other Person, to
issue, transfer or sell any shares of the capital stock or other securities of
the
7.
13
Company, (iii) there are no other outstanding securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of the
capital stock or other securities of the Company, and (iv) there is no
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled
to acquire or receive any shares of capital stock or other securities of the
Company.
(f) The Company does not own any Parent Common Stock.
(g) Complete and accurate copies of the Certificate of
Incorporation, including any Certificate of Designation (collectively the
"Company Certificate of Incorporation") and Bylaws (or comparable charter
documents), each as amended to date, of the Company are filed as exhibits to
the Company SEC Documents (as defined in Section 2.2(a)) and have been
delivered to Parent.
2.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent a complete and
accurate copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the Securities and Exchange
Commission ("SEC") on or after December 31, 1995 (the "Company SEC Documents"),
which are all the forms, reports and documents required to be filed by the
Company with the SEC since December 31, 1995. As of the time it was filed with
the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Company SEC
Documents complied in all material respects with the published requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) none of
the Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Each of the financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Documents and the
set of the Company's unaudited interim financial statements as of and for the
three-month period ended March 31, 1998 including the Company's unaudited
balance sheet as of March 31, 1998 (the "March 1998 Balance Sheet") that are
attached to the Company Disclosure Schedule (collectively, the "Company
Financial Statements") (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto and except
that the unaudited interim financial statements included in the Company
Financial Statements are subject to normal year-end audit adjustments which
were not or are not expected to be material in amount and do not contain
footnotes), and (iii) fairly presented the financial position of the Company as
at the respective dates thereof and the results of its operations and cash
flows for the periods indicated.
(c) The unaudited bi-weekly financial statements to be
delivered to Parent pursuant to Section 4.4(a)(v) will be prepared in a manner
consistent with the basis on which the Company Financial Statements were
prepared and will fairly present the financial position of the Company as at
the respective dates thereof and the results of operations and cash flows of
the
8.
14
Company for the periods indicated, except that the unaudited bi-weekly
financial statements will be subject to normal year-end audit adjustments and
will not contain footnotes.
(d) The Company has previously furnished to Parent a
complete and accurate copy of any amendments or modifications that have not yet
been filed with the SEC to agreements, documents or other instruments that have
been filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act.
(e) The Company has no Liabilities, except for (i) any
Liabilities which are set forth in the March 1998 Balance Sheet or disclosed in
the notes included in the Company Financial Statements, (ii) any Liabilities
which were incurred after March 31, 1998 in the ordinary course of business
consistent with past practice and do not exceed in the aggregate $50,000, or
(iii) other Liabilities which, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect on the
Company.
2.3 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997, there has not been (a) any change, or any development or combination of
changes or developments that has had or would reasonably be expected to have a
Material Adverse Effect on the Company, (b) any damage, destruction or loss of
any of the assets of the Company, whether or not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect on the
Company, (c) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary
course of business) which would be prohibited by Section 4.4(b)(ii), (vi),
(viii), (ix), (x), (xi), (xii) or (xvi) if it were to occur or be effected
between the date of this Agreement and the Effective Time or (d) any
declaration, accrual, set aside or payment of any dividend or distribution by
the Company.
2.4 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of the Company with any Governmental Authority on or before the Closing Date
(i) have been or will be filed on or before the applicable due date (including
any extensions of such due date that expire prior to the Closing Date), and
(ii) have been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on the
Company's Tax Returns to be due on or before the Closing Date have been or will
be paid on or before the Closing Date except for amounts which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) To the knowledge of the Company, the Company Financial
Statements and the financial statements to be delivered to the Company pursuant
to Section 4.4(a)(v) fully accrue all Taxes with respect to all periods through
the dates thereof in accordance with generally accepted accounting principles.
The Company will establish, in the ordinary course of business and consistent
with its past practices, reserves reasonably adequate for the payment of all
Taxes through the Closing Date, except for amounts which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company.
(c) No claim or Legal Proceeding is pending or, to the
knowledge of the Company, has been threatened against or with respect to the
Company in respect of any Tax.
9.
15
There are no unsatisfied liabilities for material Taxes (including liabilities
for interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by the Company
with respect to any material Tax (other than liabilities for Taxes asserted
under any such notice of deficiency or similar document which are being
contested in good faith by the Company and with respect to which adequate
reserves for payment have been established). There are no liens for material
Taxes upon any of the assets of the Company except liens for current Taxes not
yet due and payable. The Company has not entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. The Company has
not been, and will not be, required to include any adjustment in taxable income
for any tax period (or portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(d) To the knowledge of the Company, there is no
agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of the
Company that, considered individually or considered collectively with any other
such Contracts, will, or could reasonably be expected to, give rise directly or
indirectly to the payment of any amount that would not be deductible pursuant
to Section 280G or Section 162 of the Code. The Company is not a party to or
bound by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract.
2.5 PROPRIETARY ASSETS.
(a) The Company owns, or licenses or otherwise possess
legally enforceable rights to use, all Proprietary Assets that are owned by the
Company, or licensed to or otherwise used in the Company's business as
currently conducted (the "Company Proprietary Assets"), except to the extent
that the failure to have such rights has not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Company.
(b) Part 2.5(b) of the Company Disclosure Schedule lists
(i) all patents and patent applications and all registered and unregistered
trademarks, trade names, service marks and copyrights, and all applications
with respect therefor, included in the Company Proprietary Assets, including
the jurisdictions in which each such Company Proprietary Asset has been issued
or registered or in which any application for such issuance and registration
has been filed, (ii) all licenses, sublicenses and other agreements to which
the Company is a party and pursuant to which any Person is authorized to use
any Company Proprietary Asset, (iii) all licenses, sublicenses and other
agreements to which the Company is a party and pursuant to which it is
authorized to use any Proprietary Asset held or used by a third party (other
than "shrink wrap" licenses with respect to commercially available software
programs costing less than $10,000) ("Third Party Proprietary Assets"), and
(iv) a description of any Company Proprietary Asset not disclosed under clauses
(i), (ii) and (iii) above.
(c) To the Company's knowledge, there is no unauthorized
use, disclosure, infringement or misappropriation of any Company Proprietary
Asset, or any Third Party Proprietary Asset to the extent licensed by or
through the Company by any third party, including any employee or former
employee of the Company, except such as would not have a Material
10.
16
Adverse Effect on the Company. The Company has not entered into any agreement
to indemnify any other Person against any charge of infringement of any Company
Proprietary Asset.
(d) The Company is not, and will not be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to any Company Proprietary Asset or Third Party Proprietary Asset,
except for such breaches that would not have a Material Adverse Effect on the
Company.
(e) All patents, registered trademarks, registered service
marks or copyright registrations owned by the Company are valid and subsisting.
Except for actions which would not reasonably be expected to have a Material
Adverse Effect on the Company, the Company (i) is not a party to any Legal
Proceeding which involves a claim of infringement of any Third Party
Proprietary Asset and (ii) has not brought any Legal Proceeding for
infringement of any Company Proprietary Asset or breach of any license or
agreement involving a Company Proprietary Asset against any third party, which
action is continuing. To the Company's knowledge, the manufacture, marketing,
licensing or sale of any Company Proprietary Asset or products does not
infringe any Third Party Proprietary Asset.
(f) The Company has secured agreements with all
consultants and employees who prior to the date of this Agreement contributed
to the creation or development of any Company Proprietary Asset of the rights
to such contributions that the Company does not already own by operation of law
in the form attached hereto as Exhibit E.
(g) The Company has taken all reasonable and appropriate
steps to protect and preserve the confidentiality of all Company Proprietary
Assets not otherwise protected by patents, patent applications or copyrights
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by the Company by or to any third party has been
pursuant to the terms of a written agreement between the Company and such third
party, and all use, disclosure or appropriation of Confidential Information not
owned by the Company has been pursuant to the terms of a written agreement
between the Company and the owner of such Confidential Information, or is
otherwise lawful.
2.6 CONTRACTS.
(a) Except as identified as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 or as an
exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, the Company is not a party to, or bound by, any Material
Company Contract. For purposes of this Agreement, a "Material Company
Contract" shall be deemed to be any Contract filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 or as
an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, and any Contract:
(i) relating to the employment or engagement of,
or the performance of services by, any employee, consultant or independent
contractor in excess of $75,000 per year;
11.
17
(ii) restricting in any manner the Company's
right or ability to (A) compete with any other Person, (B) acquire or transfer
any product, technology or other asset from or to any other Person, or (C)
develop or distribute any Company Proprietary Asset;
(iii) that (A) provides for the receipt or
expenditure by the Company of cash or other consideration in excess of $25,000;
(B) relates to the performance of services by or on behalf of the Company
having a value in excess of $25,000; (C) was entered into outside the ordinary
course of business; or (D) is material and cannot be terminated by the Company
without penalty with 30 days notice or less;
(iv) relating to the acquisition, issuance or
transfer of any securities;
(v) creating or relating to the creation of any
Encumbrance with respect to any of the Company Proprietary Assets or other
assets having a value in excess of $25,000;
(vi) involving or incorporating any guaranty,
pledge, performance, completion bond, indemnity or contribution or surety
arrangement; or
(vii) creating or relating to any partnership,
joint venture, research or development collaboration, license agreement, or any
other Contract by which the Company is obligated or has the right to share any
revenues, profits, losses, costs or Liabilities.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, all Material Company Contracts
are in full force and effect and are enforceable against the Company and, to
the Company's knowledge, are enforceable against the other parties thereto,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to the
availability of specific performance, injunctive relief, or by general
equitable principles, and to the extent any indemnification or contribution
provisions thereof may be limited by applicable federal or state securities
laws. The Company has not breached, nor has the Company received in writing
any claim or threat that it has breached, in any material respect, and no
default has occurred under any of the Material Company Contracts and, to the
Company's knowledge, (i) none of the other contracting parties has violated or
breached, and no default has occurred under any of the Material Company
Contracts, and (ii) other than the transactions contemplated hereby, no event
has occurred, and no circumstance or condition exists which with the giving of
notice or the lapse of time, or both, will, or could reasonably be expected to,
result in a violation, breach or default under any Material Company Contract or
give any Person the right to cancel, terminate or modify any Material Company
Contract. To the Company's knowledge, the Company's relationship with each
other party under a Material Company Contract, including, without limitation,
Xxxxx-Xxxxxxx Xxxxx, Schering-Plough, Merck and Onyx Pharmaceuticals, Inc., is
good. To the Company's knowledge, no party to a Material Company Contract
currently in effect has given notice to the Company of intent to terminate such
Material Company Contract in a way that would have a Material Adverse Effect on
the Company. The Company has provided to Parent or Parent's counsel true and
complete copies of each of the Material Company Contracts. Consummation of the
transactions contemplated by this Agreement and each other
12.
18
agreement to be entered into by the Company in connection herewith will not
(and will not give any Person a right to) cancel, terminate or modify any
material rights of, or accelerate or increase any material obligation of, the
Company under any Material Company Contract.
(c) The Company possesses all material Governmental
Authorizations which are required in order to operate its business as presently
conducted, and the Company is in compliance in all material respects with all
such Governmental Authorizations. Each such Governmental Authorization is
identified in Part 2.6(c) of the Company Disclosure Schedule. Each such
Governmental Authorization is valid and in full force and effect and will
remain so until consummation of the transactions contemplated by this
Agreement, except where the failure to comply would not have a Material Adverse
Effect on the Company.
(d) Part 2.6(d) of the Company Disclosure Schedule sets
forth a list of all claims made or, to the Company's knowledge, threatened
against the Company under each Material Company Contract presently or
heretofore in effect to the extent such claims, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect on the Company.
2.7 EMPLOYEES; BENEFIT PLANS.
(a) Part 2.7(a) of the Company Disclosure Schedule
identifies each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, medical, life, disability
or other insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or agreement sponsored, maintained, contributed to
or required to be contributed to by the Company for the benefit of any current
or former employee, consultant, officer or director of the Company (other than
those plans, programs and agreements disclosed in the Company SEC Documents and
other than the Company's 401(k) profit sharing plan).
(b) Except as set forth in Part 2.7(a) of the Company
Disclosure Schedule (and except for the Company's 401(k) profit sharing plan),
the Company does not maintain, sponsor or contribute to, and has not at any
time in the past maintained, sponsored or contributed to, any employee pension
benefit plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Merger Subtitles of ERISA) for the benefit of
employees or former employees of the Company.
(c) Each of the plans intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the
Internal Revenue Service, and the Company is not aware of any reason why any
such determination letter should be revoked.
(d) Except as disclosed in the Company SEC Documents,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former employee or director
of the Company (whether or not under any plan), or materially increase the
13.
19
benefits payable under any plan, or result in any acceleration of the time of
payment or vesting of any such benefits.
(e) The Company is in compliance with all applicable Legal
Requirements and Contracts relating to employment, employment practices, wages,
bonuses and terms and conditions of employment, including employee compensation
matters, except where the failure to be in compliance would not have a Material
Adverse Effect on the Company.
2.8 LITIGATION. There is no Legal Proceeding pending or, to the
Company's knowledge, threatened by or before any court or Governmental
Authority that involves the Company or any of the assets owned or used by the
Company. The Company is not a party to any decree, order, writ, injunction,
judgment or arbitration award (or agreement entered into in any Legal
Proceeding) with respect to its properties, assets, personnel or business
activities.
2.9 PROPERTIES.
(a) Part 2.9(a) of the Company Disclosure Schedule sets
forth each lease of real and personal property to which the Company is a party
(the "Leases"). The Company has previously delivered to Parent complete and
accurate copies of all the Leases. Each of the Leases is valid, binding and
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance,
injunctive relief, or by general equitable principles, and to the extent any
indemnification or contribution provisions thereof may be limited by applicable
federal or state securities laws. The Company has not breached, nor has the
Company received in writing any claim or threat that it has breached, in any
material respect, and no default has occurred under any of the Leases and, to
the Company's knowledge, (i) none of the other contracting parties has violated
or breached, and no default has occurred under any of the Leases, and (ii)
other than the transactions contemplated hereby, no event has occurred, and no
circumstance or condition exists which with the giving of notice or the lapse
of time, or both, will, or could reasonably be expected to, result in a
violation, breach or default under any of the Leases or give any Person the
right to cancel, terminate or modify any of the Leases. The Company does not
own any real property.
(b) The Company has, and at all times since June 1, 1995,
has continuously had, in effect fire, casualty, property, comprehensive general
liability including product/completed operations and contractual liability
coverage, and directors and officers insurance policies, with extended coverage
(subject to deductibles), sufficient to allow the Company to replace any of its
properties that might be damaged or destroyed, and reasonably adequate to
protect it and its financial condition against the risks involved in the
business conducted by it. Part 2.9(b) of the Company Disclosure Schedule lists
all such policies. The Company has not done anything by way of action or
inaction which might invalidate any of such policies in whole or in part and
the Company has not received any notice or other indication that any such
policies would be cancelled or that any such policies were no longer in full
force or effect or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
14.
20
2.10 ENVIRONMENTAL MATTERS. To the knowledge of the Company, no
current or prior owner of any property leased or controlled by the Company has
received any notice (in writing or otherwise), whether from a Governmental
Authority, citizens group, employee or otherwise, that alleges that such
current or prior owner or the Company is not in compliance with any
Environmental Law. To the knowledge of the Company, all property that is
leased to, controlled by or used by the Company, and all surface water,
groundwater and soil associated with or adjacent to such property is in clean
and healthful condition and is free of any material environmental contamination
of any nature. For purposes of this Section 2.10: (i) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (ii)
"Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and
any other substance that is now or hereafter regulated by any Environmental Law
or that is otherwise a danger to health, reproduction or the environment.
2.11 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at
all times since December 31, 1995 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company.
2.12 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Documents, since the date of the Company's last proxy statement
filed with the SEC, no event has occurred that would be required to be reported
by the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Part 2.12 of the Company Disclosure Schedule identifies each person who is an
"affiliate," as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act, of the Company ("Company Affiliates"), as of the date of
this Agreement.
2.13 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Company Common Stock and the affirmative vote of the
holders of shares of the Company Preferred Stock (calculated on an as-converted
basis), voting as separate classes, outstanding on the record date for the
Company Stockholders' Meeting (the "Required Company Stockholder Vote") are the
only votes of the holders of any class or series of the Company's capital stock
necessary to adopt and approve this Agreement, the Merger and the other
transactions contemplated by this Agreement.
2.14 COMPANY ACTION. The Board of Directors of the Company (at a
meeting duly called and held) has (a) unanimously determined that the Merger is
in the best interests of the Company and its stockholders, (b) unanimously
approved this Agreement and the Merger in accordance with the provisions of
Section 251 of the DGCL, (c) unanimously recommended the adoption and approval
of this Agreement and the Merger by the stockholders of the Company and
directed that the Merger be submitted for consideration by the Company's
stockholders at the Company Stockholders' Meeting, (d) taken all necessary
steps to render Section 203 of the DGCL inapplicable to the Merger and the
other transactions contemplated by this Agreement
15.
21
and (e) adopted a resolution having the effect of causing the Company not to be
subject, to the extent permitted by applicable law, to any state takeover law
that may purport to be applicable to the Merger and the other transactions
contemplated by this Agreement.
2.15 FAIRNESS OPINION. The Company's Board of Directors has
received the written opinion of Xxxxxxxxx & Xxxxx, financial advisor to the
Company, dated the date of this Agreement, to the effect that the consideration
to be received by the Company Stockholders is fair to the Company Stockholders
from a financial point of view and such written opinion has not been withdrawn
or otherwise modified by Xxxxxxxxx & Xxxxx. The Company has furnished an
accurate and complete copy of said written opinion to Parent.
2.16 FINANCIAL ADVISOR. The Company represents and warrants that,
except for Xxxxxxxxx & Xxxxx, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or any of the other transactions contemplated by this Agreement
based on arrangements made by or on behalf of the Company. A copy of the
Company's agreement with Xxxxxxxxx & Xxxxx has been delivered to Parent.
2.17 ENFORCEABILITY. The Company has all requisite corporate power
and authority to execute, deliver and, subject to obtaining requisite
stockholder approval, to perform its obligations under this Agreement and all
other agreements, documents and instruments contemplated hereby to which it is
or will become a party. The execution and delivery of this Agreement and the
other agreements, documents and instruments contemplated hereby have been duly
and validly authorized by the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company are necessary for the Company
to authorize any of such agreements, documents or instruments and no such
corporate proceedings (other than the approval of the Company Stockholders) are
necessary to enable the Company to consummate the Merger or any of the other
transactions contemplated by this Agreement. All agreements, documents and
instruments to be executed in connection with the Merger (a) have been (or will
be) duly executed and delivered by duly authorized officers of the Company and
(b) constitute (or, when executed by the Company, will constitute) legal, valid
and binding obligations of the Company enforceable against it in accordance
with their terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, as limited by laws
relating to the availability of specific performance, injunctive relief, or by
general equitable principles, and to the extent any indemnification or
contribution provisions thereof may be limited by applicable federal or state
securities laws.
2.18 GOVERNMENTAL CONSENTS; NO CONFLICTS. Except as may be
required by the Exchange Act, the Securities Act, state securities or blue sky
laws, the DGCL, and the NASD bylaws and the rules and regulations of the
American Stock Exchange (as they relate to the S-4 Registration Statement and
the Prospectus/Joint Proxy Statement), there is no requirement applicable to
the Company to make any filing with, or to obtain any permit, authorization, or
Consent of, any Governmental Authority as a condition to the consummation of
the Merger or any of the other transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement and the other agreements,
documents and instruments contemplated hereby by the Company nor the
consummation by the Company of the Merger or any of the other transactions
contemplated by this Agreement will (a) violate the Certificate of
16.
22
Incorporation or Bylaws of the Company, (b) result in a default (or with notice
or lapse of time or both would result in a default) under, or materially impair
the rights of the Company or materially alter the rights or obligations of any
third party under, or require the Company to make any material payment or
become subject to any material liability to any third party under, or give rise
to any right of termination, amendment, cancellation, acceleration, repurchase,
put or call under, any of the terms, conditions or provisions of any Material
Company Contract, (c) result in the creation of any material (individually or
in the aggregate) Encumbrance on any of the assets of the Company or (d)
conflict with or violate any law, statute, rule, regulation, judgment, order,
writ, injunction, decree or arbitration award applicable to the Company or any
of its assets, which conflict or violation has had or would reasonably be
expected to have a Material Adverse Effect on the Company.
2.19 TITLE TO ASSETS. The Company owns, and has good, valid and
marketable title to, or, in the case of leased assets, valid leasehold
interests in, all assets reflected on the March 1998 Balance Sheet. All of
said assets are owned or leased by the Company free and clear of any
Encumbrances, except for (a) any lien for current taxes not yet due and
payable, (b) minor liens that have arisen in the ordinary course of business
and that do not (individually or in the aggregate) materially detract from the
value of the assets subject thereto or would not have a Material Adverse Effect
on the Company, (c) liens described in Part 2.19 of the Company Disclosure
Schedule, and (d) Liabilities reflected in the March 1998 Balance Sheet.
2.20 COMPANY PREFERRED STOCK CONVERSION. Each share of the Company
Preferred Stock is convertible in accordance with the Company Certificate of
Incorporation and each of the holders of Company Preferred Stock has entered
into an agreement with the Company confirming such conversion.
2.21 NO EXISTING DISCUSSIONS. On the date hereof, neither the
Company, nor any Representative of the Company, is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating
to any Acquisition Proposal.
2.22 STOCK OPTIONS. Under the terms (as in effect as of the date
hereof) of each stock option agreement by which any Company Option is
evidenced, in connection with the Merger, all outstanding Company Options shall
automatically accelerate and become fully exercisable for all of the shares of
Company Common Stock subject to such Company Options and, to the extent such
Company Options are not exercised prior to the Effective Time, shall terminate
and cease to remain outstanding immediately after the Effective Time.
2.23 WAIVER. The holders of the Company Preferred Stock have
waived their right to purchase shares of 6% Series B Convertible Preferred
Stock of the Company and their right to require the Company to redeem any of
the outstanding shares of Company Preferred Stock.
2.24 DISCLOSURE.
(a) The copies of all documents furnished by the Company
pursuant to the terms of this Agreement are complete and accurate copies of the
original, as such documents may have been amended to date.
17.
23
(b) The Company has timely filed all required forms,
reports and documents required to be filed with the SEC and the American Stock
Exchange.
(c) None of the representations and warranties of the
Company contained in Article 2 of this Agreement or in any other Article of
this Agreement or the information disclosed in the Company Disclosure Schedule
contains any untrue statement of a material fact or omits 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.
(d) None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in the Form S-4
registration statement to be filed with the SEC by Parent in connection with
the issuance of the Merger Shares (the "S-4 Registration Statement") will, at
the time the S-4 Registration Statement is filed with the SEC or at the time
the S-4 Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in the Prospectus/Joint Proxy
Statement, will, at the time the Prospectus/Joint Proxy Statement is mailed to
the stockholders of the Company or the stockholders of Parent, at the time of
the Company Stockholders' Meeting or the Parent Stockholders' Meeting and as of
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. Notwithstanding the foregoing, no representation or
warranty is made by the Company with respect to statements made about the
Parent or Merger Sub or based on information supplied by Parent or Merger Sub
or any of their representatives which is contained in the S-4 Registration
Statement or the Prospectus/Joint Proxy Statement. The Prospectus/Joint Proxy
Statement will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations promulgated by the SEC
thereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that,
except as set forth in the Parent SEC Documents filed prior to the date of this
Agreement or in the disclosure schedules delivered by Parent to the Company
dated and signed as of that date of this Agreement by an executive officer of
Parent (collectively, the "Parent Disclosure Schedule"):
3.1 ORGANIZATION.
(a) Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Merger Sub has all requisite corporate power and
authority to (i) own and use its assets in the manner in which its assets are
currently owned and used, and (ii) to carry on its business as presently
conducted. Except for Merger Sub, Parent has no subsidiaries.
18.
24
(b) Each of Parent and Merger Sub is qualified to do
business as a foreign corporation and is in good standing under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to be so qualified would have a Material Adverse Effect on
Parent or Merger Sub.
(c) As of the date of this Agreement, the authorized
capital stock of Parent consists of: 60,000,000 shares of Parent Common Stock,
$.01 par value, 14,669,844 shares of which are issued and outstanding; and
10,000,000 shares of Preferred Stock, par value $.01 per share, none of which
are issued and outstanding. As of the date of this Agreement, Parent had
outstanding options to purchase a total of 2,135,821 shares of Parent Common
Stock (minus any Parent Options exercised on the date hereof) under the 1997
Equity Incentive Plan and 2,840,642 shares of Parent Common Stock are reserved
for future grant under the 1997 Equity Incentive Plan. As of the date of this
Agreement, warrants to purchase 93,687 shares of Parent Common Stock (minus any
Parent Warrants exercised on the date hereof) were outstanding. Except as set
forth above and except for 125,000 shares of Parent Common Stock reserved for
issuance pursuant to Parent's Non-employee Directors' Stock Option Plan, 7,500
of which are issued and outstanding, and 250,000 shares of Parent Common Stock
reserved for issuance pursuant to Parent's Employee Stock Purchase Plan, no
shares of which have been issued and are outstanding and 250,000 shares of
which remain available for purchase, there are no shares of capital stock of
Parent authorized, issued or outstanding or any outstanding subscriptions,
options, warrants, stock appreciation rights, calls, rights, convertible
securities or other securities convertible into, exchangeable for, or
evidencing the right to subscriber for, any shares of capital stock of Parent.
All the issued and outstanding shares of Parent Common Stock are validly
issued, fully paid and nonassessable. None of the outstanding shares of Parent
Common Stock is entitled or subject to (i) any preemptive right, right of
participation, right of maintenance or any similar right, or (ii) any right of
first refusal in favor of any Person.
(d) As of the date of this Agreement, the authorized
capital stock of Merger Sub consists of 10,000 shares of Common Stock, par
value $.01 per share, 100 of which are issued and outstanding and are held
beneficially and of record by Parent.
(e) Except as set forth above, as of the date of this
Agreement, (i) there are no shares of capital stock of Parent authorized,
issued or outstanding, (ii) there are no outstanding subscriptions, options,
warrants, stock appreciation right plans, calls, rights, convertible
securities, stockholder rights plans (or similar plans commonly referred to as
"poison pills") or other agreements or commitments of any character relating to
issued or unissued capital stock or other securities of Parent, or obligating
Parent or, to Parent's knowledge, any other Person, to issue, transfer or sell
any shares of the capital stock or other securities of Parent, (iii) there are
no other outstanding securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of the capital stock or other
securities of Parent, and (iv) there is no condition or circumstance that may
give rise to or provide a basis for the assertion of a claim by any Person to
the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of Parent.
(f) Complete and accurate copies of the Certificate of
Incorporation and Bylaws of Parent, and Parent's 1997 Equity Incentive Plan,
1997 Non-employee Directors' Stock Option Plan and Employee Stock Purchase
Plan, each as amended to date, are filed as
19.
25
exhibits to the Parent SEC Documents (as defined in Section 3.2(a)) and have
been delivered to the Company. Complete and accurate copies of the Certificate
of Incorporation and Bylaws of Merger Sub have been delivered to the Company.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company a complete
and accurate copy of each report, schedule, registration statement and
definitive proxy statement filed by Parent with the SEC on or after November
21, 1997 (the "Parent SEC Documents"), which are all the forms, reports and
documents required to be filed by Parent with the SEC since November 21, 1997,
the date of Parent's initial public offering of its Common Stock. As of the
time it was filed with the SEC (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing): (i) each of
the Parent SEC Documents complied in all material respects with the published
requirements of the Securities Act or the Exchange Act, as the case may be; and
(ii) none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Documents (i)
complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto, (ii) was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto and except that the unaudited interim
financial statements are subject to normal year-end audit adjustments which
were not, or are not, expected to be material in amount and do not contain
footnotes), and (iii) fairly presented the financial position of Parent as at
the respective dates thereof and the results of operations and cash flows for
the periods indicated.
(c) Parent has previously furnished to the Company a
complete and correct copy of any amendments or modifications that have not yet
been filed with the SEC but that are required to be filed to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act.
(d) Parent has no Liabilities, except for (i) any
Liabilities set forth in Parent's unaudited financial statements (including the
notes thereto) filed with the SEC as part of Parent's quarterly report on Form
10-Q for the quarter ended Xxxxx 00, 0000, (xx) any Liabilities which were
incurred after March 31, 1998 in the ordinary course of business consistent
with past practice, or (iii) other Liabilities which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect on Parent.
3.3 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997, there has not been (a) any change, or any development or combination of
developments that has had or would reasonably be expected to have a Material
Adverse Effect on Parent, (b) any damage, destruction or loss, whether or not
covered by insurance which has had or would reasonably be expected to have a
Material Adverse Effect on Parent and (c) any declaration, accrual, set aside
or payments of any dividend or distribution by Parent.
20.
26
3.4 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of Parent with any Governmental Authority on or before the Closing Date (i)
have been or will be filed on or before the applicable due date (including any
extensions of such due date that expire prior to the Closing Date), and (ii)
have been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on
Parent's Tax Returns to be due on or before the Closing Date have been or will
be paid on or before the Closing Date except for amounts which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Parent.
(b) To the knowledge of Parent, the Parent Financial
Statements fully accrue all Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. Parent
will establish, in the ordinary course of business and consistent with its past
practices, reserves reasonably adequate for the payment of all Taxes through
the Closing Date, except for amounts which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on Parent.
(c) No claim or Legal Proceeding is pending or, to the
knowledge of Parent, has been threatened against or with respect to Parent in
respect of any Tax. There are no unsatisfied liabilities for material Taxes
(including liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by Parent with respect to any material Tax (other than liabilities for
Taxes asserted under any such notice of deficiency or similar document which
are being contested in good faith by Parent and with respect to which adequate
reserves for payment have been established). There are no liens for material
Taxes upon any of the assets of Parent except liens for current Taxes not yet
due and payable. Parent has not entered into or become bound by any agreement
or consent pursuant to Section 341(f) of the Code. Parent has not been, and
will not be, required to include any adjustment in taxable income for any tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(d) To the knowledge of Parent, there is no agreement,
plan, arrangement or other Contract covering any employee or independent
contractor or former employee or independent contractor of Parent that,
considered individually or considered collectively with any other such
Contracts, will, or could reasonably be expected to, give rise directly or
indirectly to the payment of any amount that would not be deductible pursuant
to Section 280G or Section 162 of the Code. Parent is not a party to or bound
by any tax indemnity agreement, tax sharing agreement, tax allocation agreement
or similar Contract.
3.5 LITIGATION. There is no Legal Proceeding pending or threatened
by or before any court or Governmental Authority that involves Parent or any of
the assets owned or used by Parent. Parent is not a party, as of the date of
this Agreement, to any decree, order or arbitration award (or agreement entered
into in any Legal Proceeding with any Governmental Authority) with respect to
its property, assets, personnel or business activities.
21.
27
3.6 COMPLIANCE WITH LEGAL REQUIREMENTS. Parent is, and has at all
times since December 31, 1995 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and would not reasonably be expected to have a Material Adverse
Effect on Parent.
3.7 VALID ISSUANCE. The shares of Parent Common Stock to be
issued to the Company Stockholders in the Merger, when issued by Parent
pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, will be issued in compliance with
applicable federal and state securities laws and will be issued free and clear
of any lien, pledge, security interest, encumbrance, claim or equitable
interest, and no preemptive right, right of first refusal, registration right
or other similar right of stockholders exists with respect to such shares or
the issuance thereof or the inclusion thereof in the S-4 Registration
Statement.
3.8 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Parent Common Stock outstanding on the record date
for the Parent Stockholders' Meeting (the "Required Parent Stockholder Vote")
is the only vote of the holders of any class or series of Parent's capital
stock necessary to adopt and approve this Agreement, the Merger and the
transactions contemplated by this Agreement.
3.9 PARENT ACTION. The Board of Directors of Parent (at a meeting
duly called and held) has (a) unanimously determined that the Merger is in the
best interests of Parent and its stockholders, (b) unanimously approved this
Agreement and the Merger in accordance with the provisions of Section 251 of
the DGCL, (c) unanimously recommended the adoption and approval of this
Agreement and the Merger by the stockholders of Parent and directed that the
Merger be submitted for consideration by Parent's stockholders at the Parent
Stockholders' Meeting, and (d) taken all necessary steps to render Section 203
of the DGCL inapplicable to the Merger and the other transactions contemplated
by this Agreement.
3.10 FAIRNESS OPINION. Parent's Board of Directors has received
the written opinion of Xxxxxx Xxxx LLC, financial advisor to Parent, dated the
date of this Agreement, to the effect that the Merger is fair to Parent from a
financial point of view and such written opinion has not been withdrawn or
otherwise modified by Xxxxxx Xxxx LLC. Parent has furnished an accurate and
complete copy of said written opinion to the Company.
3.11 FINANCIAL ADVISOR. Parent represents and warrants that,
except for Xxxxxx Xxxx LLC, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Merger or any of the other transactions contemplated by this Agreement.
3.12 ENFORCEABILITY. Each of Parent and Merger Sub has all
requisite corporate power and authority to execute, deliver and, subject to
obtaining requisite stockholder approval, to perform its obligations under this
Agreement and all other agreements, documents and instruments contemplated
hereby to which it is or will become a party. The execution and delivery of
this Agreement and the other agreements, documents and instruments contemplated
hereby have been duly and validly authorized by the Board of Directors of
Parent and Merger Sub and no other corporate proceedings on the part of Parent
or Merger Sub are necessary for
22.
28
Parent or Merger Sub to authorize any of such agreements, documents or
instruments and no such corporate proceedings (other than the approval of
Parent's stockholders) are necessary to enable Parent or Merger Sub to
consummate the Merger or any of the other transactions contemplated by this
Agreement. All agreements, documents and instruments to be executed in
connection with the Merger (a) have been (or will be) duly executed and
delivered by duly authorized officers of Parent and Merger Sub and (b)
constitute (or, when executed by Parent and Merger Sub, will constitute) legal,
valid and binding obligations of Parent and Merger Sub enforceable against it
in accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief,
or by general equitable principles, and to the extent any indemnification or
contribution provisions thereof may be limited by applicable federal or state
securities laws.
3.13 GOVERNMENTAL CONSENT; NO CONFLICTS. Except as may be required
by the Exchange Act, the Securities Act, state securities or blue sky laws, the
DGCL, and the NASD bylaws (as they relate to the S-4 Registration Statement and
the Prospectus/Joint Proxy Statement), there is no requirement applicable to
Parent or Merger Sub to make any filing with, or to obtain any permit,
authorization, or Consent of, any Governmental Authority as a condition to the
consummation by Parent and Merger Sub of the Merger. Neither the execution and
delivery of this Agreement and the other agreements, documents and instruments
contemplated hereby by Parent or Merger Sub nor the consummation by Parent or
Merger Sub of the Merger or any of the other transactions contemplated by this
Agreement will (a) violate the Certificate of Incorporation or Bylaws of Parent
or the Certificate of Incorporation or Bylaws of Merger Sub, (b) result in a
default (or with notice or lapse of time would result in a default) under, or
materially impair the rights of Parent or Merger Sub or materially alter the
rights or obligations of any third party under, or require Parent or Merger Sub
to make any material payment or become subject to any material liability to any
third party under, or give rise to any right of termination, amendment,
cancellation, acceleration, repurchase, put or call under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
license agreement, lease or other contract, instrument or obligation to which
Parent or Merger Sub is a party or by which Parent or Merger Sub or any of
their respective assets may be bound, (c) result in the creation of any
material (individually or in the aggregate) Encumbrance on any of the assets of
Parent or Merger Sub or (d) conflict with or violate any law, statute, rule,
regulation, judgment, order, writ, injunction, decree or arbitration award
applicable to Parent or Merger Sub or any of their respective assets, which
conflict or violation has had or would reasonably be expected to have a
Material Adverse Effect on Parent or Merger Sub.
3.14 DISCLOSURE.
(a) The copies of all documents furnished by Parent
pursuant to the terms of this Agreement are complete and accurate copies of the
original, as such documents may have been amended to date.
(b) Parent has timely filed all required forms, reports
and documents required to be filed with the SEC and the NASD.
23.
29
(c) None of the representations and warranties of Parent
or Merger Sub contained in Article 3 of this Agreement or in any other Article
of this Agreement or the information disclosed in the Parent Disclosure
Schedule contains any untrue statement of a material fact or omits 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.
(d) None of the information supplied or to be supplied by
Parent for inclusion or incorporation by reference in the S-4 Registration
Statement will, at the time the S-4 Registration Statement is filed with the
SEC or at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by
Parent for inclusion or incorporation by reference in the Prospectus/Joint
Proxy Statement will, at the dates mailed to the stockholders of Parent or the
stockholders of the Company, at the time of the Parent Stockholders' Meeting or
the Company Stockholders' Meeting and as of 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.
Notwithstanding the foregoing, no representation or warranty is made by Parent
or Merger Sub with respect to statements made about the Company or based on
information supplied by the Company or any of its Representatives which is
contained in the S-4 Registration Statement or the Prospectus/Joint Proxy
Statement. The Prospectus/Joint Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
3.15 INTERIM OPERATIONS OF MERGER SUB. Merger Sub has been formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby.
3.16 PARENT CONTRACTS. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, the contracts between
Parent and each of Japan Tobacco Inc., Procter & Xxxxxx Pharmaceuticals, Inc.
and N.V. Organon (collectively, the "Material Parent Contracts") are each in
full force and effect and are enforceable against Parent and, to Parent's
knowledge, are enforceable against the other parties thereto, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability of
specific performance, injunctive relief, or by general equitable principles,
and to the extent any indemnification or contribution provisions thereof may be
limited by applicable federal or state securities laws. Parent has not
breached, nor has Parent received in writing any claim or threat that it has
breached, in any material respect, and no default has occurred under any of the
Material Parent Contracts and, to Parent's knowledge, (i) none of the other
contracting parties has violated or breached, and no default has occurred under
any of the Material Parent Contracts, and (ii) other than the transactions
contemplated hereby, no event has occurred, and no circumstance or condition
exists which with the giving of notice or the lapse of time, or both, will, or
could reasonably be expected to, result in a violation, breach or default under
any
24.
30
Material Parent Contract or give any Person the right to cancel, terminate or
modify any Material Parent Contract. To Parent's knowledge, Parent's
relationship with each other party under a Material Parent Contract is good.
To Parent's knowledge, no party to a Material Parent Contract currently in
effect has given notice to Parent of intent to terminate such Material Parent
Contract in a way that would have a Material Adverse Effect on Parent.
ARTICLE 4
COVENANTS; ADDITIONAL AGREEMENTS
4.1 PARENT ACCESS AND INVESTIGATION. During the period from the
date of this Agreement through the Effective Time (the "Pre-Closing Period"),
the Company shall, and shall cause its Representatives to: (a) provide Parent
and Parent's Representatives with reasonable access during normal business
hours to the Company's Representatives, personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to the Company; and (b) provide Parent and Parent's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Company, and
with such additional financial, operating and other data and information
regarding the Company as Parent may reasonably request.
4.2 COMPANY ACCESS AND INVESTIGATION. During the Pre-Closing
Period, Parent shall, and shall cause its Representatives to: (a) provide the
Company and the Company's Representatives with reasonable access during normal
business hours to Parent's and its Representatives', personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents
and information relating to Parent; and (b) provide the Company and the
Company's Representatives with such copies of the existing books, records, Tax
Returns, work papers and other documents and information relating to Parent,
and with such additional financial, operating and other data and information
regarding Parent, as the Company may reasonably request.
4.3 CONFIDENTIALITY. The parties acknowledge that Parent and the
Company have previously executed Confidentiality Agreements (the
"Confidentiality Agreements"), which Confidentiality Agreements shall continue
in full force and effect in accordance with their respective terms and which
Confidentiality Agreements shall be applicable to any information obtained
pursuant to this Article 4.
4.4 CONDUCT OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period, the Company shall: (i)
conduct its business and operations (A) in the ordinary course and consistent
with past practices and (B) in compliance in all material respects with all
applicable Legal Requirements and the requirements of all Material Company
Contracts, except to the extent that the failure to be in compliance would not
have a Material Adverse Effect on the Company; (ii) use reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and maintain its relations and goodwill
with all suppliers, landlords, creditors, collaborators, joint venture
partners, licensors, licensees, employees and other Persons having business
relationships with the Company; (iii) keep in full force all insurance policies
to which it
25.
31
is a party as of the date of this Agreement; (iv) use reasonable efforts to
provide all notices, assurances and support required by any Company Contract
relating to any material Company Proprietary Asset in order to ensure that no
condition under such Company Contract occurs which could result in, or could
increase the likelihood of any transfer or disclosure of any material Company
Proprietary Asset; (v) provide to Parent bi-weekly updates of the Company's
financial position in an amount of detail reasonably satisfactory to Parent,
and (vi) to the extent requested by Parent, cause its officers to report
regularly to Parent concerning the status of the Company's business including
any corporate partnership discussions or other discussions with respect to any
collaborations between the Company and third parties, and will provide regular
status reports of such discussions.
(b) During the Pre-Closing Period, the Company shall not,
without Parent's prior written consent:
(i) declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any capital stock (other
than any dividend required to be paid pursuant to the terms of the Company
Certificate of Incorporation on the Company Preferred Stock);
(ii) repurchase, redeem or otherwise acquire any
capital stock or other securities of the Company (other than any redemption of
Company Preferred Stock in accordance with the Company Certificate of
Incorporation);
(iii) sell, issue, grant or authorize the grant of
any shares of capital stock of the Company or any securities convertible into,
or rights, warrants or options to acquire, any such shares of capital stock or
other convertible securities (except that the Company may issue Company Common
Stock upon the exercise of Company Options and Company Warrants outstanding on
the date of this Agreement in accordance with their present terms);
(iv) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Company's stock
option plans, any provision of any agreement evidencing any outstanding stock
option or any restricted stock purchase agreement, or otherwise modify any of
the terms of any of the Company's stock option or other employee benefit plans
or any outstanding option, warrant or other equity security of the Company;
(v) amend the Company Certificate of
Incorporation or Bylaws, adopt any stock purchase rights plan (or "poison
pill") or effect or become a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(vi) acquire (by purchasing any material portion
of the capital stock or assets of or by any other means) any business or any
Entity or division thereof;
(vii) form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(viii) acquire, lease or license any right or other
asset from any other Person or sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person (except, in each case,
for immaterial assets acquired, leased, licensed or disposed of by
26.
32
the Company in the ordinary course of business and consistent with past
practices), or waive any material provision;
(ix) except pursuant to lines of credit
(including that certain $2,000,000 line of credit evidenced by that certain
Loan Agreement between Parent and the Company) and subject to credit limits in
effect prior to the date of this Agreement in amounts not to exceed in the
aggregate $10,000, incur any indebtedness for borrowed money, or issue or sell
any debt securities or guarantee, endorse or otherwise become responsible for
any obligation of any other Person;
(x) make any loan or advance to any Person,
other than travel and similar advances to employees in the ordinary course of
business consistent with past practice;
(xi) prepay any material claim, Liability or
obligation, or pay, discharge or satisfy any material unliquidated or
contingent Liability;
(xii) enter into or amend any employment
agreement, severance agreement, special pay arrangement with respect to
termination of employment or other similar arrangement or agreement with any
director, officer or employee of the Company, or establish, adopt or amend any
employee benefit plan;
(xiii) pay any bonus or make any profit-sharing or
similar payment or change any compensation payable or to become payable to any
of its directors, officers or employees (other than any adjustment to the
salary of any non-exempt and exempt employee that is made in the ordinary
course of business consistent with past practice or bonuses payable in
accordance with existing bonus obligations or plans);
(xiv) change any of the Company's methods of
accounting or accounting practices in any material respect;
(xv) except in the ordinary course of business
consistent with past practice, enter into any material Contract or amend or
terminate, or waive any material provision under, any Material Company
Contract;
(xvi) make any capital expenditure in excess of
$10,000;
(xvii) make or fail to make any material election
concerning the term, scope or termination of any real property Lease, or waive
any material provision of any such Lease or enter into any new real property
lease;
(xviii) commence, settle or compromise any Legal
Proceeding;
(xix) engage in any transaction with any
stockholder, director, officer or employee other than in the ordinary course of
business consistent with past practice;
(xx) enter into any material transaction or take
any other material action outside the ordinary course of business or
inconsistent with past practice; or
27.
33
(xxi) authorize or propose, or enter into any
Contract contemplating, any of the items or actions set forth in clauses (i)
through (xx) above.
4.5 CONDUCT BY PARENT. During the Pre-Closing Period, Parent
shall not, without the prior written consent of the Company (i) declare,
accrue, set aside or pay any dividend or any other distribution in respect of
any shares of its capital stock, (ii) repurchase, redeem or otherwise reacquire
any shares of its capital stock or other securities, or (iii) amend or permit
the adoption of any amendments to its Certificate of Incorporation or bylaws in
a manner that would materially adversely affect the terms and provisions of the
Parent Common Stock, or (iv) take, or agree in writing or otherwise to take,
any of the foregoing actions.
4.6 NOTIFICATION. During the Pre-Closing Period, each party
hereto shall promptly notify the other party in writing of: (i) the discovery
by such party of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or
constitutes a material inaccuracy in any representation or warranty made by
such party in this Agreement; (ii) any event, condition, fact or circumstance
that occurs, arises or exists after the date of this Agreement and that would
cause or constitute a material inaccuracy in any representation or warranty
made by such party in this Agreement if (A) such representation or warranty had
been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; (iii) any material breach of any covenant or obligation of such
party; and (iv) any event, condition, fact or circumstance that would make the
timely satisfaction of any of the conditions set forth in Article 5 or Article
6 impossible or unlikely or that has had or could reasonably be expected to
have a Material Adverse Effect on any of the parties. No notification given by
any party pursuant to this Section 4.6 shall limit or otherwise affect any of
the representations, warranties, covenants or obligations of such party
contained in this Agreement.
4.7 NO SHOP.
(a) During the Pre-Closing Period, the Company shall not
permit any Representative of the Company to, (i) solicit, initiate, or
encourage the making, submission or announcement of any Acquisition Proposal,
(ii) furnish any information regarding the Company to any Person in connection
with or in response to an Acquisition Proposal, (iii) engage in discussions or
negotiations with any Person with respect to any Acquisition Proposal, (iv)
subject to Section 4.9(c), approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition Transaction;
provided, however, that: (A) nothing herein shall prohibit the Company's Board
of Directors from disclosing to the Company Stockholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act; (B) nothing herein shall prohibit the Company's Board of
Directors from making any disclosure to the Company Stockholders, if, in the
good faith judgment of the Board of Directors of the Company after consultation
with its outside legal counsel, failure to so disclose would be inconsistent
with applicable laws; and (C) the Company shall not be prohibited by this
Section 4.7 from (x) furnishing nonpublic information regarding the Company to
any Person in response to an Acquisition Proposal that is submitted by such
Person (and not withdrawn), or (y) entering into discussions with any Person in
response to a Superior Offer that is submitted by such Person
28.
34
(and not withdrawn) if, in either such case: (1) neither the Company nor any
Representative of the Company shall have violated any of the restrictions set
forth in this Section 4.7, (2) the Board of Directors of the Company believes
in good faith, after consultation with its outside legal counsel, that such
action is required in order for the Board of Directors of the Company to avoid
a substantial risk of liability with respect to its fiduciary obligations to
the Company's stockholders under applicable law, (3) prior to furnishing any
such nonpublic information to, or entering into discussions with, such Person,
the Company gives Parent written notice of the identity of such Person and of
the Company's intention to furnish nonpublic information to, or enter into
discussions with, such Person, and the Company receives from such Person an
executed confidentiality agreement containing limitations no less restrictive
than the limitations imposed on Parent pursuant to that certain Mutual
Non-Disclosure Agreement dated as of January 27, 1998 between Parent and the
Company, and (4) contemporaneously furnishing any such nonpublic information to
such Person, the Company furnishes such nonpublic information to Parent (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent). Without limiting the generality of the foregoing, the
Company acknowledges and agrees that any violation of any of the restrictions
set forth in the preceding sentence by any Representative of the Company,
whether or not such Representative is purporting to act on behalf of the
Company, shall be deemed to constitute a breach of this Section 4.7 by the
Company; provided, however, that this sentence shall not limit the rights of
any Representative who is a stockholder of the Company to freely vote his stock
and to exercise all of his rights as a stockholder of the Company, subject to
any contractual restrictions that may apply.
(b) The Company shall promptly advise Parent orally and in
writing of the receipt of any Acquisition Proposal (including the identity of
the Person making or submitting such Acquisition Proposal and the terms
thereof) that is made or submitted by any Person during the Pre-Closing Period
or any inquiry relating to an Acquisition Proposal prior to the Effective Time.
(c) Subject to Section 4.7(a), the Company shall
immediately cease and cause to be terminated any discussions or negotiations
with any parties existing as of the date of this Agreement and that relate to
any Acquisition Proposal.
4.8 REGISTRATION STATEMENT; PROSPECTUS/JOINT PROXY STATEMENT.
(a) As promptly as practicable after the date of this
Agreement, the Company and Parent shall prepare and cause to be filed with the
SEC the Prospectus/Joint Proxy Statement and Parent shall prepare and cause to
be filed with the SEC the S-4 Registration Statement (in which the
Prospectus/Joint Proxy Statement will be included as a prospectus) and any
other documents required by the Securities Act or Exchange Act to be filed in
connection with the Merger; provided, however, that notwithstanding anything to
the contrary contained in this Section 4.8(a), if (and to the extent) Parent
and the Company so elect: (i) the Prospectus/Joint Proxy Statement shall
initially be filed with the SEC on a confidential basis as a proxy statement of
the Company and Parent under Section 14 of the Exchange Act (and not as a
registration statement of Parent); (ii) until it is reasonably likely that the
SEC will declare the S-4 Registration Statement (in which the Prospectus/Joint
Proxy Statement will be included as a prospectus) effective under the
Securities Act, all amendments to the Prospectus/Joint Proxy
29.
35
Statement shall be filed with the SEC on a confidential basis as amendments to
the proxy statement of the Company and Parent under Section 14 of the Exchange
Act; and (iii) Parent shall not be obligated to file the S-4 Registration
Statement (in which the Prospectus/Joint Proxy Statement will be included as a
prospectus) with the SEC until it is reasonably likely that the SEC will
promptly declare the S-4 Registration Statement effective under the Securities
Act. Each of Parent and the Company shall use reasonable efforts to (A) cause
the S-4 Registration Statement to comply with the rules and regulations
promulgated by the SEC, (B) respond promptly to any comments of the SEC or its
staff, (C) have the S-4 Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and (D) cause the
Prospectus/Joint Proxy Statement to be mailed to their respective stockholders
as promptly as practicable after the S-4 Registration Statement is declared
effective under the Securities Act. The Company shall promptly furnish to
Parent all information concerning the Company, its subsidiaries and its
stockholders as may be required or reasonably requested in connection with any
action contemplated by this Section 4.8(a). Each of Parent and the Company
shall (1) notify the other promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the S-4 Registration Statement or the Prospectus/Joint Proxy
Statement or for additional information and (2) shall supply the other with
copies of all correspondence with the SEC or its staff with respect to the S-4
Registration Statement or the Prospectus/Joint Proxy Statement. Neither Parent
nor the Company shall file any amendment or supplement to the S-4 Registration
Statement or the Prospectus/Joint Proxy Statement to which the other shall have
reasonably objected. Whenever any event occurs that should be set forth in an
amendment or supplement to the S-4 Registration Statement or the
Prospectus/Joint Proxy Statement, Parent or the Company, as the case may be,
shall promptly inform the other of such occurrence and shall cooperate in
filing with the SEC or its staff, and, if appropriate, mailing to stockholders
of Parent and the Company, such amendment or supplement.
(b) Prior to the Effective Time, Parent shall use
reasonable efforts to obtain all regulatory approvals needed to ensure that the
shares of Parent Common Stock to be issued to the Company Stockholders in the
Merger (i) will be qualified under the securities or "blue sky" law of every
jurisdiction of the United States in which any registered stockholder of the
Company has an address of record on the record date for determining the
stockholders entitled to notice of and to vote on the Merger; provided,
however, that Parent shall not be required to qualify to do business as a
foreign corporation in any jurisdiction in which it is not now qualified or to
file a general consent to service of process in any jurisdiction, and (ii) will
be approved for listing (subject to notice of issuance) at the Effective Time
on the Nasdaq NMS.
4.9 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action reasonably necessary
under all applicable Legal Requirements to call, give notice of, convene and
hold a meeting of the holders of Company Common Stock and Company Preferred
Stock to consider, act upon and vote upon the adoption and approval of this
Agreement and the approval of the Merger (the "Company Stockholders' Meeting").
The Company Stockholders' Meeting will be held as promptly as practicable and
in any event within 45 days after the S-4 Registration Statement is declared
effective under the Securities Act. The Company will use reasonable efforts to
ensure that, within 45 days after the S-4 Registration Statement is declared
effective under the Securities Act,
30.
36
the Company Stockholders' Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited in connection with the Company
Stockholders' Meeting are solicited, in compliance with all applicable Legal
Requirements. Notwithstanding anything to the contrary contained in this
Agreement, the Company may adjourn or postpone the Company Stockholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Prospectus/Proxy Statement is provided to the Company
Stockholders in advance of a vote on the Merger and this Agreement, or, if as
of the time for which the Company Stockholders' Meeting is originally scheduled
(as set forth in the Prospectus/Proxy Statement) there are insufficient shares
of Company Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Company
Stockholders' Meeting. The Company will use reasonable efforts to hold the
Company Stockholders' Meeting as soon as possible. The Company's obligation to
call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 4.9(a) shall not be limited or otherwise affected
by the commencement, disclosure, announcement or submission of any Superior
Offer or other Acquisition Proposal, or by any withdrawal, amendment or
modification of the recommendation of the Board of Directors of the Company
with respect to the Merger.
(b) Subject to Section 4.9(c): (i) the Board of Directors
of the Company shall recommend that the Company Stockholders vote in favor of
and adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
recommended that the Company Stockholders vote in favor of and adopt and
approve this Agreement and approve the Merger at the Company Stockholders'
Meeting; and (iii) neither the Board of Directors of the Company nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify, in a manner adverse to Parent, the recommendation of
the Board of Directors of the Company that the Company Stockholders vote in
favor of and adopt and approve this Agreement and approve the Merger.
(c) Nothing in this Agreement shall prevent the Board of
Directors of the Company from withholding, withdrawing, amending or modifying
its recommendation in favor of the Merger and amending the Prospectus/Proxy
Statement at any time prior to the adoption and approval of this Agreement by
the Required Company Stockholder Vote if (i) a Superior Offer is made to the
Company and is not withdrawn, (ii) neither the Company nor any of its
Representatives shall have violated any of the restrictions set forth in
Section 4.7, and (iii) the Board of Directors of the Company concludes in good
faith, after consultation with its outside counsel, that, in light of such
Superior Offer, the withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of the Company
to avoid a substantial risk of liability with respect to its fiduciary
obligations to the Company Stockholders under applicable law. Nothing
contained in this Section 4.9 shall limit the Company's obligation to call,
give notice of, convene and hold the Company Stockholders' Meeting (regardless
of whether the recommendation of the Board of Directors of the Company shall
have been withdrawn, amended or modified).
4.10 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action reasonably necessary
under all applicable Legal Requirements to call, give notice of, convene and
hold a meeting of the holders of Parent
31.
37
Common Stock to consider, act upon and vote upon the adoption and approval of
this Agreement and the approval of the Merger (the "Parent Stockholders'
Meeting"). The Parent Stockholders' Meeting will be held as promptly as
practicable and in any event within 45 days after the S-4 Registration
Statement is declared effective under the Securities Act. Parent will use
reasonable efforts to ensure that, within 45 days after the S-4 Registration
Statement is declared effective under the Securities Act, the Parent
Stockholders' Meeting is called, noticed, convened, held and conducted, and
that all proxies solicited in connection with the Parent Stockholders' Meeting
are solicited, in compliance with all applicable Legal Requirements.
Notwithstanding anything to the contrary contained in this Agreement, Parent
may adjourn or postpone the Parent Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to the Parent Stockholders in advance of
a vote on the Merger and this Agreement, or, if as of the time for which the
Parent Stockholders' Meeting is originally scheduled (as set forth in the
Prospectus/Proxy Statement) there are insufficient shares of Parent Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Parent Stockholders' Meeting. Parent
will use reasonable efforts to hold the Parent Stockholders' Meeting as soon as
possible.
(b) (i) The Board of Directors of Parent shall recommend
that the Parent's stockholders vote in favor of and adopt and approve this
Agreement and approve the Merger at the Parent Stockholders' Meeting; (ii) the
Prospectus/Joint Proxy Statement shall include a statement to the effect that
the Board of Directors of Parent has recommended that the Parent's stockholders
vote in favor of and adopt and approve this Agreement and approve the Merger at
the Parent Stockholders' Meeting; and (iii) neither the Board of Directors of
Parent nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify, in a manner adverse to the Company, the
recommendation of the Board of Directors of Parent that the Parent's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger.
4.11 REGULATORY APPROVALS. The Company and Parent shall use
reasonable efforts to file as soon as practicable after the date of this
Agreement all notices, reports and other documents required by law to be filed
with any Governmental Authority with respect to the Merger and the other
transactions contemplated by this Agreement and to submit promptly any
additional information requested by any such Governmental Authority. The
Company and Parent shall (i) give each other prompt notice of the commencement
of any Legal Proceeding by or before any court on Governmental Authority with
respect to the Merger or any of the transactions contemplated by this
Agreement, and (ii) keep each other informed as to the status of any such Legal
Proceeding.
4.12 ADDITIONAL AGREEMENTS.
(a) Parent and the Company shall use reasonable efforts to
take, or cause to be taken, all actions necessary to consummate the Merger and
make effective the other transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, each party to this Agreement (i)
shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the Merger and the other
transactions contemplated by this Agreement, (ii) shall use reasonable efforts
to obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party
32.
38
in connection with the Merger or any of the other transactions contemplated by
this Agreement, and (iii) shall use reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger. Each of Parent and the Company
shall promptly deliver to the other a copy of each such filing made, each such
notice given and each such Consent obtained by Parent or the Company, as the
case may be, during the Pre-Closing Period.
(b) The Company will use reasonable efforts to resolve all
Legal Proceedings against the Company in a manner reasonably acceptable to
Parent.
4.13 DISCLOSURE. Except as otherwise required by applicable law,
Parent and the Company shall keep confidential the existence, status and terms
of the negotiations and agreements regarding the Merger. Parent and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to the Merger or any of the
other Transactions. Without limiting the generality of the foregoing, neither
party shall permit any of its Representatives to, make any disclosure regarding
the Merger or any of the other transactions contemplated by this Agreement
unless (a) the other party shall have approved such disclosure, or (b) such
party shall have determined after consultation with its outside legal counsel
that such disclosure is required by applicable law.
4.14 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall cause
to be delivered to Parent a letter of Xxxxxx Xxxxxxxx LLP, dated no more than
two business days before the date on which the S-4 Registration Statement
becomes effective (and reasonably satisfactory in form and substance to
Parent), that is customary in scope and substance for letters delivered by
independent accountants in connection with the registration statements similar
to the S-4 Registration Statement.
4.15 COMPANY AFFILIATE AGREEMENTS. The Company shall use
reasonable efforts to cause each Person who becomes a Company Affiliate after
the date of this Agreement to execute and deliver to Parent, on or prior to the
Effective Time, an affiliate agreement in the form of Exhibit F attached hereto
(the "Company Affiliate Agreement").
4.16 TAX MATTERS. At or prior to the Closing, Parent and the
Company shall execute and deliver to Parent's counsel and to the Company's
counsel tax representation letters in customary form. Parent and the Company
shall use reasonable efforts prior to the Effective Time to cause the Merger to
qualify as a tax free reorganization under Section 368(a)(1) of the Code.
4.17 EMPLOYMENT OR CONSULTING AGREEMENT AND NONCOMPETITION
AGREEMENT. The Company shall use reasonable efforts to cause to be executed
and delivered to Parent employment agreements or consulting agreements, as
applicable, between Parent and those Persons identified on Exhibit G.
4.18 EMPLOYEE BENEFITS. Parent intends to maintain or cause the
Surviving Corporation to maintain employee benefit plans (as defined in Section
3(3) of ERISA) for the benefit of employees of the Company which are
substantially similar to those benefits provided for Parent's employees,
including, without limitation, any of the following benefit plans maintained by
Parent: medical/dental/vision care, life insurance, disability income, sick
pay,
33.
39
holiday and vacation pay, 401(k) plan coverage, Section 125 benefit
arrangements, bonus profit-sharing or other incentive plans, pension or
retirement programs, dependent care assistance, severance benefits, and
employee stock option and stock purchase plans, to the extent the Company
employees meet the eligibility requirements for each such plan or program. To
the extent permitted and commercially practicable under applicable plans and
laws, Parent intends that the Company's employees (i) shall be given credit,
for purposes of any service requirements for participation, for their period of
service with the Company prior to the Closing Date, and (ii) shall also, with
respect to any Parent plans or programs which have co-payment, deductible or
other co-insurance features, receive credit for any amounts such employees have
paid to date in 1998 in co-payments, deductibles or co-insurance under
comparable programs maintained by Company prior to the date hereof. In
addition, Parent intends that, to the extent permitted and commercially
practicable under the Company's medical/health plans, no Company employee who
participates in any medical/health plan of Company at the Closing date shall be
denied coverage under Parent's medical/health plan by reason of any
pre-existing condition exclusions.
4.19 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will, or
Parent will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and its directors and officers as of the date
hereof (the "Indemnified Parties") and any indemnification provisions under the
Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior to
the Effective Time, were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) From the Effective Time until the sixth anniversary
thereof, Parent shall, or Parent shall cause the Surviving Corporation to,
maintain in effect, for the benefit of the current directors and officers of
the Company with respect to acts or omissions occurring prior to the Effective
Time, the existing policy of directors' and officers' liability insurance
maintained by the Company as of the date of this Agreement (the "Existing
Policy"); provided, however, that (i) Parent or the Surviving Corporation may
substitute for the Existing Policy a policy or policies of comparable coverage,
and (ii) neither Parent nor the Surviving Corporation shall be required to pay
an annual premium for the Existing Policy (or for any substitute policies) in
excess of the amount of the last annual premium paid by the Company prior to
the date of this Agreement for the Existing Policy, which amount was $119,500
(the "Past Premium Amount"). In the event any future annual premium for the
Existing Policy (any substitute policies) exceeds the Past Premium Amount,
Parent or the Surviving Corporation shall be entitled to reduce the amount of
coverage of the Existing Policy (or any substitute policies) to the amount of
coverage that can be obtained for a premium equal to the Past Premium Amount.
(c) This Section 4.19 shall survive the consummation of
the Merger, is intended to be for the benefit of, and enforceable by, each
person entitled to indemnification
34.
40
pursuant hereto and each such person's or entity's heirs and representatives,
and shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
4.20 NASDAQ LISTING. Parent agrees to authorize for listing on
Nasdaq the shares of Parent Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger, upon official notice of
issuance.
4.21 BLUE SKY LAWS. Parent shall take such steps as may be
reasonably necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of Parent Common Stock
pursuant hereto. The Company shall use its reasonable efforts to assist Parent
as may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Parent
Common Stock pursuant hereto.
4.22 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use
reasonable efforts to obtain and deliver to Parent prior to the Closing the
written resignation of each officer and director of the Company.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
5.1 REPRESENTATIONS AND WARRANTIES ACCURATE.
(a) Without limiting the effect or independence of the
conditions set forth in Sections 5.1(b) and 5.1(c), the representations and
warranties of the Company contained in Sections 2.1(c), 2.1(d) and 2.1(e) shall
have been accurate in all respects as of the date of this Agreement (it being
understood that for purposes of determining the accuracy of the representations
and warranties of the Company contained in Sections 2.1(c), 2.1(d) and 2.1(e)
with respect to the fully-diluted capitalization of the Company (A) such
representations and warranties shall be deemed to have been accurate as long as
the actual fully-diluted capitalization of the Company does not exceed the
fully-diluted capitalization of the Company as represented in Sections 2.1(c),
2.1(d) and 2.1(e) by more than 15,000 shares of Company Common Stock, (B)
changes in the number of outstanding shares of Company Common Stock resulting
solely from the conversion of the Company Preferred Stock shall be disregarded
and (C) any update of or modification to the Company Disclosure Schedule made
or purported to have been made after the date of this Agreement shall be
disregarded).
(b) Without limiting the effect or independence of the
conditions set forth in Sections 5.1(a) and 5.1(c), the representations and
warranties of the Company contained in this Agreement (other than the
representations and warranties of the Company contained in Sections 2.1(c),
2.1(d) and 2.1(e)) shall have been accurate in all respects as of the date of
this Agreement (it being understood that, for purposes of determining the
accuracy of such representations and warranties any inaccuracies that, in the
aggregate, do not have a Material
35.
41
Adverse Effect on the Company shall be disregarded and (ii) any update of or
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded).
(c) Without limiting the effect or independence of the
conditions set forth in Sections 5.1(a) and 5.1(b), the representations and
warranties of the Company contained in this Agreement (except for any
representation or warranty that refers specifically to "the date of this
Agreement" or to any specific date or period prior to the date of this
Agreement) shall be accurate in all respects as of the Closing Date as if made
on and as of the Closing Date (it being understood that, for purposes of
determining the accuracy of such representations and warranties as of the
Closing Date: (i) any inaccuracies that, in the aggregate, do not have a
Material Adverse Effect on the Company shall be disregarded and (ii) any update
of or modification to the Company Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded).
5.2 COMPLIANCE WITH COVENANTS. The Company shall have complied
with and performed in all material respects each covenant contained in this
Agreement that is required to be complied with or performed by the Company on
or prior to the Closing Date.
5.3 NO MATERIAL ADVERSE EFFECT. There shall have been no change
in the Company's business, capitalization, operations or financial condition
since the date of this Agreement which has had or would reasonably be expected
to have a Material Adverse Effect on the Company.
5.4 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with
respect to the S-4 Registration Statement.
5.5 COMPANY STOCKHOLDER APPROVAL. This Agreement and the Merger
shall have been adopted and approved by the Required Company Stockholder Vote.
5.6 PARENT STOCKHOLDER APPROVAL. This Agreement and the Merger
shall have been adopted and approved by the Required Parent Stockholder Vote.
5.7 AGREEMENTS AND DOCUMENTS. Parent shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) A letter from Xxxxxx Xxxxxxxx LLP, dated as of the
Closing Date and addressed to Parent, reasonably satisfactory in form and
substance to Parent, updating the letter referred to in Section 4.14;
(b) A Company Affiliate Agreement in the form of Exhibit F
executed by each Company Affiliate as of the Closing Date, or who was a Company
Affiliate on the date on which the Company Stockholders' Meeting was held or on
the date 30 days prior to the Closing;
(c) An employment or consulting agreement and
noncompetition agreement with Parent executed by each Person identified on
Exhibit G;
36.
42
(d) A legal opinion of Xxxxxx Godward LLP, outside counsel
to Parent, dated as of the Closing Date and addressed to Parent, to the effect
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code (it being understood that, in rendering such opinion, such
outside counsel may rely upon the tax representation letters referred to in
Section 4.16);
(e) The written resignations of all officers and directors
of the Company; and
(f) A certificate of the Chief Executive Officer of the
Company evidencing compliance with the conditions set forth in Sections 5.1,
5.2, 5.3 and 5.5.
5.8 ABSENCE OF RESTRAINT. No order to restrain, enjoin or
otherwise prevent the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall have been entered by any
court or Governmental Authority, and there shall not be any Legal Requirement
enacted or deemed applicable to the Merger that makes the consummation of the
Merger illegal.
5.9 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Authority is or is
threatened to become a party: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking to
obtain from Parent or any of its subsidiaries or from the Company any damages
that may be material to Parent or the Company; (c) seeking to prohibit or limit
in any material respect Parent's ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the stock of
the Surviving Corporation; or (d) which would materially and adversely affect
the right of Parent, the Surviving Corporation or any subsidiary of Parent to
own the assets or operate the business of the Company.
5.10 OTHER REQUIRED CONSENTS AND APPROVALS. All Consents required
to be obtained in connection with the Merger and the other transactions
contemplated by this Agreement shall have been obtained and shall be in full
force and effect (except where the failure to obtain such Consents has not had,
and would not reasonably be expected to have, a Material Adverse Effect on
Parent or the Company.
5.11 STOCK OPTIONS. All outstanding Company Options not exercised
prior to the Effective Time shall have terminated and ceased to remain
outstanding.
ARTICLE 6
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
37.
43
6.1 REPRESENTATIONS AND WARRANTIES ACCURATE.
(a) Without limiting the effect or independence of the
condition set forth in Section 6.1(b), the representations and warranties of
Parent and Merger Sub contained in this Agreement shall have been accurate in
all respects as of the date of this Agreement (it being understood that, for
purposes of determining the accuracy of such representations and warranties any
inaccuracies that, in the aggregate, do not have a Material Adverse Effect on
Parent shall be disregarded).
(b) Without limiting the effect or independence of the
condition set forth in Section 6.1(a), the representations and warranties of
Parent and Merger Sub contained in this Agreement (except for any
representation or warranty that refers specifically to "the date of this
Agreement" or to any specific date or period prior to the date of this
Agreement) shall be accurate in all respects as of the Closing Date as if made
on and as of the Closing Date (it being understood that, for purposes of
determining the accuracy of such representations and warranties as of the
Closing Date any inaccuracies that, in the aggregate, do not have a Material
Adverse Effect on Parent shall be disregarded.
6.2 COMPLIANCE WITH COVENANTS. Parent and Merger Sub shall have
complied with and performed in all material respects each covenant contained in
this Agreement that is required to be complied with or performed by Parent and
Merger Sub on or prior to the Closing Date.
6.3 NO MATERIAL ADVERSE EFFECT. There shall have been no change
in Parent's business, capitalization, operations or financial condition since
the date of this Agreement which has had or would reasonably be expected to
have a Material Adverse Effect on Parent.
6.4 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with
respect to the S-4 Registration Statement.
6.5 COMPANY STOCKHOLDER APPROVAL. This Agreement and the Merger
shall have been adopted and approved by the Required Company Stockholder Vote.
6.6 PARENT STOCKHOLDER APPROVAL. This Agreement and the Merger
shall have been adopted and approved by the Required Parent Stockholder Vote.
6.7 AGREEMENTS AND DOCUMENTS. The Company shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) A legal opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
counsel to the Company, dated as of the Closing Date and addressed to the
Company, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code (it being understood that, in
rendering such opinion, such outside counsel may rely upon the tax
representation letters referred to in Section 4.16); and
(b) A certificate of the Chief Executive Officer of Parent
evidencing compliance with the conditions set forth in Sections 6.1, 6.2, 6.3
and 6.6.
38.
44
6.8 ABSENCE OF RESTRAINT. No order to restrain, enjoin or
otherwise prevent the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall have been entered by any
court or Governmental Authority and there shall not be any Legal Requirement
enacted or deemed applicable to the Merger that makes the consummation of the
Merger illegal.
6.9 LISTING. The shares of Parent Common Stock to be issued to
the Company Stockholders in the Merger shall have been approved for quotation
on the Nasdaq NMS upon official notice of issuance thereof.
6.10 CLOSING PRICE. The Closing Price of Parent Common Stock shall
be more than $6.34.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Authority is or is
threatened to become a party: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking to
obtain from Parent or any of its subsidiaries any damages that may be material
to Parent; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of the Surviving Corporation; or (d)
which would materially and adversely affect the right of Parent, the Surviving
Corporation or any subsidiary of Parent to own the assets or operate the
business of the Company.
ARTICLE 7
TERMINATION OF AGREEMENT
7.1 TERMINATION. This Agreement may be terminated prior to the
Effective Time, whether before or after approval of the Merger by the Company
Stockholders:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall
not have been consummated by December 31, 1998 (unless the failure to
consummate the Merger is attributable to a failure on the part of the party
seeking to terminate this Agreement to perform any material obligation required
to be performed by such party at or prior to the Effective Time);
(c) by the Company if the Closing Price of Parent Common
Stock is less than $6.34;
(d) by either Parent or the Company if a court of
competent jurisdiction or Governmental Authority shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger;
(e) by either Parent or the Company if (i) the Company
Stockholders' Meeting shall have been held, and (ii) this Agreement and the
Merger shall not have been
39.
45
adopted and approved at such meeting by the Required Company Stockholder Vote;
provided, however, that the Company shall not be permitted to terminate this
Agreement pursuant to this Section 7.1(e) if the failure of the Company
Stockholders to adopt and approve this Agreement and approve the Merger at the
Company Stockholders' Meeting is attributable to a failure on the part of the
Company to perform any material obligation required to have been performed by
the Company under this Agreement; and provided further, that the Company may so
terminate this Agreement only following its compliance with Sections 7.3(b) and
(c);
(f) by either Parent or the Company if (i) the Parent
Stockholders' Meeting shall have been held, and (ii) this Agreement and the
Merger shall not have been adopted or approved at such meeting by the Required
Parent Stockholder Vote; provided, however, that Parent shall not be permitted
to terminate this Agreement pursuant to this Section 7.1(f) if the failure of
the Parent Stockholders to adopt and approve this Agreement and approve the
Merger at the Parent Stockholders' Meeting is attributable to a failure on the
part of Parent to perform any material obligation required to have been
performed by Parent under this Agreement;
(g) by Parent (at any time prior to the adoption and
approval of this Agreement and the Merger by the Required Company Stockholder
Vote) if a Triggering Event shall have occurred;
(h) by Parent, following a breach of any covenant or
agreement of the Company contained in this Agreement, or if any representation
or warranty of the Company contained in this Agreement shall be or shall have
become inaccurate, in either case such that any of the conditions set forth in
Sections 5.1(a), 5.1(b), 5.1(c) and 5.2 would not be satisfied as of the time
of such breach or as of the time such representation or warranty was or shall
have become inaccurate; provided, however, that: (A) if such breach or
inaccuracy is curable by the Company, then Parent may not terminate this
Agreement under this Section 7.1(h) with respect to a particular breach or
inaccuracy prior to or during the 30-day period commencing upon delivery by
Parent of written notice to the Company of such breach or inaccuracy, provided
that the Company continues to exercise all reasonable efforts to cure such
breach or inaccuracy; and (B) the right to terminate this Agreement under this
Section 7.1(h) shall not be available to Parent if Parent shall have committed
a material uncured breach of this Agreement; or
(i) by the Company, following a breach of any covenant or
agreement of Parent contained in this Agreement, or if any representation or
warranty of Parent contained in this Agreement shall be or shall have become
inaccurate, in either case such that any of the conditions set forth in
Sections 6.1(a), 6.1(b) and 6.2 would not be satisfied as of the time of such
breach or as of the time such representation or warranty was or shall have
become inaccurate; provided, however, that: (A) if such breach or inaccuracy is
curable by Parent, then the Company may not terminate this Agreement under this
Section 7.1(i) with respect to a particular breach or inaccuracy prior to or
during the 30-day period commencing upon delivery by the Company of written
notice to Parent of such breach or inaccuracy, provided Parent continues to
exercise reasonable efforts to cure such breach or inaccuracy; and (B) the
right to terminate this Agreement under this Section 7.1(i) shall not be
available to the Company if the Company shall have committed a material uncured
breach of this Agreement.
40.
46
7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, this Agreement shall be of no
further force or effect; provided, however, that (i) this Section 7.2, Section
7.3 and Article 8 shall survive the termination of this Agreement and shall
remain in full force and effect and, (ii) subject to Section 7.3(b) below, the
termination of this Agreement shall not relieve any party from any liability
for any breach of this Agreement.
7.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all fees and expenses, other than
attorneys' and accountants' fees, incurred in connection with the printing and
filing of the S-4 Registration Statement and the Prospectus/Joint Proxy
Statement and any amendments or supplements thereto with the SEC.
(b) In consideration of the substantial time, expense and
forgoing of other opportunities that the Parent has invested in the
transactions contemplated hereby, if this Agreement is terminated by either
Parent or the Company pursuant to Section 7.1(e) or if this Agreement is
terminated by Parent pursuant to Section 7.1(g), then the Company shall pay to
Parent a nonrefundable fee, in cash, of $1,000,000 (the "Break-Up Fee");
(c) In the case of termination of this Agreement pursuant
to Section 7.1(e), the Break-Up Fee shall be paid within one business day after
such termination. In the case of termination of this Agreement pursuant to
Section 7.1(g), the Break-Up Fee shall be paid within one business day after
such termination.
ARTICLE 8
MISCELLANEOUS
8.1 AMENDMENT. This Agreement may be amended with the approval of
the respective Boards of Directors of the Company and Parent at any time before
or after approval of this Agreement by the Company Stockholders; provided,
however, that after any such stockholder approval, no amendment shall be made
except as permitted by applicable law. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.2 WAIVER.
(a) No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any party in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
41.
47
(b) No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
8.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger.
8.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein and in that certain Mutual Non-Disclosure
Agreement dated January 27, 1998 between Parent and the Company constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among or between any of the parties with respect to the
subject matter hereof. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same instrument.
8.5 APPLICABLE LAW; JURISDICTION. This Agreement is made under,
and shall be construed and enforced in accordance with, the laws of the State
of Delaware applicable to agreements made and to be performed solely therein,
without giving effect to principles of conflicts of law. In any action between
or among any of the parties, whether arising out of this Agreement or
otherwise: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in Maryland; (b) if any such action is commenced in a state court,
then, subject to applicable law, no party shall object to the removal of such
action to any federal court located in Xxxxxxxxxx County, Maryland; (c) each of
the parties irrevocably waives the right to trial by jury; and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 8.7.
8.6 ASSIGNABILITY. This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors; provided, however, that neither this Agreement
nor any of the rights or obligations of the Company, Parent or Merger Sub
hereunder may be assigned by any party without the prior written consent of the
other parties hereto, and any attempted assignment without such consent shall
be void and of no effect. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement, except as specifically
provided in Section 4.19.
8.7 NOTICES. All notices and other communications required or
permitted to be delivered to any party pursuant to this Agreement shall be in
writing and shall be deemed properly given if delivered personally, by
facsimile, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
42.
48
To Parent or Merger Sub:
Gene Logic Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Company:
Oncormed, Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a facsimile, when the party receiving such facsimile shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized, overnight courier, on the Business Day following
dispatch and (d) in the case of registered or certified mail, on the fifth
Business Day following such mailing.
8.8 COOPERATION. Each of the Company and Parent agrees to
cooperate fully with the other and to execute and deliver such further
documents, certificates, agreements and instruments and to take such other
actions as may be reasonably requested by the other to evidence or reflect the
transactions contemplated hereby and to carry out the intent and purposes of
this Agreement.
43.
49
8.9 CONSTRUCTION. The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement. Except as otherwise indicated, all references in this Agreement
to "Articles," "Sections" and "Exhibits" are intended to refer to Articles and
Sections of this Agreement and Exhibits to this Agreement. The titles and
captions of the Articles and Sections of this Agreement are included for
convenience of reference only and shall have no effect on the construction or
meaning of this Agreement. As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
[THIS SPACE INTENTIONALLY LEFT BLANK]
44.
50
IN WITNESS WHEREOF, the parties hereby have executed this Agreement
and Plan of Reorganization as of the date first above written.
GENE LOGIC INC.
/s/ XXXXXXX X. XXXXXXX
---------------------------------------------
By: Xxxxxxx X. Xxxxxxx, M.D., Ph.D.
Title: President and Chief Executive Officer
GENE LOGIC ACQUISITION CORP.
/s/ XXXXXXX X. XXXXXXX
---------------------------------------------
By: Xxxxxxx X. Xxxxxxx, M.D., Ph.D.
Title: President and Chief Executive Officer
ONCORMED, INC.
/s/ XXXXXXX X. XXXXXX
---------------------------------------------
By: Xxxxxxx X. Xxxxxx, M.D., Ph.D.
-----------------------------------------
Title: Chairman of the Board of Directors
--------------------------------------
and Chief Executive Officer
[AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]
51
EXHIBITS
Exhibit A Certain Definitions
Exhibit B [reserved]
Exhibit C Directors and Officers of Surviving Corporation
Exhibit D Form of Stock Option Agreement
Exhibit E Form of Company Proprietary Information and Assignment
Agreement
Exhibit F Form of Company Affiliate Agreement
Exhibit G List of Persons to Enter into Employment or Consulting and
Noncompetition Agreement
52
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than an offer, proposal or inquiry by Parent)
contemplating or otherwise relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of related transactions involving:
(a) any merger, consolidation, share exchange, business
combination, issuance of securities, acquisition of securities, tender offer,
exchange offer or other similar transaction (i) in which the Company is a
constituent corporation, (ii) in which a Person or "group" (as defined in the
Exchange Act and the rules promulgated thereunder) of Persons directly or
indirectly acquires the Company or more than 50% of the Company's business or
directly or indirectly acquires beneficial or record ownership of securities
representing more than 50% of the outstanding securities of any class of voting
securities of the Company, or (iii) in which the Company issues securities
representing more than 50% of the outstanding securities of any class of voting
securities of the Company; or
(b) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 50% of the assets of the
Company, or any liquidation or dissolution of the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger
and Reorganization to which this Exhibit A is attached, as it may be amended
from time to time.
BREAK-UP FEE. "Break-up Fee" shall have the meaning set forth in
Section 7.3(b).
CERTIFICATE OF MERGER. "Certificate of Merger" shall have the meaning
set forth in Section 1.3.
CLOSING. "Closing" shall have the meaning set forth in Section 1.3.
CLOSING DATE. "Closing Date" shall have the meaning set forth in
Section 1.3.
CLOSING PRICE. "Closing Price" shall have the meaning set forth in
Section 1.5(b)(i).
CODE. "Code" shall have the meaning set forth in the recitals.
COMPANY. "Company" shall have the meaning set forth in the preamble.
COMPANY AFFILIATES. "Company Affiliates" shall have the meaning set
forth in Section 2.12.
A-1
53
COMPANY AFFILIATE AGREEMENT. "Company Affiliate Agreement" shall have
the meaning set forth in Section 4.15.
COMPANY CERTIFICATE OF INCORPORATION. "Company Certificate of
Incorporation" shall have the meaning set forth in Section 2.1(g).
COMPANY COMMON STOCK. "Company Common Stock" shall have the meaning
set forth in Section 1.5(a)(i).
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party; (b) by which the Company or any of its assets is
or may become bound or under which the Company has, or may become subject to,
any obligation; or (c) under which the Company has or may acquire any right or
interest.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall have
the meaning set forth in the preamble to Article 2.
COMPANY FINANCIAL STATEMENTS. "Company Financial Statements" shall
have the meaning set forth in Section 2.2(b).
COMPANY OPTIONS. "Company Options" shall have the meaning set forth
in Section 1.8.
COMPANY PREFERRED STOCK. "Company Preferred Stock" shall have the
meaning set forth in Section 1.5(a)(i).
COMPANY PROPRIETARY ASSETS. "Company Proprietary Assets" shall have
the meaning set forth in Section 2.5(a).
COMPANY SEC DOCUMENTS. "Company SEC Documents" shall have the meaning
set forth in Section 2.2(a).
COMPANY STOCK CERTIFICATE. "Company Stock Certificate" shall have the
meaning set forth in Section 1.6.
COMPANY STOCKHOLDERS. "Company Stockholders" shall have the meaning
set forth in Section 1.5(a).
COMPANY STOCKHOLDERS' MEETING. "Company Stockholders' Meeting" shall
have the meaning set forth in Section 4.9(a).
COMPANY WARRANTS. "Company Warrants" shall have the meaning set forth
in Section 1.9.
CONFIDENTIAL INFORMATION. "Confidential Information" shall have the
meaning set forth in Section 2.5(g).
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
A-2
54
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option,
warranty, purchase order, license, sublicense or legally binding commitment or
undertaking of any nature.
DGCL. "DGCL" shall have the meaning set forth in Section 1.2.
EFFECTIVE TIME. "Effective Time" shall have the meaning set forth in
Section 1.3.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ENVIRONMENTAL LAW. "Environmental Law" shall have the meaning set
forth in Section 2.10.
ERISA. "ERISA" shall have the meaning set forth in Section 2.7(b).
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
EXCHANGE AGENT. "Exchange Agent" shall have the meaning set forth in
Section 1.7(a).
EXCHANGE FUND. "Exchange Fund" shall have the meaning set forth in
Section 1.7(a).
EXCHANGE RATIO. "Exchange Ratio" shall have the meaning set forth in
Section 1.5(b)(ii).
EXISTING POLICY. "Existing Policy" shall have the meaning set forth
in Section 4.19(b).
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Legal Requirement; or (b) right under any Contract
with any Governmental Authority.
GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any: (a)
nation, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any
A-3
55
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Entity and any court or other tribunal).
INDEMNIFIED PARTIES. "Indemnified Parties" shall have the meaning set
forth in Section 4.19(a).
LEASES. "Leases" shall have the meaning set forth in Section 2.9(a).
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
or before, or otherwise involving, any court or other Governmental Authority or
any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental
Authority.
LIABILITIES. "Liabilities" shall mean any liability or obligation of
any kind or nature, secured or unsecured (whether absolute, accrued, contingent
or otherwise, and whether due or to become due).
MARCH 1998 BALANCE SHEET. "March 1998 Balance Sheet" shall have the
meaning set forth in Section 2.2(b).
MATERIAL ADVERSE EFFECT. An event, violation, change, failure,
inaccuracy, circumstance or other matter will be deemed to have a "Material
Adverse Effect" on the Company if such event, violation, change, failure,
inaccuracy, circumstance or other matter (considered together with all other
matters that would constitute exceptions to the representations and warranties
set forth in Article 2 of the Agreement but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on (i) the business, capitalization, operations or financial
condition of the Company taken as a whole, (ii) the ability of the Company to
consummate the Merger or any of the other transactions contemplated by the
Agreement or to perform any of its obligations under the Agreement, or (iii)
Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; provided, however, that: (A) any material adverse effect that
results from general economic, business or industry conditions or legislative
or regulatory initiatives shall be disregarded in determining whether there has
been a "Material Adverse Effect" on the Company; (B) any material adverse
effect that results from the taking of any action required by this Agreement or
from the announcement or pendency of the transactions contemplated by this
Agreement shall be disregarded in determining whether there has been a
"Material Adverse Effect" on the Company; (C) any material adverse effect that
results from the issuance of a report by the Company's
A-4
56
accountant that expresses doubt as to the Company's ability to continue as a
going concern or the Company's lack of liquidity and capital resources shall be
disregarded in determining whether there has been a "Material Adverse Effect"
on the Company; and (D) a decline in the Company's stock price shall not, in
and of itself, constitute a "Material Adverse Effect" on the Company and shall
be disregarded in determining whether there has been a Material Adverse Effect
on the Company. An event, violation, change, failure, inaccuracy, circumstance
or other matter will be deemed to have a "Material Adverse Effect" on Parent if
such event, violation, change, failure, inaccuracy, circumstance or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in Article 3 of the
Agreement but for the presence of "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, in such
representations and warranties) would have a material adverse effect on the
business, operations or financial condition of Parent and its subsidiaries
taken as a whole; provided, however, that: (A) any material adverse effect that
results from general economic, business or industry conditions or legislative
or regulatory initiatives shall be disregarded in determining whether there has
been a "Material Adverse Effect" on Parent; (B) any material adverse effect
that results from the taking of any action required by this Agreement or from
the announcement or pendency of the transactions contemplated by this Agreement
shall be disregarded in determining whether there has been a "Material Adverse
Effect" on Parent; and (C) a decline in Parent's stock price shall not, in and
of itself, constitute a "Material Adverse Effect" on Parent and shall be
disregarded in determining whether there has been a "Material Adverse Effect"
on Parent.
MATERIAL COMPANY CONTRACT. "Material Company Contract" shall have the
meaning set forth in Section 2.6(a).
MATERIAL PARENT CONTRACTS. "Material Parent Contracts" shall have the
meaning set forth in Section 3.16.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" shall have the meaning set forth in Section 2.10.
MERGER. "Merger" shall have the meaning set forth in the recitals.
MERGER SUB. "Merger Sub" shall have the meaning set forth in the
preamble.
NASD. "NASD" shall mean the National Association of Securities
Dealers.
NASDAQ NMS. "Nasdaq NMS" shall have the meaning set forth in Section
1.5(b)(i).
OUTSTANDING SHARES. "Outstanding Shares" shall have the meaning set
forth in Section 1.5(b)(iii).
PARENT. "Parent" shall have the meaning set forth in the preamble.
PARENT COMMON STOCK. "Parent Common Stock" shall have the meaning set
forth in Section 1.5(a)(iii).
A-5
57
PARENT DISCLOSURE SCHEDULE. "Parent Disclosure Schedule" shall have
the meaning set forth in the preamble to Article 3.
PARENT OPTIONS. "Parent Options" shall mean all outstanding options
to purchase shares of capital stock of Parent.
PARENT SEC DOCUMENTS. "Parent SEC Documents" shall have the meaning
set forth in Section 3.2(a).
PARENT STOCKHOLDERS' MEETING. "Parent Stockholders' Meeting" shall
have the meaning set forth in Section 4.10(a).
PARENT WARRANTS. "Parent Warrants" shall mean all outstanding
Warrants to purchase shares of capital stock of Parent.
PAST PREMIUM AMOUNT. "Past Premium Amount" shall have the meaning set
forth in Section 4.19(b).
PERSON. "Person" shall mean any individual, Entity or Governmental
Authority.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall have the meaning set
forth in Section 4.1.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, sample, media and/or cell line and
procedures and formulations for producing any such sample, media and/or cell
line, process, formula, test data, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or
other intellectual property right or intangible asset; or (b) right to use or
exploit any of the foregoing.
PROSPECTUS/JOINT PROXY STATEMENT. "Prospectus/Joint Proxy Statement"
shall mean the prospectus/joint proxy statement, filed as a part of the S-4
Registration Statement, to be sent to the Company's stockholders in connection
with the Company Stockholders' Meeting and to Parent's stockholders in
connection with the Parent Stockholders' Meeting.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants and advisors.
REQUIRED COMPANY STOCKHOLDER VOTE. "Required Company Stockholder
Vote" shall have the meaning set forth in Section 2.13.
REQUIRED PARENT STOCKHOLDER VOTE. "Required Parent Stockholder Vote"
shall have the meaning set forth in Section 3.8.
X-0
00
X-0 REGISTRATION STATEMENT. "S-4 Registration Statement" shall have
the meaning set forth in Section 2.25(d).
SEC. "SEC" shall have the meaning set forth in Section 2.2(a).
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of the
outstanding shares of Company Common Stock on terms that the Board of Directors
of the Company determines, in its reasonable judgment, after consultation with
its financial advisor, to be more favorable from a financial point of view to
the Company's stockholders than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not likely to be obtained by such third party on a timely
basis.
SURVIVING CORPORATION. "Surviving Corporation" shall have the meaning
set forth in Section 1.1.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or
collected by or under the authority of any Governmental Authority.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
THIRD PARTY PROPRIETARY ASSETS. "Third Party Proprietary Assets"
shall have the meaning set forth in Section 2.5(b).
TOTAL MERGER SHARES. "Total Merger Shares" shall have the meaning set
forth in Section 1.5(b)(i).
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have
occurred if: (i) this Agreement is terminated due to breach of this Agreement
by the Company; (ii) the Board of Directors of the Company shall have failed to
recommend, or shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of the
adoption and approval of this Agreement or the approval of the Merger; (iii)
the Company shall have failed to include in the Prospectus/Joint Proxy
Statement the recommendation of the Board of Directors of the Company in favor
of adoption and approval of this Agreement and approval of the Merger; (iv) the
Company shall have approved, endorsed or recommended any Acquisition Proposal
or Parent terminates this Agreement after the Company
A-7
59
publicly announces it is considering an Acquisition Proposal; (v) a tender or
exchange offer relating to securities of the Company shall have been commenced
and the Company shall not have sent to its securityholders, within ten (10)
business days after the commencement of such tender or exchange offer, a
statement disclosing that the Company does not recommend acceptance of such
tender or exchange offer; (vi) an Acquisition Proposal is publicly announced,
and the Company (A) fails to issue a press release announcing its opposition to
such Acquisition Proposal within five (5) business days after such Acquisition
Proposal is announced or (B) otherwise fails to actively oppose such
Acquisition Proposal; or (vii) the Company shall have failed to hold the
Company Stockholders' Meeting as promptly as practicable and in any event
within 45 days after the S-4 Registration Statement is declared effective under
the Securities Act.
A-8
60
EXHIBIT C
DIRECTORS OF SURVIVING CORPORATION
Xxxxxxx X. Xxxxxxx, M.D., Ph.D.
Xxxx X. Xxxxxx, Ph.D., X.Xx.
OFFICERS OF SURVIVING CORPORATION
Xxxxxxx X. Xxxxxxx, M.D., Ph.D., President and Chief Executive Officer
Xxxx X. Xxxxxxx, Senior Vice President, Corporate Development and Chief
Financial Officer
Xxxx X. Xxxxxx, Ph.D., X.Xx., Chairman of the Board of Directors
61
EXHIBIT D
FORM OF COMPANY STOCK OPTION AGREEMENT
62
EXHIBIT E
FORM OF COMPANY PROPRIETARY INFORMATION AND ASSIGNMENT AGREEMENT
63
EXHIBIT F
FORM OF COMPANY AFFILIATE AGREEMENT
64
EXHIBIT G
LIST OF PERSONS TO ENTER INTO EMPLOYMENT OR CONSULTING AND NONCOMPETITION
AGREEMENTS
EMPLOYMENT AND NONCOMPETITION AGREEMENT
Xx. Xxxxxxx Xxxxxxxx
Xx. Xxxxxx Xxxxxxx
CONSULTING AND NONCOMPETITION AGREEMENT
Xx. Xxxxxxx X. Xxxxxx
