CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Among
NOVARTIS INC.,
NOVARTIS BIOTECH HOLDING CORP.
and
SYSTEMIX, INC.
Dated as of January 10, 1997
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Glossary of Defined Terms
(Not Part of this Agreement)
Defined Term Location of Definition
------------ ----------------------
affiliate............................................ ss. 8.03(a)
Agreement............................................ Preamble
beneficial owner..................................... ss. 8.03(b)
Blue Sky Laws........................................ ss. 3.05(b)
Board................................................ Recitals
business day......................................... ss. 8.03(c)
Certificate of Merger................................ ss. 2.02
Certificates......................................... ss. 2.09(b)
Code................................................. ss. 2.10
Company.............................................. Preamble
Company Common Stock................................. Recitals
Company Preferred Stock.............................. ss. 3.03
control.............................................. ss. 8.03(d)
Delaware Law......................................... Recitals
Dissenting Shares.................................... ss. 2.08(a)
Effective Time....................................... ss. 2.02
Exchange Act......................................... ss. 1.02(b)
First Minimum Condition.............................. ss. 1.01(a)
Indemnified Parties.................................. ss. 5.05(b)
Material Adverse Effect.............................. ss. 3.01
Merger............................................... Recitals
Merger Consideration................................. ss. 2.06(a)
Offer................................................ Recitals
Offer Documents...................................... ss. 1.01(b)
Offer to Purchase.................................... ss. 1.01(b)
Option............................................... ss. 2.07(a)
Parent............................................... Preamble
Paying Agent......................................... ss. 2.09(a)
Per Share Amount..................................... Recitals
person............................................... ss. 8.03(e)
Proxy Statement...................................... ss. 3.08
Purchaser............................................ Preamble
Schedule 14D-9....................................... ss. 1.02(b)
Schedule 14D-1....................................... ss. 1.01(b)
Schedule 13E-3....................................... ss. 1.01(b)
SEC.................................................. ss. 1.01(b)
Second Minimum Condition............................. ss. 1.01(a)
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Defined Term Location of Definition
------------ ----------------------
SEC Reports.......................................... ss. 3.07(a)
Securities Act....................................... ss. 3.07(a)
Shares............................................... Recitals
Stockholders' Meeting................................ ss. 5.02(a)
Subsidiary........................................... ss. 3.01
subsidiary........................................... ss. 8.03(f)
Surviving Corporation................................ ss. 2.01
Transactions......................................... ss. 1.01(b)
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.01. The Offer............................................. 2
SECTION 1.02. Company Action........................................ 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger............................................ 5
SECTION 2.02. Effective Time; Closing............................... 5
SECTION 2.03. Effect of the Merger.................................. 5
SECTION 2.04. Certificate of Incorporation; By-laws................. 5
SECTION 2.05. Directors and Officers................................ 6
SECTION 2.06. Conversion of Securities.............................. 6
SECTION 2.07. Stock Options......................................... 6
SECTION 2.08. Dissenting Shares..................................... 7
SECTION 2.09. Surrender of Shares; Stock Transfer Books............. 7
SECTION 2.10. Withholding Rights.................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries.......... 9
SECTION 3.02. Certificate of Incorporation and By-laws.............. 9
SECTION 3.03. Capitalization........................................ 9
SECTION 3.04. Authority Relative to this Agreement.................. 10
SECTION 3.05. No Conflict; Required Filings and Consents............ 11
SECTION 3.06. Compliance............................................ 11
SECTION 3.07. SEC Filings; Financial Statements..................... 12
SECTION 3.08. Offer Documents; Schedule 14D-9; Schedule 13E-3; Proxy
Statement.......................................... 13
SECTION 3.09. Brokers............................................... 13
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Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01. Corporate Organization................................ 13
SECTION 4.02. Authority Relative to this Agreement.................. 14
SECTION 4.03. No Conflict; Required Filings and Consents............ 14
SECTION 4.04. Offer Documents; Proxy Statement...................... 15
SECTION 4.05. Brokers............................................... 15
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of the Business Pending the Merger............ 15
SECTION 5.02. Stockholders' Meeting................................. 16
SECTION 5.03. Proxy Statement....................................... 16
SECTION 5.04. Access to Information; Confidentiality................ 16
SECTION 5.05. Directors' and Officers' Indemnification and Insurance 17
SECTION 5.06. Notification of Certain Matters....................... 19
SECTION 5.07. Further Action; Reasonable Best Efforts............... 19
SECTION 5.08. Public Announcements.................................. 19
SECTION 5.09. Termination of Agreements............................. 19
SECTION 5.10. Financing............................................. 20
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Merger.............................. 20
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination........................................... 21
SECTION 7.02. Effect of Termination................................. 22
SECTION 7.03. Amendment............................................. 22
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Page
SECTION 7.04. Waiver................................................ 22
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Non-Survival of Representations, Warranties and
Agreements......................................... 23
SECTION 8.02. Notices............................................... 23
SECTION 8.03. Certain Definitions................................... 24
SECTION 8.04. Severability.......................................... 25
SECTION 8.05. Entire Agreement; Assignment.......................... 25
SECTION 8.06. Parties in Interest................................... 25
SECTION 8.07. Specific Performance.................................. 26
SECTION 8.08. Fees and Expenses..................................... 26
SECTION 8.09. Governing Law......................................... 26
SECTION 8.10. Headings.............................................. 26
SECTION 8.11. Counterparts.......................................... 26
Annex A: Conditions to the Offer
AGREEMENT AND PLAN OF MERGER, dated as of January 10, 1997 (this
"Agreement"), among NOVARTIS INC., a company organized under the laws of
Switzerland and the successor by merger to Sandoz Ltd. ("Parent"), NOVARTIS
BIOTECH HOLDING CORP. (formerly known as Sandoz Biotech Holdings Corporation), a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser"), and SYSTEMIX, INC., a Delaware corporation (the "Company").
WHEREAS, Purchaser owns an aggregate of 10,610,099 shares of Common
Stock, par value $.01 per share, of the Company ("Company Common Stock") (shares
of Company Common Stock being hereinafter collectively referred to as "Shares");
WHEREAS, Parent and Purchaser have proposed that Purchaser acquire
all of the remaining issued and outstanding Shares;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer in compliance with Section 14(d)(1) of
the Exchange Act (as defined below) and in compliance with the rules and
regulations promulgated thereunder (the "Offer") to acquire all the issued and
outstanding Shares for $19.50 per Share (such amount, or any greater amount per
Share paid pursuant to the Offer, being hereinafter referred to as the "Per
Share Amount") net to the seller in cash, upon the terms and subject to the
conditions of this Agreement and the Offer;
WHEREAS, in accordance with the terms of Section 2.05 of the
Acquisition Agreement among Parent, Purchaser and the Company dated as of
December 16, 1991 (the "Acquisition Agreement"), and based in part on the
opinion of Xxxxxx Brothers Inc. that the consideration to be received by the
holders of Shares (other than Parent and Purchaser) pursuant to each of the
Offer and the Merger (as defined below) is fair to such holders from a financial
point of view, a majority of the Independent Directors (as defined in the
Acquisition Agreement) has approved the Offer and the Merger (the "Independent
Director Approval");
WHEREAS, the Boards of Directors of Purchaser and the Company have
each determined that it is in the best interests of their respective
stockholders for Purchaser to acquire all of the remaining issued and
outstanding Shares;
WHEREAS, the Board of Directors of the Company (the "Board") has, by
unanimous vote of all directors present and voting (with all directors who are
designees of Parent abstaining), approved the making of the Offer and resolved
and agreed to recommend that the holders of the Shares tender their Shares
pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of Purchaser and the Company have each approved the merger (the
"Merger") of Purchaser
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with and into the Company in accordance with the General Corporation Law of the
State of Delaware ("Delaware Law") following the consummation of the Offer and
upon the terms and subject to the conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 7.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the initial public
announcement of Purchaser's intention to commence the Offer. Purchaser shall
not, without the consent of a majority of the Independent Directors, accept for
payment any Shares tendered pursuant to the Offer unless at least a majority of
the then issued and outstanding Shares, other than Shares owned by Parent and
Purchaser, shall have been validly tendered and not withdrawn prior to the
expiration of the Offer (the "First Minimum Condition"). The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer (i) shall be subject to the condition (the "Second Minimum Condition")
that at least the number of Shares that when added to the Shares already owned
by Parent and Purchaser shall constitute not less than 90% (or such other amount
which would allow the Merger to be effected without a meeting of the Company's
stockholders in accordance with Section 253 of the Delaware Law) of the then
issued and outstanding Shares shall have been validly tendered and not withdrawn
prior to the expiration of the Offer and (ii) shall be subject to the
satisfaction of the other conditions set forth in Annex A hereto. Purchaser
expressly reserves the right to waive any such condition (except the First
Minimum Condition), to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that (i) no change may be made which decreases the price per Share
payable in the Offer or which reduces the maximum number of Shares to be
purchased in the Offer or which imposes conditions to the Offer in addition to
those set forth in Annex A hereto and (ii) in the event all conditions set forth
in Annex A shall have been satisfied other than the Second Minimum Condition,
Purchaser may extend the Offer for a period or periods aggregating not more than
20 business days after the later of (x) the initial expiration date of the Offer
and (y) the date on which all other conditions set forth in Annex A shall have
been satisfied, after which time Purchaser shall waive the Second Minimum
Condition. The Per Share Amount shall, subject
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to applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer (including, without limitation, the First Minimum Condition and the
Second Minimum Condition), Purchaser shall pay, as promptly as practicable after
expiration of the Offer, for all Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") (i) a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "Schedule 14D-1") with respect to the
Offer and (ii) a Rule 13e-3 Transaction Statement on Schedule 13E-3 (together
with all amendments and supplements thereto, the "Schedule 13E-3") with respect
to the Offer and the other transactions contemplated hereby (the
"Transactions"). The Schedule 14D-1 and the Schedule 13E-3 shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Schedule 13E-3, the Offer to Purchase and
such other documents, together with all supplements and amendments thereto,
being referred to herein collectively as the "Offer Documents"). Parent,
Purchaser and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading, and Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 and the Schedule 13E-3 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given the
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC. Parent and Purchaser shall
provide the Company and its counsel with a copy of any written comments or
telephonic notification of any verbal comments Parent or Purchaser may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt thereof and shall provide the Company and its counsel with a copy of any
written responses and telephonic notification of any verbal responses of Parent,
Purchaser or their counsel.
SECTION 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) a majority of the Independent
Directors approved the Offer and the Merger, (ii) the Board, at a meeting duly
called and held on January 10, 1997, has, by unanimous vote of all directors
present and voting (with all directors who are designees of Parent abstaining),
(A) determined that this Agreement and the Transactions, including each of the
Offer and the Merger, are fair to and in the best interests of the holders of
Shares (other than Parent and Purchaser), (B) approved and adopted this
Agreement and the Transactions and (C) recommended that the stockholders of the
Company accept the Offer and approve and adopt this Agreement and the
Transactions, and (iii) Xxxxxx Brothers Inc. has delivered to the Independent
Directors and to the Board a written opinion that the consideration to be
received by the holders of Shares (other than
4
Parent and Purchaser) pursuant to each of the Offer and the Merger is fair to
the holders of Shares from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Board described in the immediately preceding sentence.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendation of the Board
described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the
extent required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
securities laws. The Company, Parent and Purchaser agree to correct promptly any
information provided by any of them for use in the Schedule 14D-9 which shall
have become false or misleading, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Purchaser and its counsel shall
be given the opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC. The Company shall
provide Purchaser and its counsel with a copy of any written comments or
telephonic notification of any verbal comments the Company may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
thereof and shall provide Purchaser and its counsel with a copy of any written
responses and telephonic notification of any verbal responses of the Company or
its counsel.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated in accordance with Section
7.01, shall deliver to the Company all copies of such information then in their
possession.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware Law, at
the Effective Time (as hereinafter defined) Purchaser shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 2.02. Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VI, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
be held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VI.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-laws. (a) At the
Effective Time the Certificate of Incorporation of Purchaser previously
delivered to the Company shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation; provided, however, that, at the Effective Time,
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read as follows: "The name of the corporation is SyStemix, Inc."
(b) At the Effective Time, the By-laws of Purchaser previously
delivered to the Company shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-laws.
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SECTION 2.05. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.06(b) and any Dissenting Shares (as hereinafter defined)) shall be
cancelled and shall be converted automatically into the right to receive
an amount equal to the Per Share Amount in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 2.09, of the certificate
that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 2.07. Stock Options and Warrants. (a) Immediately prior to
the Effective Time, each outstanding option and warrant to purchase Shares (in
each case, an "Option"), whether or not then exercisable, may be surrendered by
the holder of such Option for cancellation by the Company, and each holder of a
cancelled Option shall be entitled to receive an amount in cash from Purchaser,
in consideration for the cancellation of each such Option, at the same time as
the Merger Consideration is received by the holders of Shares, equal to the
product of (i) the number of Shares to be issued upon the exercise of such
Option and (ii) the excess, if any, of the Per Share Amount over the exercise
price per Share previously subject to such Option; provided, however, that any
Options owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective Time
shall be cancelled without any conversion thereof and no payment or distribution
shall be made with respect thereto.
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(b) The Company shall use all reasonable efforts to obtain such
consents as may be necessary or required so that, immediately prior to the
Effective Time, each Option may be and shall be cancelled by the Company.
SECTION 2.08. Dissenting Shares. (a) Notwithstanding any provision
of this Agreement to the contrary, Shares that are outstanding immediately prior
to the Effective Time and which are held by stockholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.09, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Delaware Law and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior
to the Effective Time, Purchaser shall designate a bank or trust company to act
as agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a). Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as
8
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly evidenced by such Certificate, and such Certificate shall
then be cancelled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered on the stock transfer books of the Company, it shall be a
condition of payment that the Certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such taxes either have been
paid or are not applicable.
(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
SECTION 2.10. Withholding Rights. Purchaser or the Paying Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares and/or an Option such
amounts that Purchaser or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the United States Internal
Revenue Code of 1986, as amended (the "Code"), the rules and regulations
promulgated thereunder or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Purchaser or the Paying Agent, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the
9
Shares and/or Option in respect of which such deduction and withholding was made
by Purchaser or the Paying Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of
the Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
or effect that, when taken together with all other adverse changes and effects
that are within the scope of the representations and warranties made by the
Company in this Agreement and which are not individually or in the aggregate
deemed to have a Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, operations, properties, condition (financial
or otherwise), assets or liabilities (including, without limitation, contingent
liabilities) or prospects of the Company and the Subsidiaries taken as a whole.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect, and neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists of 30,000,000 Shares and 1,000,000 shares of preferred stock,
par value $.01 per share ("Company Preferred Stock"). As of the date hereof, (i)
14,500,094 Shares
10
are issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no Shares are held in the treasury of the Company, (iii)
3,383,239 Shares are authorized for future issuance (with respect to which
options to acquire 2,016,378 Shares are issued and outstanding) pursuant to
employee stock options or stock incentive rights granted pursuant to the
Company's 1988 Stock Option Plan and 1991 Stock Option and Incentive Plan, and
(iv) 1,367,600 Shares are reserved for future issuance in connection with the
exercise of the Warrants (as such term is defined in the Stock and Warrant
Purchase Agreement, dated as of January 30, 1995, among Parent, Purchaser and
Company (the "Warrant Purchase Agreement")). As of the date hereof, no shares of
Company Preferred Stock are issued and outstanding. Except as contemplated by
this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. All Shares subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except for obligations to
executives under currently existing employment agreements to make loans relating
to personal residences, there are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any Shares
or any capital stock of any Subsidiary or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
person. Each outstanding share of capital stock of each Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or another Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement. The Company has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action (including approval by a majority of the Independent
Directors as provided in the Acquisition Agreement) and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recordation of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its
11
terms. The restrictions on business combinations contained in Section 203 of
Delaware Law have been satisfied with respect to the Transactions.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company or any Subsidiary, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of either of them is bound or affected, except for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate have a Material Adverse Effect, or prevent or
materially delay the performance by the Company of any of its obligations under
this Agreement or the consummation of any of the Transactions.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws and filing and
recordation of appropriate merger documents as required by Delaware Law and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not, individually or in the
aggregate, have a Material Adverse Effect, or prevent or materially delay the
performance by the Company of any of its obligations under this Agreement or the
consummation of any of the Transactions.
SECTION 3.06. Compliance. Neither the Company nor any Subsidiary is
in conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound or affected,
except for any such conflicts, defaults or violations that would
not,individually or in the aggregate, have a Material Adverse Effect, or prevent
or materially delay the
12
performance by the Company of any of its obligations under this Agreement or the
consummation of any of the Transactions.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 1994, and has heretofore delivered to Parent, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended December 31, 1994 and 1995, respectively, (ii) its Quarterly Reports on
Form 10-Q for the periods ended March 31, June 30 and September 30, 1996, (iii)
all proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since December 31, 1994, and (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company with the SEC
since December 31, 1994 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to herein, collectively,
as the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the consolidated financial position, results
of operations and changes in financial position of the Company and the
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries at December 31,
1995, including the notes thereto, included in the Company's Annual Report on
Form 10-K for the fiscal year then ended, or on the unaudited consolidated
balance sheet of the Company and the consolidated Subsidiaries at September 30,
1996, including the notes thereto, included in the Company's Quarterly Report on
Form 10-Q for the period then ended, the Company and the consolidated
Subsidiaries have no liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
consolidated balance sheet, or in the notes thereto, prepared in accordance with
generally accepted accounting principles, except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
September 30, 1996.
13
SECTION 3.08. Offer Documents; Schedule 14D-9; Schedule 13E-3; Proxy
Statement. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents or the Schedule 13E-3 shall, at the
respective times the Schedule 14D-9, the Offer Documents, the Schedule 13E-3 or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
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
made therein, in the light of the circumstances under which they are made, not
misleading. Neither the proxy statement to be sent to the stockholders of the
Company in connection with the Stockholders' Meeting (as hereinafter defined) or
the information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, being
referred to herein as the "Proxy Statement"), shall, at the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Stockholders' Meeting and at the
Effective Time, be false or misleading with respect to any material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent, Purchaser or any of their
representatives which is contained in any of the foregoing documents. The
Schedule 14D-9 and the Proxy Statement shall comply in all material respects as
to form with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.09. Brokers. No broker, finder or investment banker (other
than Xxxxxx Brothers Inc.) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Xxxxxx
Brothers Inc. pursuant to which such firm would be entitled to any payment
relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.
14
SECTION 4.02. Authority Relative to this Agreement. Each of Parent
and Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Purchaser pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any property or asset of either of
them is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or materially delay the
performance by Parent or Purchaser of any of its obligations under this
Agreement or the consummation of any of the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, and filing and recordation of appropriate
merger documents as required by Delaware Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay the performance by Parent
or Purchaser of any of its obligations under this Agreement or the consummation
of any of the Transactions.
15
SECTION 4.04. Offer Documents; Proxy Statement. The Offer Documents
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
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
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in any of the foregoing documents or the
Offer Documents. The Offer Documents shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.05. Brokers. No broker, finder or investment banker (other
than Xxxxxx Xxxxxxx & Co. Incorporated) is entitled to any brokerage, finder's
or other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or Purchaser.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of the Business Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and the Subsidiaries shall be conducted only in, and the Company
and the Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its best efforts to preserve substantially intact the business organization
of the Company and the Subsidiaries, to keep available the services of the
current officers, employees and consultants of the Company and the Subsidiaries
and to preserve the current relationships of the Company and the Subsidiaries
with customers, suppliers and other persons with which the Company or any
Subsidiary has significant business relations.
16
SECTION 5.02. Stockholders' Meeting. (a) If required by applicable
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Certificate of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold an
annual or special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the Transactions (the "Stockholders' Meeting") and (ii)
include in the Proxy Statement the recommendation of the Board (with all
directors who are designees of Parent abstaining) that the stockholders of the
Company approve and adopt this Agreement and the Transactions. At the
Stockholders' Meeting, Parent and Purchaser shall cause all Shares then owned by
them and their subsidiaries to be voted in favor of the approval and adoption of
this Agreement and the Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire such number of Shares that, when taken together with the Shares
previously owned by Purchaser, constitute at least 90 percent of the then
outstanding Shares, the parties hereto agree, subject to Article VI, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of Delaware Law, as soon as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.
SECTION 5.03. Proxy Statement. If required by applicable law, as
soon as practicable following consummation of the Offer, the Company shall file
the Proxy Statement with the SEC under the Exchange Act, and shall use its best
efforts to have the Proxy Statement cleared by the SEC. Parent, Purchaser and
the Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC. The Company shall give Parent and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of the Company, Parent and Purchaser
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC and to cause the Proxy Statement and all required amendments and supplements
thereto to be mailed to the holders of Shares entitled to vote at the
Stockholders' Meeting at the earliest practicable time.
SECTION 5.04. Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser access at all reasonable
17
times to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser with financial, operating and other data and
information as Parent or Purchaser, through its officers, employees or agents,
may reasonably request, in any case consistent with that currently available to
such persons and necessary to conduct the Offer and consummate the other
Transactions.
(b) No investigation pursuant to this Section 5.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(c) Information afforded or furnished to Parent or Purchaser by the
Company pursuant to this Section 5.04 shall be kept confidential and shall not
be disclosed to third parties except (i) with the consent of the Company, (ii)
as may be required by law, regulation or by legal process (including by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process), or (iii) as may be necessary in connection with the
Transactions.
SECTION 5.05. Directors' and Officers' Indemnification and
Insurance. (a) The By-laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in Article
XV of the By-laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals
who at the Effective Time were directors, officers, employees, fiduciaries or
agents of the Company, unless such modification shall be required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary and each fiduciary and agent of each
such director and officer (collectively, the "Indemnified Parties") against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, fiduciary or agent, whether
occurring before or after the Effective Time, until the expiration of the
statute of limitations relating thereto (and shall pay any expenses in advance
of the final disposition of such action or proceeding to each Indemnified Party
to the fullest extent permitted under Delaware Law, upon receipt from the
Indemnified Party to whom expenses are advanced of any undertaking to repay such
advances required under Delaware Law). In the event of any such claim,
18
action, suit, proceeding or investigation, (i) the Company or the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated pursuant to this Section 5.05(b) to
pay the fees and expenses of more than one counsel (plus appropriate local
counsel) for all Indemnified Parties in any single action except (x) that the
persons who served as directors of the Company who were not designees of Parent
shall be entitled to retain one additional counsel (plus appropriate local
counsel) to represent them at the expense of the Company or the Surviving
Corporation, and (y) to the extent that two or more of such Indemnified Parties
shall have conflicting interests in the outcome of such action, in which case
such additional counsel (including local counsel) as may be required to avoid
any such conflict or likely conflict may be retained by the Indemnified Parties
at the expense of the Company or the Surviving Corporation; and provided further
that, in the event that any claim for indemnification is asserted or made within
the period prior to the expiration of the applicable statute of limitations, all
rights to indemnification in respect of such claim shall continue until the
disposition of such claim. Parent hereby agrees to guarantee the obligations of
the Surviving Corporation and, following consummation of the Offer, the Company,
under this Section 5.05(b).
(c) The Surviving Corporation shall use its reasonable efforts to
maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 5.05(c) more than an
amount per year equal to 175% of current annual premiums paid by the Company for
such insurance. In the event that, but for the proviso to the immediately
preceding sentence, the Surviving Corporation would be required to expend more
than 175% of current annual premiums, the Surviving Corporation shall obtain the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 175% of current annual premiums.
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the
19
Company or the Surviving Corporation, as the case may be, or at Parent's option,
Parent, shall assume the obligations set forth in this Section 5.05.
SECTION 5.06. Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event the occurrence,
or nonoccurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.06 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.07. Further Action; Reasonable Best Efforts. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall (i)
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Transactions, including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and the Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement and the Surviving Corporation shall
use their reasonable best efforts to take all such action.
SECTION 5.08. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange to which Parent or the Company is a party.
SECTION 5.09. Termination of Agreements. The parties hereto hereby
agree that each of the Acquisition Agreement and the Warrant Purchase Agreement
shall be terminated as of the Effective Time. For purposes of clarity, it is
understood by the parties hereto that all representations, warranties and
agreements between the parties which, by the terms of such agreements, survive
either or both the Closing Date (as that term is defined in each of the
Acquisition Agreement and the Warrant Purchase Agreement) or the termination of
such agreements shall all be terminated as of the Effective Time.
20
SECTION 5.10. Financing. Parent shall ensure that Purchaser has
sufficient funds to acquire all the outstanding Shares in the Offer and the
Merger.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Merger. The respective obligations
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions
shall have been approved and adopted by the affirmative vote of the
stockholders of the Company to the extent required by Delaware Law and the
Certificate of Incorporation of the Company;
(b) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of: (i) making the acquisition
of Shares by Parent or Purchaser or any affiliate of either of them
illegal or otherwise restricting, preventing or prohibiting consummation
of the Transactions, (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of all or any material portion of the business or assets of
the Company, Parent or any of their respective subsidiaries as a result of
the Transactions, or (iii) compelling the Company, Parent, Purchaser or
any of their respective subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of the Company, Parent,
Purchaser or any of their respective subsidiaries as a result of the
Transactions; and
(c) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this Agreement or
the terms of the Offer, Purchaser fails to purchase any Shares validly
tendered and not withdrawn pursuant to the Offer.
21
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company, if such termination is
also approved by a majority of the Independent Directors; or
(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before June 30, 1997;
provided, however, that the right to terminate this Agreement under this
Section 7.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date or (ii) any court of competent jurisdiction or other governmental
authority shall have issued an order, decree, ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(c) By Parent if due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (i) failed to commence the Offer within 60
days following the date of this Agreement, (ii) terminated the Offer
without having accepted any Shares for payment thereunder or (iii) failed
to pay for Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such failure to pay for Shares shall
have been caused by or resulted from the failure of Parent or Purchaser to
perform in any material respect any material covenant or agreement of
either of them contained in this Agreement or the material breach by
Parent or Purchaser of any material representation or warranty of either
of them contained in this Agreement; or
(d) By the Company, upon approval of the Board and a majority
of the Independent Directors, if due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in
Annex A hereto, Purchaser shall have (i) failed to commence the Offer
within 60 days following the date of this Agreement, (ii) terminated the
Offer without having accepted any Shares for payment thereunder or (iii)
failed to pay for Shares pursuant to the Offer within 90 days following
the commencement of the Offer, unless such failure to pay for Shares shall
have been caused by or resulted from the failure of the Company to perform
in any
22
material respect any material covenant or agreement of it contained in
this Agreement or the material breach by the Company of any material
representation or warranty of it contained in this Agreement; or
(e) By the Company, upon approval of the Board and a majority
of the Independent Directors, if any representation or warranty of Parent
and Purchaser in this Agreement which is qualified as to materiality shall
not be true and correct or any such representation or warranty that is not
so qualified shall not be true and correct in any material respect, in
each case as if such representation or warranty was made as of such time
on or after the date of this Agreement; or Parent or Purchaser shall have
failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of Parent or Purchaser
to be performed or complied with by it under this Agreement.
SECTION 7.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except (i) as set forth in Section 8.01 and (ii) nothing herein shall relieve
any party from liability for any breach hereof.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the approval and adoption of this Agreement and the Transactions by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger, imposes conditions to the Merger
other than set forth in Section 6.01 or would otherwise amend or change the
terms and conditions of the Merger in a manner materially adverse to the holders
of the Shares (other than Parent and its affiliates); and provided further that
such amendment shall be approved by a majority of the Independent Directors.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
SECTION 7.04. Waiver. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby and, in
the case of any extension or waiver by which the Company is to be bound, only if
approved by a majority of the Independent Directors.
23
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Articles II and VIII and Section 5.05 shall survive the Effective Time
indefinitely.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.02):
if to Parent or Purchaser:
Novartis Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
if to the Company:
SyStemix, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
24
with copies to:
Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and
Shereff Xxxxxxxx Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
SECTION 8.03. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a
person who shall be deemed to be the beneficial owner of such Shares (i)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates or person with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any Shares;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in
the case of determining a date when any payment is due, any day on which
banks are not required or authorized by law or executive order to close in
the City of New York;
25
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means an affiliate
controlled by such person, directly or indirectly, through one or more
intermediaries.
SECTION 8.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 8.05. Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law or otherwise,
except that Parent and Purchaser may assign all or any of their rights and
obligations hereunder to any affiliate of Parent provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 8.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 5.05 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
26
SECTION 8.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 8.08. Fees and Expenses. (a) In the event that this
Agreement is terminated prior to consummation of the Merger, other than a
termination pursuant to Section 7.01(a) or (d) or a termination pursuant to
Section 7.01(b) or (c) which results from any representation or warranty of the
Company in this Agreement not being true and correct or the failure of the
Company to perform any obligation or to comply with any agreement or covenant of
the Company to be performed or complied with by it under this Agreement, then,
in any such event, Purchaser shall, and Parent shall cause Purchaser to, pay all
actual out-of-pocket fees and expenses incurred by the parties hereto, including
all fees and expenses payable to investment banking firms, counsel and
accountants, in connection with the structuring, negotiation, preparation,
execution and performance of this Agreement, as well as all printing and
advertising expenses.
(b) Except as set forth in this Section 8.08, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such costs and expenses, whether or not any Transaction is
consummated.
SECTION 8.09. Governing Law. Except to the extent that Delaware Law
is mandatorily applicable to the Transactions, this Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court sitting in the City
of New York and the parties hereto hereby consent to the jurisdiction of such
courts in any such action or proceeding.
SECTION 8.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
27
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
NOVARTIS INC.
By /s/Xxxxxxx Xxxx /s/Xxxxxxxxx Xxxxxx
------------------------------- ------------------------
Name: Xxxxxxx Xxxx Xxxxxxxxx Xxxxxx
Title: Chief Financial Officer Corporate Counsel
NOVARTIS BIOTECH HOLDING
CORP.
By /s/Xxxxxx X. Xxxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Vice President and Secretary
SYSTEMIX, INC.
By /s/Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or pay for any Shares tendered pursuant to
the Offer, and may terminate or amend the Offer and may postpone the acceptance
for payment of and payment for Shares tendered, if (i) the Second Minimum
Condition shall not have been satisfied or (ii) at any time on or after the date
of this Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
(a) an order shall have been entered in any action or
proceeding before any federal or state court or governmental agency or
other regulatory body or a permanent injunction by any federal or state
court of competent jurisdiction in the United States shall have been
issued and remain in effect (i) making illegal the purchase of, or payment
for, any Shares by Parent, Purchaser or any affiliate of Parent or
Purchaser; (ii) otherwise preventing the consummation of any of the
Transactions; (iii) imposing limitations on the ability of Parent,
Purchaser or any affiliate of Parent or Purchaser to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer on
all matters properly presented to the Company's stockholders, which would
effect a material diminution in the value of the Shares acquired by
Purchaser;
(b) there shall have been any federal or state statute, rule
or regulation enacted or promulgated on or after the date of the Offer
that could reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (iii) of
paragraph (a) above;
(c) any representation or warranty of the Company in this
Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each case as if
such representation or warranty was made as of such time on or after the
date of this Agreement;
(d) there shall have occurred and be remaining in effect (i)
any general suspension of, or limitation on prices for, trading in
securities of the Company on the NASDAQ National Market System, (ii) any
material change in United States or Switzerland currency exchange rates or
a suspension of, or limitation on, currency exchange markets in the United
States or Switzerland, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or
Switzerland, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United
A-2
States or Switzerland or (v) in the case of any of the foregoing existing
on the date hereof, a material acceleration or worsening thereof;
(e) this Agreement shall have been terminated in accordance
with its terms; or
(f) Purchaser and the Company (with the approval of a majority
of the Independent Directors) shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
