Exhibit 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
CELL THERAPEUTICS, INC.
AND
NOVUSPHARMA, S.p.A.
DATED
AS OF
JUNE 16, 2003
TABLE OF CONTENTS
ARTICLE I THE MERGER..............................................................................................3
1.1 The Merger..........................................................................................3
1.2 Closing.............................................................................................3
1.3 Effective Time......................................................................................4
1.4 Effects of the Merger...............................................................................4
1.5 Articles of Incorporation and Bylaws................................................................4
1.6 Directors; Operations following the Merger..........................................................4
1.7 Effect on Capital Stock.............................................................................5
1.8 Exchange of Shares..................................................................................6
1.9 No Fractional Shares................................................................................6
1.10 Rescission Shares...................................................................................6
1.11 Return of the Exchange Fund.........................................................................7
1.12 No Further Ownership Rights in Novuspharma Ordinary Shares..........................................7
1.13 Associated Rights...................................................................................7
1.14 Further Assurances..................................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF NOVUSPHARMA..........................................................8
2.1 Organization, Standing and Corporate Power..........................................................8
2.2 Capital Structure...................................................................................8
2.3 Authority...........................................................................................9
2.4 Consents and Approvals; No Violations..............................................................10
2.5 Publicly Filed Documents; Financial Statements.....................................................11
2.6 Disclosure.........................................................................................12
2.7 Absence of Certain Changes or Events...............................................................13
2.8 Taxes..............................................................................................14
2.9 Actions and Proceedings............................................................................15
2.10 Certain Agreements.................................................................................15
2.11 Employee Benefits; Social Security.................................................................16
2.12 Compliance with Applicable Laws....................................................................17
2.13 Intellectual Property..............................................................................20
2.14 Agreements with Employees; Labor Disputes..........................................................22
2.15 Contracts; Debt Instruments........................................................................23
2.16 Financial Advisors.................................................................................24
2.17 Title to Properties; Leases........................................................................24
2.18 Grants and Subsidies...............................................................................25
2.19 Insider Interests..................................................................................25
2.20 Insurance..........................................................................................25
2.21 Voting Requirements................................................................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CTI................................................................25
3.1 Organization, Standing and Corporate Power.........................................................26
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3.2 Capital Structure; Subsidiaries....................................................................26
3.3 Authority..........................................................................................27
3.4 Consents and Approvals; No Violations..............................................................27
3.5 SEC Documents; Financial Statements................................................................28
3.6 Disclosure.........................................................................................29
3.7 Absence of Certain Changes or Events...............................................................30
3.8 Taxes..............................................................................................30
3.9 Actions and Proceedings............................................................................31
3.10 Certain Agreements.................................................................................32
3.11 Employee Benefits; Social Security.................................................................32
3.12 Compliance with Applicable Laws....................................................................33
3.13 Intellectual Property..............................................................................36
3.14 Agreements with Employees; Labor Disputes..........................................................38
3.15 Contracts; Debt Instruments........................................................................38
3.16 Financial Advisors.................................................................................39
3.17 Title to Properties................................................................................39
3.18 Third Party Reimbursement Policies.................................................................40
3.19 Voting Requirements................................................................................40
3.20 State Takeover Statutes; Certain Charter Provisions................................................40
3.21 Rights Plan........................................................................................40
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................40
4.1 Conduct of Business by Novuspharma.................................................................40
4.2 Conduct of Business by CTI.........................................................................43
4.3 No Solicitation by CTI.............................................................................45
4.4 No Solicitation by Novuspharma.....................................................................47
4.5 Other Actions......................................................................................48
ARTICLE V ADDITIONAL AGREEMENTS..................................................................................49
5.1 Preparation of Proxy Statement, Registration Statement, Information Document
and Listing Particulars; Shareholders' Meetings...................................................49
5.2 Access to Information; Regulatory Communications...................................................50
5.3 Commercially Reasonable Efforts; Notification......................................................51
5.4 Termination of Novuspharma Stock Options, Assumption of Novuspharma Stock
Option Plans and Treatment of Novuspharma Employees...............................................52
5.5 Conveyance Taxes...................................................................................54
5.6 Indemnification, Exculpation and Insurance.........................................................54
5.7 Letters of Accountants.............................................................................55
5.8 Fees and Expenses..................................................................................55
5.9 Public Announcements...............................................................................55
5.10 Novuspharma Representatives on the Surviving Corporation...........................................56
5.11 Creditors' Claims..................................................................................56
5.12 Headquarters.......................................................................................56
5.13 Favorable Tax Ruling...............................................................................56
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5.14 Termination of 2001 Shareholders' Agreement........................................................56
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.......................................................................56
6.1 Conditions to Each Party's Obligations to Close....................................................56
6.2 Additional Conditions to Obligations of CTI........................................................57
6.3 Additional Conditions to Obligations of Novuspharma................................................58
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................................59
7.1 Termination........................................................................................59
7.2 Effect of Termination..............................................................................61
7.3 Amendment..........................................................................................62
7.4 Extension; Waiver..................................................................................62
ARTICLE VIII GENERAL PROVISIONS..................................................................................62
8.1 Nonsurvival of Representations and Warranties......................................................63
8.2 Notices............................................................................................63
8.3 Definitions........................................................................................64
8.4 Interpretation.....................................................................................64
8.5 Counterparts.......................................................................................65
8.6 Entire Agreement; No Third-Party Beneficiaries.....................................................65
8.7 GOVERNING LAW; CONSENT TO JURISDICTION.............................................................65
8.8 Assignment.........................................................................................65
8.9 Specific Performance...............................................................................65
8.10 Severability.......................................................................................66
8.11 WAIVER OF JURY TRIAL...............................................................................66
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Schedules
---------
Schedule A Merger Plan
Schedule B Novuspharma Significant Shareholders
Schedule C CTI Significant Shareholders
Schedule D Shareholders of Surviving Corporation entering into
Shareholders' Agreement
Schedule E Continuing Employees
Schedule F Directors of the Surviving Corporation
Schedule G Novuspharma Representatives on the Board of Directors of the
Surviving Corporation
Schedule H Directors of the Italian Subsidiary
Schedule I Institore
Schedule J List of Exemptions to the Listing Particulars
Exhibits
--------
Exhibit A-1 Form of Novuspharma Shareholder Voting Agreement
Exhibit A-2 Form of Novuspharma Shareholder Voting Agreement for
Shareholders entering Into the Shareholders' Agreement
Exhibit B-1 Form of CTI Shareholder Voting Agreement
Exhibit B-2 Form of CTI Shareholder Voting Agreement for Non-Executive
Officers and Directors
Exhibit C Form of Shareholders' Agreement
Exhibit D Articles of Incorporation of the Surviving Corporation
Exhibit E Bylaws of the Surviving Corporation
Exhibit F Bylaws of the Italian Subsidiary
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 16, 2003, by and between Cell Therapeutics, Inc., a
Washington corporation ("CTI"), and Novuspharma, S.p.A., an Italian joint
stock company ("Novuspharma").
THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis
of the following facts and understandings:
A. The respective Boards of Directors of CTI and Novuspharma
have each approved the transactions contemplated by this Agreement, subject to
the terms and conditions herein, and have granted to their respective officers
or managing directors, as applicable, the relevant powers to execute this
Agreement.
1. The Board of Directors of CTI has resolved, among other
things, to: (i) approve the draft merger plan (progetto di fusione)
in the form set forth on Schedule A attached hereto (together with
the attachments thereto, including an English translation approved
and reasonably accepted by each of CTI and Novuspharma (the "Merger
Plan")); (ii) recommend to its shareholders the approval of the
issuance of shares of CTI Common Stock (as hereinafter defined) in
the merger contemplated by this Agreement and the Merger Plan
pursuant to which Novuspharma will merge into CTI (the "Merger") upon
the terms and subject to the conditions set forth in this Agreement
and in accordance with the Business Corporation Act of the State of
Washington, as amended (the "WBCA") and the Italian Civil Code, as
amended, and any other applicable provision of Italian law ("Italian
Law"); (iii) convene the CTI Shareholders' Meeting (as defined in
Section 5.1(f) hereof); (iv) apply, promptly following the
Shareholder Approvals (as defined in Recital C below), to the Borsa
Italiana S.p.A. (the "Borsa Italiana") for the listing on the Nuovo
Mercato of the shares of common stock, no par value per share, of CTI
("CTI Common Stock") and to the Commissione Nazionale per le Societa
e la Borsa, the Italian securities regulatory commission ("CONSOB"),
for the registration of the relevant Listing Particulars (as defined
in Section 5.1(a) hereof); (v) notify the National Association of
Securities Dealers ("NASD") on the appropriate form prior to the
consummation of the Merger of the issuance and listing on the Nasdaq
National Market of the shares of CTI Common Stock to be issued as
Merger Consideration (as defined in Section 1.7(b) hereof) and (vi)
carry out any action necessary in order to accomplish the foregoing
objectives and to consummate the Merger and the other transactions
contemplated hereby.
2. The Board of Directors of Novuspharma has resolved to:
(i) approve the Merger Plan; (ii) recommend to its shareholders the
approval of the Merger upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the WBCA and
Italian Law; (iii) convene the Novuspharma Shareholders' Meeting (as
defined in Section 5.1(f) hereof); (iv) cooperate with CTI with
respect to CTI's application to the Borsa Italiana for the listing on
the Nuovo Mercato of the shares of CTI Common Stock and to CONSOB for
the registration of the relevant Listing Particulars; and (v) carry
out any actions necessary in order to accomplish the foregoing
objectives and to consummate the Merger and the other transactions
contemplated hereby.
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As a consequence of the Merger, each ordinary share, nominal value One Euro
(Euro 1) per share, of Novuspharma (the "Novuspharma Ordinary Shares") (other
than Novuspharma Ordinary Shares, if any, to be cancelled in accordance with
Section 1.7(a) hereof and Rescission Shares (as defined in Section 1.10
hereof)) shall be converted in accordance with Section 1.7(b) of this
Agreement into that number of shares of CTI Common Stock representing the
Merger Consideration.
B. The Merger, the Merger Plan, and certain of the transactions
contemplated by this Agreement must be approved by the holders of at least
two-thirds (66 2/3%) of the Novuspharma Ordinary Shares present at the
Novuspharma Shareholders' Meeting, provided that the quorum required for the
Novuspharma Shareholders' Meeting shall consist of more than one-half (50%) of
the outstanding Novuspharma Ordinary Shares as of the relevant record date
during the first call, more than one-third (33 1/3%) of the outstanding
Novuspharma Ordinary Shares as of the relevant record date during the second
call, and more than one-fifth (20%) of the outstanding Novuspharma Ordinary
Shares as of the relevant record date during the third call (the "Novuspharma
Shareholder Approval").
C. The Merger and the Merger Agreement must be approved by a
majority of the outstanding shares of Cerebus Common Stock (the "CTI
Shareholder Approval" and, together with the Novuspharma Shareholder Approval,
the "Shareholder Approvals").
D. Immediately after the execution and delivery of this
Agreement by Novuspharma, (i) CTI and each of the shareholders of Novuspharma
listed on Schedule B attached hereto ("Novuspharma Significant Shareholders")
shall enter into a voting agreement (each, a "Novuspharma Shareholder Voting
Agreement") in substantially the form attached hereto as Exhibit A-1 or
Exhibit A-2, and (ii) Novuspharma and each of the shareholders of CTI listed
on Schedule C attached hereto ("CTI Significant Shareholders") shall enter
into a voting agreement (each, a "CTI Shareholder Voting Agreement" and
together with the Novuspharma Shareholder Voting Agreement, the "Shareholder
Voting Agreements") in substantially the form attached hereto as Exhibit B-1
or Exhibit B-2; and (iii) CTI and each of the prospective shareholders of the
Surviving Corporation listed on Schedule D attached hereto is entering into a
shareholders' agreement (the "Shareholders' Agreement") in substantially the
form attached hereto as Exhibit C; and the effectiveness of the Shareholders'
Agreement shall be subject to and conditioned upon the consummation of the
Merger.
E. Immediately after the execution of this Agreement by
Novuspharma, CTI and the employees of Novuspharma listed on Schedule E
attached hereto ("Continuing Employees") shall enter into employment
agreements reasonably satisfactory to CTI (the "Employment Agreements").
F. As a condition and inducement to each party's willingness to
enter into this Agreement, CTI shall obtain the listing of the CTI Common
Stock on the Nuovo Mercato, and, in furtherance thereof, CTI shall, inter
alia, (i) apply to the Borsa Italiana for the listing on the Nuovo Mercato of
the shares of CTI Common Stock and apply to CONSOB for the registration of the
relevant Listing Particulars (subject to Schedule J), (ii) notify the NASD
prior to the issuance and listing on the Nasdaq National Market of the shares
of CTI Common Stock issued as Merger Consideration, and (iii) carry out any
other actions or activity reasonably required pursuant to Italian Law in order
to accomplish such listings and Novuspharma shall cooperate with CTI in
carrying out such actions. The effectiveness of the listing of the shares of
CTI Common Stock on the Nuovo Mercato and the newly issued shares of CTI
Common Stock on the Nasdaq National Market is intended to occur
simultaneously.
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G. For Italian income tax purposes, it is intended that the
Merger shall constitute a tax-neutral transaction for Novuspharma and for
holders of Novuspharma Ordinary Shares resident in Italy, except for transfers
made pursuant to Section 1.9 or 1.10 below. It is understood that (i) CTI
shall establish an Italian Branch, qualifying as a permanent establishment for
Italian tax purposes (the "Italian Branch"), prior to the Closing (as defined
in Section 1.2 below) and appoint an Italian legal representative
("Institore"), (ii) at the Effective Time (as defined in Section 1.3 below)
the assets (or a portion thereof) of the Surviving Corporation that were owned
by Novuspharma immediately prior to the Effective Time shall be attributed to
the Italian Branch, and (iii) within one hundred twenty (120) days after the
Effective Time, CTI shall cause the assets (or a portion thereof) of the
Italian Branch to be contributed to a wholly-owned subsidiary of the Surviving
Corporation in the form of a S.r.l. (the "Italian Subsidiary") in exchange for
all of the quotas of capital stock of the Italian Subsidiary.
H. As a condition and inducement to Novuspharma's willingness
to enter into this Agreement, the parties agree that, (i) as of the Effective
Time, the individuals set forth on Schedule G attached hereto shall become
directors of the Surviving Corporation (as defined in Section 1.1 below), and
(ii) upon the contribution of the assets (or a portion thereof) of the Italian
Branch to the Italian Subsidiary, the directors of the Italian Subsidiary
shall be as set forth on Schedule H attached hereto.
I. Concurrently with the execution and delivery of this
Agreement, the parties shall announce the Merger to the public and to the
relevant securities authorities in compliance with Applicable Laws (as defined
in Section 2.4).
J. CTI and Novuspharma desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the
other transactions contemplated by this Agreement and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the WBCA and Italian Law,
Novuspharma shall be merged with and into CTI at the Effective Time. Following
the Merger, the separate corporate existence of Novuspharma shall cease and
CTI shall continue as the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all of the rights and obligations as well as
the assets and liabilities of Novuspharma in accordance with the WBCA and
Italian Law.
1.2 Closing. The Closing of the Merger shall take place at a
date and time to be agreed between the parties, which shall be no later than
the fifth business day after satisfaction or waiver by the relevant party or
parties of the last of the conditions set forth in Article VI (the "Closing
Date"), at the offices of Studio Notarile Xxxxxxxxx, Xxx Xxxxxxx 00, Xxxxx,
Xxxxx, before the Italian notary public, Mr. Piergaetano Xxxxxxxxx or any
other notary public of his office (the "Italian Notary Public"), unless
another Italian notary public, time, date or place is mutually agreed upon in
writing by the parties hereto. For purposes of this Agreement, the
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"Closing" shall mean the execution and delivery of all relevant legal and
contractual documentation required hereunder and under each of the WBCA and
Italian Law to properly consummate the Merger, including the merger deed,
drafted in the Italian language and signed by the parties before the Italian
Notary Public (together with an English translation thereof approved, and
reasonably accepted and countersigned by the parties, (the "Merger Deed")).
1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing, the parties shall
file (a) appropriate Articles of Merger with the Secretary of State of
Washington in accordance with Chapter 23B.11.050 and any other relevant
provisions of the WBCA (the "Articles of Merger") and (b) the Merger Deed with
the Companies' Register in Milan, Italy. The parties shall make all other
filings and recordings required by the WBCA and Italian Law in connection with
the Merger. The Merger shall become effective immediately prior to the first
trading date on the Nuovo Mercato of the shares of CTI Common Stock, or at
such other time as CTI and Novuspharma shall agree should be specified in the
Articles of Merger, the Merger Deed or other appropriate documents (such date
and time, or such other date or time as may be set forth therein, being the
"Effective Time"). The parties intend that the Effective Time shall be as soon
as practicable after the later to occur of (x) the filing of the Articles of
Merger with the Secretary of State of Washington and (y) the recording of the
Merger Deed or other appropriate documents on the Companies' Register in
Milan, Italy. The accounting and fiscal effects of the Merger shall take place
as of the Effective Time.
1.4 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the WBCA and Italian Law, including,
without limiting the generality of the foregoing and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
Novuspharma shall vest in the Surviving Corporation and all debts, liabilities
and duties of Novuspharma shall become the debts, liabilities and duties of
the Surviving Corporation.
1.5 Articles of Incorporation and Bylaws. At the Effective
Time, the Articles of Incorporation and Bylaws of the Surviving Corporation
shall be as set forth in Exhibit D and Exhibit E attached hereto (which shall
also be attached to the Merger Plan), until thereafter changed or amended as
provided therein or by Applicable Laws.
1.6 Directors; Operations following the Merger.
(a) The Board of Directors of CTI shall take all actions
necessary such that effective as of immediately following the Effective Time,
the Board of Directors shall be as set forth in Schedule F attached hereto
until the earlier of the resignation or removal of any individual listed on
Schedule F attached hereto or designated in accordance with this Section
1.6(a) or until their respective successors are duly elected and qualified, as
the case may be, in the manner provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation, or as otherwise provided by law. The
Board of Directors of the Surviving Corporation shall be classified at Closing
with approximately one-third of the members of the Board elected each year,
and each Board member's class designation shall be as set forth in Schedule F
attached hereto.
(b) At the Effective Time, the Institore of the Italian
Branch shall be as set forth in Schedule I attached hereto until the earlier
of such Italian Branch Manager's resignation or removal or until such Italian
Branch Manager's respective successor is duly elected and qualified, as the
case may be, in the manner provided in the Articles of Incorporation and
Bylaws of the Surviving Corporation, and the Institore shall have the powers
4
set forth in such Schedule for so long as he is the Institore. Upon the
contribution of the assets of the Italian Branch into the Italian Subsidiary,
the Board of Directors, and certain of the officers of the Italian Subsidiary
shall be as set forth in Schedule H attached hereto until the earlier of the
resignation or removal of any individual listed on Schedule H or designated in
accordance with this Section 1.6(b) or until their respective successors are
duly elected and qualified, as the case may be, in the manner provided in the
Articles of Association and Bylaws of the Italian Subsidiary (which Bylaws
shall be substantially in the form attached hereto as Exhibit F) or as
otherwise provided by law.
1.7 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of CTI, the following
shall occur:
(a) Cancellation of Novuspharma Treasury Stock;
Cancellation of Novuspharma Owned Shares of CTI Common Stock. Each Novuspharma
Ordinary Share that is owned by Novuspharma immediately prior to the Effective
Time shall automatically be cancelled without any conversion thereof and no
consideration shall be delivered with respect thereto. Each share of CTI
Common Stock that is owned by Novuspharma immediately prior to the Effective
Time, if any, shall automatically be cancelled at the Effective Time.
Novuspharma and, after the Effective Time, the Surviving Entity shall take or
cause to be taken all actions necessary in order to accomplish such
cancellations.
(b) Conversion of Novuspharma Ordinary Shares.
(i) Each Novuspharma Ordinary Share issued and
outstanding as of the Effective Time (other than shares to be cancelled in
accordance with Section 1.7(a) hereof and Rescission Shares), shall be
converted, subject to Section 1.10 of this Agreement, into 2.45 (the "Exchange
Ratio") shares of CTI Common Stock (the "Merger Consideration"). The Exchange
Ratio shall be adjusted to reflect fully the appropriate effect of any stock
split, reverse stock split, stock dividend (including any dividend or pro rata
distribution of securities convertible into CTI Common Stock), reorganization,
recapitalization, reclassification or other like changes with respect to CTI
Common Stock having a record date on or after the date hereof and prior to the
Effective Time.
(ii) As of the Effective Time, all such
Novuspharma Ordinary Shares shall no longer be outstanding, shall
automatically be cancelled and shall cease to exist, and each book-entry
position with depositary intermediaries participating to Monte Titoli S.p.A.
("Monte Titoli") previously representing any such shares shall thereafter
represent the shares of CTI Common Stock into which such Novuspharma Ordinary
Shares were converted in the Merger in accordance with this Section 1.7(b).
The holders of such book-entry positions with depositary intermediaries
participating in Monte Titoli previously evidencing such Novuspharma Ordinary
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to Novuspharma and such Novuspharma Ordinary Shares as
of the Effective Time. Such book-entry positions previously representing
Novuspharma Ordinary Shares shall be exchanged for book-entry positions
representing whole shares of CTI Common Stock issued as Merger Consideration,
without interest, in accordance with the terms of this Agreement. As of the
Effective Time, each share of CTI Common Stock issued as Merger Consideration
shall be entitled to the same rights, preferences and privileges as other
shares of CTI Common Stock, including dividend rights. No fractional shares of
CTI Common Stock shall be issued, but in lieu thereof, the provisions of
Section 1.9 shall apply.
5
(c) Novuspharma Stock Options. Each and every
Novuspharma Stock Option outstanding under the Novuspharma Stock Option Plan
(as defined in Section 2.10 hereof) immediately prior to the Effective Time
shall be treated in the manner set forth in Section 5.4 hereof.
(d) No Effect on CTI Common Stock. At and after the
Effective Time, each share of CTI Common Stock issued and outstanding
immediately prior to the Effective Time (except for any shares of CTI Common
Stock owned by Novuspharma, which shall be cancelled pursuant to Section
1.7(a) above) shall remain an issued and outstanding share of CTI Common Stock
and shall not be affected by the Merger.
1.8 Exchange of Shares. The exchange procedure shall be
carried out through the centralized depositary system managed by Monte Titoli
and in accordance with the applicable provisions of Italian Law (including,
but not limited to, Italian Legislative Decree no. 213 of June 24, 1998) and
the standard operating procedures adopted by Monte Titoli. Novuspharma and CTI
shall take all actions necessary or useful in order to accomplish the
exchange, including, as soon as reasonably practicable after the Effective
Time, CTI shall take all necessary steps in order to issue and deliver the
shares of CTI Common Stock to be issued pursuant to Section 1.7(b) hereof in
exchange for Novuspharma Ordinary Shares and cash or shares of CTI Common
Stock, as the case may be, sufficient to pay cash in lieu of fractional shares
in accordance with Section 1.9 hereof (collectively, the "Exchange Fund").
Except as contemplated by this Section 1.8, the Exchange Fund shall not be
used for any other purposes. Novuspharma acknowledges that Novuspharma shall
be responsible for delivering to Monte Titoli the relevant instructions
regarding the Exchange Ratio, the Effective Time and any other information
that Monte Titoli may require in connection with the exchange procedure, and
CTI will cooperate with Novuspharma in such respect should Novuspharma
reasonably request. Such instructions shall be given by Novuspharma prior to
or on the Closing Date.
1.9 No Fractional Shares.
(a) No fractional shares of CTI Common Stock shall
be issued upon the conversion or exchange of Novuspharma Ordinary Shares, and
such fractional share interests shall not entitle the owner thereof to vote or
to any rights of a shareholder of CTI.
(b) Within ten (10) days following the Shareholder
Approvals, CTI and Novuspharma shall select and enter into an agreement (in
form and substance reasonably satisfactory to both parties) with a financial
intermediary which participates in Monte Titoli or a bank designated by the
parties to act as exchange agent (the "Exchange Agent"). CTI, Novuspharma and
the Exchange Agent shall determine suitable procedures for the treatment of
fractional shares of CTI Common Stock issued in respect of Novuspharma
Ordinary Shares in the Merger in accordance with market practice in Italy and
with the rules and practice of Monte Titoli. The Surviving Corporation shall
pay all commissions, transfer taxes and other out-of-pocket transaction costs
of the Exchange Agent incurred in connection with dealing with any such
fractional shares of CTI Common Stock. In addition, the Surviving Corporation
shall pay the Exchange Agent's compensation and expenses in connection with
dealing with any such fractional shares of CTI Common Stock.
1.10 Rescission Shares. Notwithstanding Section 1.7 hereof
or any other provision of this Agreement, if the Merger is consummated
pursuant to the terms and conditions of this Agreement and the WBCA and
Italian Law, Novuspharma Ordinary Shares outstanding immediately prior to the
Effective Time and held by a holder who has exercised and perfected
6
his or her rescission rights in accordance with Italian Law and who does not
subsequently withdraw such exercise or abandon such right (the "Rescission
Shares"), shall not be converted into or exchanged for the Merger
Consideration, but, effective as of the Effective Time or at any other time
determined by Novuspharma and CTI in accordance with Applicable Laws, the
holders of Rescission Shares shall be entitled to receive cash per Novuspharma
Ordinary Share equal to the Average Closing Price (as defined below). The
effective payment of the cash consideration for the rescission right will be
made immediately following the closing by the Surviving Entity since the
effective exercise of the rescission right will be subject to the consummation
of the Merger. For purposes of this Section 1.10, "Average Closing Price"
means the average closing price for a share of Novuspharma Ordinary Shares on
the Nuovo Mercato during the six (6) months prior to the date of the
Novuspharma Shareholder Approval. Novuspharma shall set aside, in a bank
account instituted by Novuspharma for such purposes, amounts in cash to be
potentially paid in respect of Rescission Shares and Novuspharma shall give
CTI and its counsel prompt notice of any demands for rescission rights
received by Novuspharma or its counsel from the holders of Novuspharma
Ordinary Shares or their nominees. Upon payment of the amounts due in respect
of the Rescission Shares pursuant to this Section 1.10, the Rescission Shares
and book-entry positions representing Rescission Shares shall automatically be
cancelled and any holder thereof shall cease to have any rights with respect
thereto, including as a shareholder of the Surviving Corporation.
1.11 Return of the Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the former shareholders of
Novuspharma for six (6) months after the Effective Time shall be delivered to
the Surviving Corporation, upon demand by the Surviving Corporation, and any
such former shareholders of Novuspharma who have not theretofore complied with
any instructions provided to them in connection with the exchange of
Novuspharma Ordinary Shares for shares of CTI Common Stock shall thereafter
seek recourse only from the Surviving Corporation for payment of their claim
for CTI Common Stock. None of CTI, Novuspharma, the Surviving Corporation or
the Exchange Agent shall be liable to any former holder of Novuspharma
Ordinary Shares for any shares of CTI Common Stock or cash otherwise
deliverable or payable to any holder of Novuspharma Ordinary Shares properly
paid to a public official pursuant to any applicable abandoned property,
escheat or similar laws.
1.12 No Further Ownership Rights in Novuspharma Ordinary
Shares. All shares of CTI Common Stock issued in accordance with the terms of
this Article I (including any cash paid pursuant to Section 1.9 or 1.10
hereof) shall be deemed to have been issued (and paid) in full satisfaction of
all rights pertaining to Novuspharma Ordinary Shares. At the Effective Time,
the stock transfer books of Novuspharma shall be closed, and there shall be no
further registrations of transfers of Novuspharma Ordinary Shares thereafter
on the records of Novuspharma.
1.13 Associated Rights. References in this Agreement to CTI
Common Stock shall include, unless the context requires otherwise, the
associated Preferred Stock Purchase Rights ("Rights") issued pursuant to that
certain Rights Agreement dated as of November 11, 1996, by and between CTI and
Xxxxxx Trust Company of California, as amended by that certain First Amendment
to Rights Agreement, dated November 20, 0000 xxxxxxx XXX, Xxxxxx Trust Company
of California and Computershare Investor Services, LLC (as amended, the
"Rights Plan").
1.14 Further Assurances. Immediately after the Effective
Time, the Surviving Corporation and its proper officers and directors or their
designees shall be authorized to execute and deliver, in the name of and on
behalf of either CTI or Novuspharma, any deeds,
7
bills of sale, assignments or assurances or other acts or things necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its right, title or interest in, to or under any
of the rights (including, without limitation, the right to collect damages for
past infringement of Intellectual Property (as defined in Section 2.13(a)
hereof) or other rights), privileges, powers, franchises, properties or assets
of either of CTI or Novuspharma or (b) otherwise to carry out the purposes of
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF NOVUSPHARMA
Except as set forth on the Disclosure Schedules (provided
that an item on such Disclosure Schedules shall be deemed to qualify only the
particular section or sections of this Article II specified for such item,
unless it is reasonably apparent that the disclosure or statement in one
section of the Disclosure Schedules should apply to one or more sections
thereof) delivered by Novuspharma to CTI prior to the execution of this
Agreement (the "Novuspharma Disclosure Schedules"), Novuspharma represents and
warrants to CTI as follows:
2.1 Organization, Standing and Corporate Power. Novuspharma
is a joint stock company duly organized, validly existing and in good standing
under the laws of Italy and has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted. Novuspharma is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, would not be
reasonably likely to have a material adverse effect (as defined in Section 8.3
hereof) on Novuspharma. The corporate records and minute books of Novuspharma
have been maintained in accordance with all applicable requirements and are
true, correct and complete in all respects, except as would not be reasonably
likely to have a material adverse effect on Novuspharma. Novuspharma has
delivered or made available to CTI true, correct and complete copies of its
Articles of Association and Bylaws, as amended to the date hereof.
2.2 Capital Structure. As of the date hereof, the authorized
capital stock of Novuspharma consists of 6,566,200 Novuspharma Ordinary
Shares, of which all of such shares are issued, subscribed, paid-in and
outstanding and are represented by a book-entry position with depositary
intermediaries participating to Monte Titoli. The rights, preferences and
privileges of Novuspharma Ordinary Shares are as stated in Novuspharma's
Articles of Association and in the applicable Italian Laws. On April 18, 2000,
the extraordinary shareholders meeting of Novuspharma granted (pursuant to
art. 2443 of the Italian Civil Code) to Novuspharma's Board of Directors the
power to reserve up to 67,770 Novuspharma Ordinary Shares for issuance
pursuant to the Novuspharma Stock Option Plans. On April 9, 2001, the
extraordinary shareholders meeting of Novuspharma granted (pursuant to art.
2443 of the Italian Civil Code) to Novuspharma's Board of Directors the power
to reserve 200,000 Novuspharma Ordinary Shares for issuance pursuant to the
Novuspharma Stock Option Plans. On April 24, 2002, the extraordinary
shareholders meeting of Novuspharma granted (pursuant to art. 2443 of the
Italian Civil Code) to Novuspharma's Board of Directors the power to reserve
250,000 Novuspharma Ordinary Shares for issuance pursuant to the Novuspharma
Stock Option Plans. All issued and outstanding Novuspharma Ordinary Shares and
all Novuspharma Ordinary Shares which may be issued upon the exercise of
Novuspharma Stock Options are or
8
will be duly authorized, validly issued, fully paid and nonassessable. No
issued or outstanding Novuspharma Ordinary Shares are subject to or were
issued in violation of any preemptive rights, or were issued in violation of
applicable securities laws. No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which stockholders of Novuspharma
may vote ("Voting Debt") is issued or outstanding as of the date hereof. As of
the date of this Agreement, except as set forth above, there are no
outstanding shares of capital stock of, or other equity or voting interests
in, Novuspharma, or securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Novuspharma is a
party or by which it is bound obligating Novuspharma to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting interests in Novuspharma, Voting Debt or other
securities (whether voting or otherwise) of Novuspharma or to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except as set forth in
Schedule 2.2(a) of the Novuspharma Disclosure Schedules, there are no
outstanding contractual obligations of Novuspharma (1) restricting the
transfer of, (2) affecting the voting rights of (including, without
limitation, voting trusts, voting agreements or irrevocable proxies), (3)
requiring the repurchase, redemption or disposition of, (4) requiring the
registration for sale of, or (5) granting any preemptive or antidilutive right
with respect to, any Novuspharma Ordinary Shares or any Novuspharma Stock
Options. Novuspharma has delivered or made available to CTI and its counsel
copies of all documents listed on Schedule 2.2(a) of the Novuspharma
Disclosure Schedules. The execution and delivery of this Agreement and the
agreements contemplated hereby to which Novuspharma is a party do not, and the
consummation of the transactions contemplated hereby and thereby and the
compliance with the provisions hereof and thereof will not, give rise to any
preemptive or antidilutive right of any person with respect to Novuspharma
Ordinary Shares or any Novuspharma Stock Options. Except as set forth in
Schedule 2.2(b) of the Novuspharma Disclosure Schedules, from the close of
business on December 31, 2002 to and including the date hereof, no Novuspharma
Ordinary Shares or other capital stock or other securities (whether voting or
otherwise) of Novuspharma have been issued or will be issued or transferred
from Novuspharma's treasury. Novuspharma does not own, directly or indirectly,
any capital stock or other equity or voting interests in, or other securities
(whether voting or otherwise) or other ownership interest in any corporation,
partnership, limited partnership, limited liability company, joint venture or
other entity. There are no options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Novuspharma is a
party or by which it is bound obligating Novuspharma to acquire or underwrite
any capital stock or other equity or voting interests in, or any other
securities of, any corporation, partnership, limited partnership, limited
liability company, joint venture or other entity. Except as set forth on
Schedule 2.2(c) of the Novuspharma Disclosure Schedules, Novuspharma owns no
shares of CTI Common Stock and since April 4, 2003 has not purchased or sold
any Novuspharma Ordinary Shares.
2.3 Authority. Novuspharma has the requisite corporate power
and authority to enter into this Agreement and, subject to the Novuspharma
Shareholder Approval, to consummate the transactions contemplated hereby. The
Board of Directors of Novuspharma at a meeting of directors duly called and
held: (a) resolved that the Merger and the Merger Plan are advisable and fair
and in the best interests of Novuspharma and its shareholders; (b) approved
the Merger Plan; (c) resolved to enter into this Agreement (granting the
managing director of Novuspharma) with the relevant corporate powers) and to
recommend approval of the Merger and the consummation of the transactions
contemplated by this Agreement upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the WBCA and Italian Law to
the holders of Novuspharma Ordinary Shares; (d) granted a director all
necessary powers in order for the Novuspharma Shareholders Meeting to be
called as soon
9
as necessary pursuant to this Agreement and (e) directed that the Merger and
the Merger Plan be submitted for the relevant approval of the holders of the
Novuspharma Ordinary Shares. The financial statements of Novuspharma as of
December 31, 2002 were approved at the ordinary shareholders' meeting of
Novuspharma held on April 24, 2003. The execution and delivery of this
Agreement and the consummation by Novuspharma of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action
on the part of Novuspharma, subject only to the Novuspharma Shareholder
Approval. This Agreement has been duly executed and delivered by Novuspharma
and constitutes a valid and binding obligation of Novuspharma, enforceable
against Novuspharma in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws affecting the rights of
creditors generally and general principles of equity.
2.4 Consents and Approvals; No Violations. Except as set
forth on Schedule 2.4 of the Novuspharma Disclosure Schedules, the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, (a) conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
pursuant to, any Novuspharma Material Contract (as defined in Section 2.15
hereof), or to loss of a material benefit under, or result in the creation of
any pledge, claim, restriction on transfer, charge, lien, encumbrance, right
of first refusal, option or security interest of any kind or nature whatsoever
("Lien") upon any of the properties or assets of Novuspharma; (b) conflict
with or result in any violation of or default under the Articles of
Association and Bylaws of Novuspharma; (c) conflict with, or result in any
material violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation pursuant to, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, commitment,
instrument, undertaking, permit, concession, franchise, license or other
legally binding arrangement or understanding ("Contracts") applicable to
Novuspharma or its properties or assets, (d) conflict with or violate any
license, permit or other instrument or Contract granted by, or entered into
with, a Regulatory Agency (as defined in Section 2.12(e) below); (e) conflict
with or result in any violation of or default (with or without notice or lapse
of time or both) under, or give rise to the right of termination, cancellation
or acceleration of any obligation pursuant to, any grant or subsidized loan
received by Novuspharma from any Italian, European Union ("EU") or other
Governmental Entity, including, without limitation, the Italian Ministry of
Scientific Research and Technology (Ministero dell'Universita e della Ricerca
Scientifica e Tecnologica / Ministero dell'Istruzione e della Ricerca or
"MURST/MIUR") (collectively, the "Grants and Subsidies"); or (f) subject to
the governmental filings and other matters referred to in the following
sentence, conflict with or violate any orders, judgments, injunctions, decrees
or other requirements of any court, arbitrator or Governmental Entity (each a
"Judgment"), or any statutes, laws, ordinances, rules or regulations (together
with any Judgments, "Applicable Laws") issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity (as defined below) and applicable to Novuspharma or its
properties, other than, in the case of foregoing clauses (a), (c), (d), (e) or
(f), any such conflicts, violations, defaults, rights, loss or Liens that
individually or in the aggregate would not (x) be reasonably likely to have a
material adverse effect on Novuspharma, (y) impair in any material respect the
ability of Novuspharma to perform its obligations under this Agreement, or (z)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Italian, United States,
EU or other foreign court, administrative or regulatory agency or commission
(including any Regulatory Agencies) or other governmental authority or agency,
(a "Governmental Entity"), is required by Novuspharma in
10
connection with the execution and delivery of this Agreement by Novuspharma or
the consummation by Novuspharma of the transactions contemplated by this
Agreement, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings, if any, as may be required of or with
the United States Federal Trade Commission and/or the United States Antitrust
Division of the Department of Justice (the "Specified Agencies") under the
United States Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX
Xxx"), (xx) the filing with CONSOB of this Agreement, the Shareholder Voting
Agreements, the Information Document (as defined in Section 5.1(b) hereof),
the minutes from the Novuspharma Shareholders' Meeting and certain other
documents as required under Italian Law relating to the Merger, (iii) the
filing with the United States Securities and Exchange Commission (the "SEC")
of such reports under the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively,
the "Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (iv) the filing with the
Borsa Italiana of the Information Document and certain other documents
relating to the Merger, (v) the filing, publication and recordation of the
Merger Deed or other appropriate documents and notices with the Companies'
Register at the Italian Chamber of Commerce in Milan, Italy, (vi) the filing
of the Articles of Merger with the Secretary of State of Washington in
accordance with the relevant provisions of the WBCA, (vii) such filings and
consents as may be required under any environmental, health or safety law or
regulation (including any rules and regulations of the United States Food and
Drug Administration (the "FDA") and any consent of MURST/MIUR) pertaining to
any notification, disclosure or required approval triggered by the Merger or
by the transactions contemplated hereby, each of which is set forth in
Schedule 2.4 of the Novuspharma Disclosure Schedules, (viii) such consents,
approvals or authorizations as set forth in Schedule 2.4 of the Novuspharma
Disclosure Schedules and (ix) such other consents, approvals, orders,
authorizations, registrations, declarations and filings required by Applicable
Laws, the failure of which to be obtained or made would not, in the case of
this clause (ix), individually or in the aggregate, (x) be reasonably likely
to have a material adverse effect on Novuspharma, (y) impair in any material
respect the ability of Novuspharma to perform its obligations under this
Agreement, or (z) prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
2.5 Publicly Filed Documents; Financial Statements.
(a) Since November 9, 2000, Novuspharma has timely
filed and published with the CONSOB and the Borsa Italiana all required
reports, forms and other documents (the "CONSOB Documents"). As of their
respective dates, the CONSOB Documents were prepared in accordance and
complied in all material respects with the requirements of Italian Law and the
rules and regulations of the Borsa Italiana and the CONSOB promulgated
thereunder and applicable to such CONSOB Documents, and none of the CONSOB
Documents contained any untrue, incorrect or incomplete 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. Except to the extent
that information contained in any CONSOB Document has been revised or
superseded by a later-filed CONSOB Document filed and publicly available prior
to the date of this Agreement, none of the CONSOB Documents contains any
untrue, incorrect or incomplete 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 were
made, not misleading.
(b) The audited financial statements of Novuspharma
included in the CONSOB Documents (together with the notes thereto, the
"Novuspharma Audited Financial
11
Statements") and the unaudited financial statements of Novuspharma included in
the CONSOB Documents (the "Novuspharma Unaudited Financial Statements" and,
together with the Novuspharma Audited Financial Statements, the "Novuspharma
Financial Statements"): (i) comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the CONSOB and the Borsa Italiana with respect thereto; (ii) have been
prepared in accordance with Italian accounting principles as prescribed by
Italian Law ("Italian GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto); (iii) fairly
present the financial position of Novuspharma as and at the respective dates
thereof and the results of its operations and its cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein); and (iv) in
the case of the Novuspharma Audited Financial Statements, have been duly
audited by KPMG S.p.A. in accordance with Italian Law. Except as required by
Italian GAAP, Novuspharma has not, since November 9, 2000, made any change in
the accounting practices or policies applied in the preparation of the
Novuspharma Financial Statements. The quarterly report of Novuspharma
contained in the CONSOB Documents as of March 31, 2003 is hereinafter referred
to as the "Novuspharma Balance Sheet" and March 31, 2003 is hereinafter
referred to as the "Novuspharma Balance Sheet Date." The books and records of
Novuspharma have been, and are being, maintained in all material respects in
accordance with Italian GAAP and other applicable legal and accounting
requirements. Except as set forth on the Novuspharma Financial Statements and
for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the Novuspharma Balance Sheet Date that
are not, individually or in the aggregate, material to Novuspharma,
Novuspharma has (i) no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by Italian GAAP to be
recognized or disclosed on the Novuspharma Financial Statements, and (ii) no
liabilities or obligations of any nature (whether accrued, contingent or
otherwise) that, individually or in the aggregate, would be reasonably likely
to have a material adverse effect on Novuspharma. No basis exists that would
require, and to Novuspharma's knowledge, no circumstance exists that would be
reasonably likely to require Novuspharma to restate any of the Novuspharma
Financial Statements.
(c) Other than in connection with this Agreement and
the transactions contemplated hereby, Novuspharma is not or has never been
subject to any filing or other reporting requirements under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") or the Exchange Act, or the rules and regulations of the SEC
promulgated thereunder. During all periods covered by the Novuspharma
Financial Statements, (i) to Novuspharma's knowledge, a majority of the
outstanding voting securities of Novuspharma were not held by residents of the
United States, (ii) a majority of the executive officers and directors of
Novuspharma were not citizens of the United States, (iii) a majority of the
assets of Novuspharma were located outside United States, and (iv) a majority
of Novuspharma's business was administered outside of the United States.
2.6 Disclosure. None of the information supplied by
Novuspharma specifically for inclusion or incorporation by reference in (a)
the Registration Statement (as defined in Section 5.1(a) hereof), will, at the
time the Registration Statement is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue, incorrect or incomplete statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, (b) the Proxy Statement (as defined
in Section 5.1(a) hereof) will, at the date the Proxy Statement is first
mailed to CTI's shareholders or at the time of the CTI Shareholders' Meeting,
contain any untrue, incorrect or incomplete statement of a material fact or
omit to state any
12
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, or (c) the Information Document and the Listing Particulars
will, at the date they are first filed with the Borsa Italiana and the CONSOB,
respectively, or, in the case of the Information Document, made available at
Novuspharma's registered office in Bresso, Italy, or at the time of the
Novuspharma Shareholders' Meeting, contain any untrue, incorrect or incomplete
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. If, at any
time prior to the Effective Time, any event with respect to Novuspharma, its
officers or directors shall occur which is required to be described in the
Proxy Statement, the Registration Statement, the Information Document or the
Listing Particulars, (1) Novuspharma shall promptly advise CTI of such event,
and (2) if required by Applicable Law, Novuspharma shall promptly file an
appropriate amendment or supplement thereto with the CONSOB or the Borsa
Italiana, and, as required by Applicable Law, disseminate such amendment or
supplement to the shareholders of Novuspharma; provided, however, that,
subject to the requirements of Italian securities laws, in no event shall
Novuspharma make any disclosure without the prior written consent of CTI if
doing so would violate or cause a violation of United States securities laws
or any other Applicable Laws. The Information Document will comply as to form
in all material respects with the rules and regulations of the CONSOB and the
Borsa Italiana. Notwithstanding the foregoing, no representation or warranty
is made by Novuspharma with respect to statements made or incorporated by
reference in the Information Document based on information supplied by CTI
specifically for inclusion or incorporation by reference therein.
2.7 Absence of Certain Changes or Events. Except as set
forth in Schedule 2.7 of the Novuspharma Disclosure Schedules and except for
this Agreement and the documents executed in connection herewith and the
transactions contemplated thereby, (a) since the Novuspharma Balance Sheet
Date and through the date of this Agreement, (i) Novuspharma has conducted its
business only in the ordinary course of business consistent with past
practice, (ii) there has not been any declaration, setting aside or payment of
any dividend on, or other distribution (whether in case, stock or property) in
respect of, any of Novuspharma's capital stock, or any purchase, redemption or
other acquisition by Novuspharma of any of its capital stock or any other
securities of Novuspharma or any options, warrants, calls or rights to acquire
any such shares or other securities except for repurchases from employees
following their termination pursuant to the terms of their pre-existing stock
option or purchase agreements, (iii) Novuspharma has not acquired or agreed to
acquire any assets other than in the ordinary course of business consistent
with past practice and (iv) there has not been any split, combination or
reclassification of any of Novuspharma's capital stock, and (b) since the
Novuspharma Balance Sheet Date through the date of this Agreement (i)
Novuspharma has not incurred any liability or obligation (indirect, direct or
contingent), that is not in the ordinary course of business or that would,
individually or in the aggregate, result in a material adverse effect on
Novuspharma, (ii) Novuspharma has not sustained any material damage,
destruction or loss, whether or not covered by insurance, and (iii) there has
been no event, circumstance or development that would be reasonably likely to
have a material adverse effect on Novuspharma.
13
2.8 Taxes.
(a) Novuspharma has timely filed the Italian, local
or non-Italian tax returns and reports required to be filed by it through the
date hereof and shall timely file all such returns and reports required to be
filed on or before the Effective Time and all such returns and reports are
true, correct and complete in all material respects. Novuspharma has timely
paid and discharged any and all taxes shown to be due on such returns. The
most recent Novuspharma Financial Statements filed prior to the date of this
Agreement and publicly available properly reflect in accordance with Italian
GAAP the Novuspharma tax situation for all taxable periods and portions
thereof through the date of such Novuspharma Financial Statements, including,
but not limited to, an adequate reserve for taxes.
(b) No claim or deficiency for any taxes has been
proposed, threatened in writing or assessed by any Italian, United States or
other taxing authority or agency (including, without limitation, the United
States Internal Revenue Service (the "IRS")) against Novuspharma which would
be reasonably likely to have a material adverse effect upon Novuspharma. As of
the date hereof, no requests for refunds or waivers of the time to assess any
taxes have been granted or are pending. As of the date hereof, no audit or
examination with respect to taxes is presently in progress and Novuspharma has
not received in writing a notice of audit or examination or similar inquiry
with respect to taxes.
(c) Novuspharma has withheld and/or paid over to the
proper governmental authorities all material taxes required to have been
withheld and/or paid over and complied with all material information reporting
and backup withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid to any employee,
independent contractor, creditor or other third party.
(d) Copies of (i) any tax examinations, (ii)
extensions of statutory limitations for the collection or assessment of taxes,
and (iii) the tax returns of Novuspharma for the last five (5) fiscal years
have been made available to CTI.
(e) There are (and, as of immediately following the
Effective Time, there will be) no material Liens on the assets of Novuspharma
relating to or attributable to taxes, except for Liens for taxes not yet due.
(f) To Novuspharma's knowledge, there is no basis
for the assertion of any claim relating to or attributable to taxes that, if
adversely determined, would result in any Lien on the assets of Novuspharma or
otherwise have a material adverse effect on Novuspharma.
(g) Novuspharma is not, and has not been at any
time, a party to a tax sharing, tax indemnity or tax allocation agreement, and
Novuspharma has not assumed the tax liability of any other person under
Contract, or pursuant to Applicable Law.
(h) As used in this Agreement, "taxes" shall include
all (i) Italian, United States and other income, property, sales, transfer,
payroll, employment, VAT, IRPEG, excise and other taxes (including IRAP), of
any nature whatsoever (whether payable directly or by withholding), together
with any interest and penalties, additions to tax or additional amounts
imposed with respect thereto and (ii) any liability for the payment of any
amount described in clause (i) of this Section 2.8(h) as a result of being a
member of an affiliated, consolidated, combined, unitary or any other similar
group for any period.
14
(i) As of the date hereof, Novuspharma's tax basis
in its assets for purposes of determining its future amortization,
depreciation and other Italian income tax deductions is accurately reflected
on Novuspharma's tax books and records, as the case may be.
(j) As of the date hereof, the tax losses of
Novuspharma are existing and valid pursuant to Applicable Law.
2.9 Actions and Proceedings. Except as set forth on Schedule
2.9 of the Novuspharma Disclosure Schedules, as of the date hereof, there is
no suit, action, investigation, audit or proceeding in any Italian, United
States, EU or other jurisdiction, including, without limitation, any product
liability claim, pending or, to the knowledge of Novuspharma, threatened in
writing against Novuspharma or its management that, individually or in the
aggregate, would be reasonably likely to (a) have a material adverse effect on
Novuspharma, or (b) have a material adverse effect on the ability of
Novuspharma to perform its obligations under this Agreement.
2.10 Certain Agreements. Except as set forth on Schedule
2.10 of the Novuspharma Disclosure Schedules, there are no stock option, stock
appreciation rights, restricted stock, stock purchase or other equity-based
plan or agreement that Novuspharma maintains or to which Novuspharma is a
party (collectively, the "Novuspharma Plans"). Novuspharma is not a party to
any oral Novuspharma Plans. A true, correct and complete copy of each
Novuspharma Plan, including, without limitation, the stock option regulations
approved by the shareholders' meetings dated April 18, 2000, April 9, 2001 and
April 24, 2002 and the minutes of the Board of Directors of Novuspharma dated
February 27, 2001, November 13, 2001 and December 11, 2002 (the "Novuspharma
Stock Option Plan"), has been made available to CTI and its counsel. As of the
date of this Agreement, Schedule 2.10 of the Novuspharma Disclosure Schedules
sets forth a true, correct and complete list of all holders of options to
purchase Novuspharma Ordinary Shares ("Novuspharma Stock Options") or other
Novuspharma equity-based awards, grant dates, number of shares subject to
awards, vesting and exercisability schedule and exercise price. As of the date
of this Agreement, except as set forth on Schedule 2.10 of the Novuspharma
Disclosure Schedules, Novuspharma is not a party to any written or unwritten
agreement or plan, including any Novuspharma Plan, any of the benefits of
which will be increased by, the vesting or exercisability of the benefits of
which will be accelerated by, or the value of any of the benefits of which
will be calculated on the basis of, any of the transactions contemplated by
this Agreement either alone or upon the occurrence of any additional or
further acts or events. No holder of any Novuspharma Stock Options or
Novuspharma Ordinary Shares granted in connection with the performance of
services for Novuspharma, is or will be entitled to receive cash from
Novuspharma in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement either alone or upon the
occurrence of any additional or further acts or events (other than, in the
case of holders of Novuspharma Ordinary Shares, any Rescission Shares and cash
in lieu of fractional shares). Novuspharma is not a party or subject to any
termination benefits agreement (or arrangement) or severance agreement (or
arrangement) or employment agreement (or arrangement), either alone or upon
the occurrence of any additional or further acts or events, which would be
triggered by the consummation of the transactions contemplated by this
Agreement, except as set forth in Schedule 2.10 of the Novuspharma Disclosure
Schedules.
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2.11 Employee Benefits; Social Security.
(a) Schedule 2.11(a) of the Novuspharma Disclosure
Schedules lists all Novuspharma Plans, employee benefit plans and all other
collective bargaining agreements or bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plans, arrangements or understandings,
whether written or unwritten (collectively, "Novuspharma Benefit Plans")
currently maintained, or contributed to, or required to be maintained or
contributed to, by Novuspharma, or with respect to which Novuspharma has any
material liability, including, without limitation, all employment agreements
with the Continuing Employees and all employment, termination, change in
control, severance or other Contracts for the benefit of any current or former
employees, officers or directors of Novuspharma that require any material
future performance or obligation by Novuspharma. Novuspharma has delivered to,
or made available for review by, CTI, true, complete and correct copies of all
Novuspharma Benefit Plans, the most recent plan summary distributed to
employees with respect to each such plan for which a summary was prepared, and
any and all trust agreements and group annuity contracts regarding any such
plan. The Novuspharma Benefit Plans have been administered in accordance with
their terms and have been properly accrued and reflected in the Novuspharma
Financial Statements, except in each case as, individually or in the
aggregate, would not be reasonably likely to have a material adverse effect on
Novuspharma. Novuspharma and all such Novuspharma Benefit Plans are in
compliance with applicable provisions of Italian Law except for failures that,
individually or in the aggregate, would not be reasonably likely to have a
material adverse effect on Novuspharma or the occurrence of the transactions
contemplated by this Agreement in accordance with the terms of this Agreement.
Except as set forth in Schedule 2.11(a) of the Novuspharma Disclosure
Schedules, the consummation of the transactions contemplated by this
Agreement, either alone or upon the occurrence of any additional or further
act or event, will not result in an increase in any payment or an increase in
the amount of compensation or benefits or accelerate the vesting,
exercisability or timing of any benefits payable to or in respect of any
employee or former employee, director, consultant or other independent
contractor of Novuspharma or the beneficiary or dependent of any such person
or entity. The most recent Novuspharma Financial Statements filed prior to the
date of this Agreement and publicly available properly reflect in accordance
with Italian GAAP all Novuspharma Benefit Plan obligations accrued or payable
(contingent or otherwise) by Novuspharma for all taxable periods and portions
thereof through the date of such Novuspharma Financial Statements.
(b) Except as disclosed in Schedule 2.11(b) of the
Novuspharma Disclosure Schedules, Novuspharma has no material liabilities for
which an adequate reserve has not been provided for in the Novuspharma
Financial Statements, pursuant to any Novuspharma Benefit Plan, including,
without limitation, any nonqualified deferred compensation plan or an excess
benefit plan.
(c) Novuspharma has timely filed, within the times
and in the manner prescribed by Italian Law, all social security returns and
social security reports required to be filed by it through the date hereof and
shall timely file all such returns and reports required to be filed on or
before the Effective Time, and all such returns and reports are true, correct
and complete in all material respects. Novuspharma has timely paid and
discharged all social security contributions due from them, other than such
social security contributions as are being contested in good faith by
appropriate proceedings and are adequately reserved for on the most
16
recent Novuspharma Financial Statements filed prior to the date of this
Agreement and publicly available. The most recent Novuspharma Financial
Statements filed prior to the date of this Agreement and publicly available
properly reflect in accordance with Italian GAAP all social security
contributions payable by Novuspharma for all taxable periods and portions
thereof through the date of such Novuspharma Financial Statements.
(d) As of the date hereof, no claim or deficiency
for any social security contributions has been proposed, threatened in
writing, asserted or assessed by any Italian social security authority or
agency against Novuspharma which would be reasonably likely to have a material
adverse effect upon Novuspharma and no requests for refunds or waivers of the
time to assess any social security contributions are pending.
(e) Novuspharma has withheld and timely paid over to
the proper governmental authorities all social security contributions required
to have been withheld and paid over and complied with all material information
reporting and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with amounts paid to any
employee.
(f) Copies of (i) any social security examinations,
(ii) extensions of statutory limitations for the collection or assessment of
social security contributions, and (iii) the social security returns of
Novuspharma for the last five fiscal years have been made available to CTI.
(g) There are no material Liens on the assets of
Novuspharma relating to or attributable to social security contributions,
except for Liens for social security contributions not yet due.
(h) To Novuspharma's knowledge and as of the date
hereof, there is no basis for the assertion of any claim relating to or
attributable to social security contributions that, if adversely determined,
would result in any Lien on the assets of Novuspharma or otherwise have a
material adverse effect on Novuspharma.
(i) As used in this Agreement, "social security
contributions" shall include all social security contributions, of any nature
whatsoever, as well as any statutory insurance (whether payable directly or by
withholding), together with any interest and penalties, additions to social
security contribution or additional amounts imposed with respect thereto.
2.12 Compliance with Applicable Laws.
(a) Novuspharma has in effect all material Italian,
United States, EU and other foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights
("Permits") necessary, under Applicable Laws in effect on the date hereof, for
it to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit, except for the lack of Permits and for defaults under Permits, which
lack or default individually or in the aggregate would not be reasonably
likely to have a material adverse effect on Novuspharma. Novuspharma is not in
violation of and has no liabilities, whether accrued, absolute, contingent or
otherwise, under any Applicable Laws, except for violations of or liabilities
under Applicable Laws which, individually or in the aggregate, would not be
reasonably likely to have a material adverse effect on Novuspharma or the
occurrence of the transactions contemplated by this Agreement in accordance
with the terms of this Agreement. As of the date hereof, to
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Novuspharma's knowledge, there is no pending proceeding for the revocation,
withdrawal or limitation of any Permit, nor has Novuspharma received any
written notice of the initiation of any such proceeding, nor to Novuspharma's
knowledge, are there any circumstances or facts that will cause the denial,
limitation or revocation of any Permit for which an application has been
submitted. Novuspharma is in compliance in all material respects with law no.
675 of December 31, 1996, as subsequently amended and relevant implementation
decrees.
(b) Novuspharma is, and has been in compliance with
applicable Environmental Laws, except for noncompliance which, individually or
in the aggregate, would not be reasonably likely to have a material adverse
effect on Novuspharma. The term "Environmental Laws" as used in this Section
2.12 means any Italian or other Applicable Laws relating to: (i) emissions,
discharges, releases or threatened releases of Hazardous Material (as defined
below) into the environment, including, without limitation, into ambient air,
soil, sediments, land surface or subsurface, buildings or facilities, surface
water, groundwater, publicly owned treatment works, septic systems or land;
(ii) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material; (iii)
protection of the environment; or (iv) employee health and safety.
(c) During the period of ownership or operation by
Novuspharma of any of its current or previously owned or leased properties, or
to Novuspharma's knowledge, during any period of prior ownership, there have
been no violations of Environmental Laws relating to Hazardous Material,
including releases in, on, under or affecting such properties or, to the
knowledge of Novuspharma, any surrounding site, except in each case for those
which, individually or in the aggregate, would not be reasonably likely to
have a material adverse effect on Novuspharma. To Novuspharma's knowledge,
Novuspharma has not shipped any Hazardous Material to any disposal site for
which it is subject to any liability. As used in this Section 2.12, "Hazardous
Material" means (i) contaminants, medical wastes, hazardous or infectious
wastes, radioactive or toxic materials or materials that are otherwise a
danger to health or the environment or capable of damage to property,
including without limitation, PCBs, asbestos, urea-formaldehyde, ozone
depleting substances, and all the substances listed as hazardous or dangerous
substances pursuant to Applicable Laws, but excluding office and janitorial
supplies, (ii) petroleum, including crude oil and any fractions thereof, and
(iii) natural gas, synthetic gas and any mixtures thereof.
(d) Novuspharma is in material compliance with the
Applicable Laws, rules and regulations of the Borsa Italiana. Novuspharma has
not received any written notice that the Borsa Italiana has commenced or
threatened to initiate any actions to delist the Novuspharma Ordinary Shares
listed on the Nuovo Mercato. Novuspharma has provided or made available and,
after the date hereof, will provide or make available to CTI and its counsel,
prior to the Closing Date, copies of all material correspondence between
Novuspharma and the Borsa Italiana.
(e) Novuspharma is in compliance in all material
respects with all (i) Applicable Laws relating to the evaluation, testing
(including clinical testing), research, experimentation, marketing and sale of
drug products, in whatever stage of development, to the extent such laws are
applicable to Novuspharma, including, without limitation, the United States
Food, Drug and Cosmetics Act, as amended (the "FDCA"), (ii) rules and
regulations of any and all applicable Italian, United States, EU and other
foreign regulatory agencies, including, without limitation, the Ministry of
Health in Italy, the European Agency for the Evaluation of Medical Products
("EMEA"), and the FDA (collectively, "Regulatory Agencies"), to the extent
such rules and regulations are applicable to it and its activities, and (iii)
product applications (including
18
Investigational New Drug Applications, ("INDs") or the EU equivalent) which
have been approved by a Regulatory Agency under which Novuspharma has
experimented, researched, studied, tested, manufactured, marketed or sold any
pharmaceutical or drug products on or after November 9, 2000. All
manufacturing research and clinical and non-clinical testing activities
conducted by Novuspharma have been and are being conducted in material
compliance with current regulations relating to Good Manufacturing Practice,
Good Clinical Practice, Good Laboratory Practice, the reporting of adverse
events, the filing of reports and security promulgated by the FDA and other EU
and Italian Regulatory Agencies, as and if applicable.
(f) Schedule 2.12(f) of the Novuspharma Disclosure
Schedules sets forth a complete and accurate list of the clinical products
that are being developed, tested, manufactured, marketed, distributed or sold
by Novuspharma as of the date of this Agreement.
(g) Novuspharma possesses approval or allowance by
the applicable Regulatory Agency of all material investigational or registered
product applications as are currently legally required and are necessary for
the conduct of its business as now being conducted; a list of all material
investigational or registered product applications and similar regulatory
filings (including INDs) is attached hereto as Schedule 2.12(g) of the
Novuspharma Disclosure Schedules, true, correct and complete copies of which
(including all supplements and amendments) have been provided or made
available by Novuspharma to CTI and its counsel.
(h) Schedule 2.12(h) of the Novuspharma Disclosure
Schedules sets forth a true, complete and accurate list of (i) Notices of
Adverse Finding (or EU equivalent), (ii) Regulatory Agency inspectional
observations, and (iii) Warning Letters or other correspondence from any
Regulatory Agency in which the Regulatory Agency asserted that the operations
of Novuspharma or its agents acting on its express authority may not be in
compliance with Applicable Laws, in each case received by Novuspharma or its
agents, acting on its express authority, and the response of Novuspharma or
its agents acting on its express authority to such Regulatory Agency's notice,
in the case of each of (i) through (iii), since January 1, 2000. True and
complete copies of such correspondence have heretofore been provided or made
available to CTI and its counsel.
(i) Except as set forth on Schedules 2.12(g) and
2.12(h) of the Novuspharma Disclosure Schedules, as to each drug of
Novuspharma for which a product application has been approved by, or an IND
(or EU equivalent) has been filed with, the applicable Regulatory Agency, the
applicant and all persons performing operations covered by the application are
in compliance in all material respects with all applicable Italian, United
States and other foreign rules and regulations, as the case may be, including,
without limitation, the requirements of the FDCA and the implementing
regulations of the FDA, respectively, and all terms and conditions of the
application.
(j) To Novuspharma's knowledge, neither Novuspharma
nor any officer or employee of Novuspharma has made an untrue statement of a
material fact or fraudulent statement to any Regulatory Agency or other
Governmental Entity, failed to disclose a material fact required to be
disclosed to the Regulatory Agency or other Governmental Entity, or committed
an act, made a statement, or failed to make a statement that, at the time such
disclosure was made, would reasonably be likely to provide a basis for the
Regulatory Agency or other Governmental Entity to invoke FDA's policy (or any
similar EU or Italian policy) respecting Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities, set forth in 56 Fed. Reg. 46191
(September 10, 1991). Neither Novuspharma, nor, to the knowledge of
19
Novuspharma, any officer, or employee of Novuspharma has been convicted of any
crime or engaged in any conduct for which debarment is mandated by 21 U.S.C.
ss. 35a(a) or any similar EU or Italian law or regulation, or for which
debarment is authorized by 21 U.S.C. ss. 55a(b) or any similar EU or Italian
law or regulation.
(k) Novuspharma has made available to CTI and its
counsel copies of any and all material written correspondence between
Novuspharma and any Regulatory Agencies within the last three (3) years.
(l) Except as set forth on Schedule 2.12(l) of the
Novuspharma Disclosure Schedules, at no time has Novuspharma, any person on
behalf of Novuspharma, or any Regulatory Agency suspended, or, to
Novuspharma's knowledge, threatened in writing to suspend, clinical trials of
any of Novuspharma's product candidates based upon the exposure, or potential
exposure, of participants in the clinical trials to unacceptable health risks
or otherwise.
(m) Except as set forth on Schedules 2.12(m) of the
Novuspharma Disclosure Schedules, Novuspharma has not received any written
notice that a Regulatory Agency has commenced or threatened in writing to
initiate (i) any action to withdraw its approval or request the recall of any
product of Novuspharma, (ii) any action to enjoin (A) any production at any
facility owned or used by Novuspharma, or any person on behalf of Novuspharma,
or (B) any facility (including any clinical facility where testing and/or
trials occur) owned or used by Novuspharma, and of any person on behalf of
Novuspharma, (iii) the withdrawal of approval of any product application
(including, any IND), or (iv) any material civil penalty, injunction, seizure
or criminal action.
(n) As to each product application (including, any
IND) submitted to, but not approved by, the applicable Regulatory Agency, and
not withdrawn by Novuspharma or applicants acting on its behalf as of the date
of this Agreement, Novuspharma has, and to the knowledge of Novuspharma
applicants acting on its behalf have, complied in all material respects with
the applicable Italian or, United States, or EU or other foreign regulatory
requirements, (including, without limitation, of the FDCA and implementing FDA
regulations), as the case may be, and has provided all additional information
and taken all additional action that has been deemed appropriate by
Novuspharma in connection with such application.
(o) The clinical, pre-clinical, safety and other
studies and tests conducted by or on behalf of or sponsored by Novuspharma
were and, if still pending, are being conducted in material compliance with
standard medical and scientific research procedures. Novuspharma has not
received any written notices or other written correspondence from the FDA or
any other Governmental Entity requiring the termination, suspension or
modification of any clinical, pre-clinical, safety or other tests.
2.13 Intellectual Property.
(a) Except as set forth on Schedule 2.13(a) of the
Novuspharma Disclosure Schedules, to Novuspharma's knowledge, Novuspharma owns
or has a valid right to use under applicable Italian, United States or foreign
laws, as the case may be all: (i) patents (including any applications
therefor, and all reissues, divisions, re-examinations, renewals, extensions,
continuations, and continuations in-part, collectively, "Patents"); (ii)
inventions (whether patented or not), data and technology; (iii) works of
authorship, software and copyrights (including any applications or
registrations therefor); (iv) industrial designs,
20
trademarks (and all associated goodwill), and internet addresses and domain
names (including any applications and registrations for any of the foregoing);
(v) trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models, and methodologies (collectively,
"Trade Secrets"); and (vi) any similar or equivalent rights anywhere in the
world (all of the foregoing (i) to (vi), "Intellectual Property"), used in or
necessary for the conduct of the business of Novuspharma as currently
conducted (the "Novuspharma Intellectual Property").
(b) Schedule 2.13(b) of the Novuspharma Disclosure
Schedules sets forth a true, correct and complete list of all Patents that are
owned or co-owned or exclusively licensed from a third party by Novuspharma
including, without limitation, Patents for industrial inventions regarding
molecules and/or technologies related to products existing or currently under
development by Novuspharma, or related to Novuspharma's compounds.
(c) Schedule 2.13(c) of the Novuspharma Disclosure
Schedules sets forth a true, correct and complete list of all material license
agreements to which Novuspharma is a party or is otherwise bound, granting any
right to use or practice any Intellectual Property rights, whether Novuspharma
is the licensee or licensor thereunder, and any written settlements relating
to any Intellectual Property to which Novuspharma is a party or is otherwise
bound (collectively, the "Novuspharma License Agreements"), indicating for
each the title, the parties, date executed and the Intellectual Property
covered thereby. The Novuspharma License Agreements in which Novuspharma is
the licensee, constitute all of the material licenses used by Novuspharma in
connection with its business.
(d) Except as set forth in Schedule 2.13(d) of the
Novuspharma Disclosure Schedules, Novuspharma has not licensed or sublicensed
its rights in any material Intellectual Property, except pursuant to the
Novuspharma License Agreements, and no royalties, honoraria or other fees are
payable by Novuspharma for the use of or right to use any third party
Intellectual Property, except pursuant to the Novuspharma License Agreements
or non-exclusive end user agreements for commercially available software.
(e) The Intellectual Property owned by Novuspharma
is free and clear of all Liens, and Novuspharma is listed in the records of
the appropriate Italian and/or United States and/or other foreign agency as
the sole owner of record for each patent and patent application listed in
Schedule 2.13(b) of the Novuspharma Disclosure Schedules (except for those
patents or patent applications designated on Schedule 2.13(b) of the
Novuspharma Disclosure Schedules as jointly owned or exclusively licensed from
a third party).
(f) Except as set forth on Schedule 2.13(f) of the
Novuspharma Disclosure Schedules, to Novuspharma's knowledge, the Patents
listed on Schedule 2.13(b) of the Novuspharma Disclosure Schedules are valid,
enforceable and subsisting, in full force and effect, and have not expired or
been cancelled or abandoned. To Novuspharma's knowledge, there is no pending
or threatened nullification, revocation, opposition, interference or
cancellation proceedings involving the Patents listed on Schedule 2.13(b) of
the Novuspharma Disclosure Schedules. Except as set forth on Schedule 2.13(f)
of the Novuspharma Disclosure Schedules, to Novuspharma's knowledge, there is
no prior art or circumstances that would render any of the Patents listed on
Schedule 2.13(b) of the Novuspharma Disclosure Schedules invalid or
unenforceable.
(g) Novuspharma has not received any written notice
asserting infringement or misappropriation of any Intellectual Property rights
of others nor has it received
21
any written notice asserting the invalidity or unenforceability of any
Novuspharma Intellectual Property. No person has notified Novuspharma in
writing that it is claiming any ownership of or right to use any Novuspharma
Intellectual Property, other than pursuant to the Novuspharma License
Agreements. No person, to the knowledge of Novuspharma, is infringing upon or
misappropriating any Intellectual Property rights owned or licensed by
Novuspharma. Except as set forth on Schedule 2.13(g) of the Novuspharma
Disclosure Schedules, to Novuspharma's knowledge, the conduct of the business
of Novuspharma as currently conducted does not conflict with, infringe upon,
misappropriate or otherwise violate the valid Intellectual Property rights of
any third party. To Novuspharma's knowledge, no action has been instituted
against Novuspharma that is presently outstanding alleging that Novuspharma
infringes upon, misappropriates or otherwise violates any rights of a third
party in or to Intellectual Property. Novuspharma has no knowledge that the
claims of any Patent owned or exclusively licensed from a third party by
Novuspharma has been previously submitted to any patent office by another
party or parties who have priority rights with respect to such Patent.
(h) Except as set forth on Schedule 2.13(h) of the
Novuspharma Disclosure Schedules, to Novuspharma's knowledge, all present and
former employees and consultants of Novuspharma have executed a written
invention assignment or consulting agreement pursuant to which such employee
or consultant has assigned to Novuspharma all Intellectual Property rights
arising out of the employment or consulting relationship with Novuspharma.
(i) Except as set forth on Schedule 2.13(i) of the
Novuspharma Disclosure Schedules, the transactions contemplated by this
Agreement will not result in (i) the loss or material impairment of the
Surviving Corporation's rights to any Novuspharma Intellectual Property; (ii)
the Surviving Corporation being bound by any material non-compete, exclusivity
obligation or other restriction on the operation of the business, the
products, or the Intellectual Property rights of the Surviving Corporation
(except to the same extent affecting specific Novuspharma Intellectual
Property rights immediately prior to the Merger); or (iii) the Surviving
Corporation granting any rights to any Intellectual Property to a third party
(except to the same extent affecting specific Novuspharma Intellectual
Property rights immediately prior to the Merger).
2.14 Agreements with Employees; Labor Disputes. Schedule
2.14 of the Novuspharma Disclosure Schedules lists all labor union and
collective bargaining agreements (or agreements in the nature thereof) between
Novuspharma and its employees in effect as of the date hereof. Except as set
forth on Schedule 2.14 of the Novuspharma Disclosure Schedules, (i) there is
no labor strike, work stoppage or other labor dispute or unrest, pending or
threatened in writing by any employee of Novuspharma that, individually or in
the aggregate, would be reasonably likely to have a material adverse effect on
Novuspharma, and (ii) there are no asserted or threatened claims made against
Novuspharma by any employees or other individuals, or labor, administrative,
social security, pension or insurance authorities, related to discrimination,
harassment, wrongful termination, unpaid benefits (including, without
limitation, severance) or otherwise, without limitation, that, individually or
in the aggregate, would be reasonably likely to have a material adverse effect
on Novuspharma. Novuspharma has complied in all respects with all relevant
applicable Italian national and company collective bargaining agreements and
the individual terms and conditions of employment or service agreements with
respect to each of its employees (and each of its former employees and
independent contractors or consultants), except where the failure to be in
such compliance would not, individually or in the aggregate, have a material
adverse effect on Novuspharma.
22
To Novuspharma's knowledge, all Novuspharma's independent contractors or
consultants, in performing their services, have at all times been properly
classified as such by Novuspharma.
2.15 Contracts; Debt Instruments(a) Except for this
Agreement and such other agreements contemplated hereby and except as set
forth on Schedule 2.15(a) of the Novuspharma Disclosure Schedules, as of the
date hereof Novuspharma is not a party to or bound by:
(i) any Contract that requires payments or
repayments by Novuspharma exceeding 100,000 Euros in any one fiscal
year or 400,000 Euros in the aggregate,
(ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any
material portion of the business of Novuspharma, taken as a whole, is
conducted, or limiting the right of Novuspharma to engage in any
material line of business,
(iii) any exclusive or material (A) supply,
distribution, marketing, research, development or purchase Contracts
or (B) Novuspharma Intellectual Property licenses,
(iv) any material joint venture or other
strategic partnership, alliance or collaboration Contract,
(v) any Contract relating to the disposition or
acquisition by Novuspharma after the date of this Agreement of a
material amount of assets not in the ordinary course of business or
pursuant to which Novuspharma will acquire any material ownership
interest in any other person or business enterprise,
(vi) any mortgages, indentures, guarantees,
loans or credit agreements, security agreements or other Contracts to
which Novuspharma is a party relating to the borrowing of money or
extension of credit, other than accounts receivable and payable in
the ordinary course of Novuspharma's business,
(vii) any Contract to which Novuspharma is a
party or any plan of Novuspharma (including, without limitation, any
stock option plan), the benefits of which will be increased or are
contingent on, the benefits of which will be calculated on the basis
of, the vesting of benefits of which will be accelerated by, or the
material terms of which will be otherwise modified in a manner
adverse to Novuspharma upon, the occurrence of any of the
transactions contemplated by this Agreement,
(viii) any indemnification or guaranty Contract
to which Novuspharma is a party that is outside the ordinary course
of Novuspharma's business, or
23
(ix) any current or pending Grants or Subsidies
to Novuspharma (all Contracts set forth in clauses (i) - (ix) above
being referred to herein as "Novuspharma Material Contracts").
(b) Novuspharma has delivered or made available to
CTI prior to the date of this Agreement, true, correct and complete copies of
all Novuspharma Material Contracts, as amended through the date of this
Agreement. Each Novuspharma Material Contract is valid and binding on
Novuspharma and, to the knowledge of Novuspharma, the other party or parties
thereto, and is in full force and effect, except to the extent they have
previously expired in accordance with their terms, and except if the failure
to be in full force and effect, individually or in the aggregate, would not be
reasonably likely to have a material adverse effect on Novuspharma, and,
except as set forth on Schedule 2.15(b) of the Novuspharma Disclosure
Schedules, Novuspharma has in all material respects performed all obligations
required to be performed by it to date under each Novuspharma Material
Contract. Except as set forth on Schedule 2.15(b) of the Novuspharma
Disclosure Schedules, as of the date hereof, Novuspharma does not know of, and
has not received written notice of (x) any actual or intended termination,
cancellation or revocation by the counterparty to a Novuspharma Material
Contract with respect to, or (y) any material violation or default under (nor,
to the knowledge of Novuspharma, does there exist any condition which, with
the passage of time or the giving of notice or both, would result in such a
material violation or default under) any Novuspharma Material Contract.
2.16 Financial Advisors.
(a) Novuspharma has received the opinion of XX Xxxxx
Securities Corporation ("XX Xxxxx"), with its principal place of business at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair to
Novuspharma's shareholders from a financial point of view.
(b) Neither Novuspharma nor any of its officers,
directors or employees has employed any broker or finder (other than XX
Xxxxx), or incurred any liability for any brokerage, finder's, financial
advisor's or similar fee, expense or commission, and no broker or finder has
acted directly or indirectly for Novuspharma, in connection with this
Agreement or the transactions contemplated hereby. Pursuant to Italian Law,
KPMG S.p.A., Novuspharma's independent auditors, has been appointed "expert"
by Novuspharma's Board of Directors.
2.17 Title to Properties; Leases. Novuspharma does not own
any real property. Schedule 2.17 of the Novuspharma Disclosure Schedules lists
all real property leases to which Novuspharma is a party, and each amendment
thereto, that is in effect as of the date of this Agreement. All such current
leases are in full force and effect, are valid and effective in accordance
with their respective terms, and there is not, under any of the leases, any
existing default or event of default (or event which with notice or lapse of
time, or both, would constitute a default) that would give rise to a material
claim against Novuspharma. Novuspharma has good and marketable title to, or
valid leasehold interests in, all its properties and assets, except where such
failure, individually or in the aggregate, would not be reasonably likely to
have a material adverse effect on Novuspharma. Except as set forth on Schedule
2.17 of the Novuspharma Disclosure Schedules, all real estate properties and
moveable assets owned by Novuspharma are owned free of mortgages, pledges,
privileges, burdens, encumbrances and other Liens, whether in rem or
otherwise.
24
2.18 Grants and Subsidies. Novuspharma is as of the date
hereof in compliance in all material respects with all requirements in respect
of the Grants and Subsidies including, without limitation, pursuant to Laws
451/94 and 46/82, the regional law 140/97 and the specific progress reporting
requirements and progress milestones of Grants and Subsidies financed pursuant
to MURST/MIUR decrees.
2.19 Insider Interests. Except as described in Schedule
2.19(a) of the Novuspharma Disclosure Schedules, none of Novuspharma, its
officers, members of its Board of Directors, or, to Novuspharma's knowledge,
its stockholders holding more than 10% of the outstanding Novuspharma Ordinary
Shares (a) has any interest in any assets or property (whether real, personal,
tangible or intangible) of or used in the business of Novuspharma (other than
as owner of outstanding securities of Novuspharma) or (b) is indebted to
Novuspharma. Novuspharma is not indebted to any such person, except for
amounts due under normal arrangements applicable to all employees generally as
to salary or reimbursement of ordinary business expenses or amounts due
generally to members of the Board for their service on the Board. As of the
date hereof, to the knowledge of Novuspharma there are no losses, claims,
damages, costs, expenses, liabilities or judgments which would entitle any
director, officer or employee of Novuspharma to indemnification by Novuspharma
under Applicable Law, the Articles of Association or Bylaws of Novuspharma or
any insurance policy maintained by Novuspharma. None of the members of
Novuspharma's Board of Directors listed on Schedule 2.19(b) has any direct or
indirect interest of any nature whatever in any person or business which
competes with, conducts any business similar to, has any arrangement or
agreement (including arrangements regarding the shared use of personnel or
facilities) with (whether as a customer or supplier or otherwise) Novuspharma.
2.20 Insurance. Novuspharma is, and at all times since its
initial public offering has been, insured with primary insurers against all
risks normally insured against by companies in similar lines of business, and
all of the insurance policies maintained by Novuspharma are in full force and
effect. At no time since its initial public offering has Novuspharma been
unable to obtain, or been denied, product liability or other insurance.
Schedule 2.20 of the Novuspharma Disclosure Schedules contains a list of all
insurance policies currently maintained by Novuspharma and contains a listing
of pending workers compensation and general liability claims as of the
Novuspharma Balance Sheet Date. These claims, individually or in the
aggregate, would not be reasonably likely to have a material adverse effect on
Novuspharma. To Novuspharma's knowledge, all necessary notifications of claims
have been made to its insurance carriers.
2.21 Voting Requirements. The affirmative vote of the
holders of at least two-thirds (66 2/3%) of the Novuspharma Ordinary Shares
present at the Novuspharma Shareholders' Meeting are the only votes of the
holders of any class or series of Novuspharma's capital stock necessary to
approve the Merger, the Merger Plan, this Agreement and the transactions
contemplated hereby, provided that the quorum required for the Novuspharma
Shareholders' Meeting shall consist of more than one-half (50%) of the
outstanding Novuspharma Ordinary Shares as of the relevant record date during
the first call, more than one-third (33 1/3%) of the outstanding Novuspharma
Ordinary Shares as of the relevant record date during the second call, and
more than one-fifth (20%) of the outstanding Novuspharma Ordinary Shares as of
the relevant record date during the third call.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CTI
25
Except as set forth on the Disclosure Schedules (provided
that an item on such Disclosure Schedules shall be deemed to qualify only the
particular section or sections of this Article III specified for such item,
unless it is reasonably apparent that the disclosure or statement in one
section of the Disclosure Schedules should apply to one or more sections
thereof) delivered by CTI to Novuspharma prior to the execution of this
Agreement (the "CTI Disclosure Schedules"), CTI represents and warrants to
Novuspharma as follows:
3.1 Organization, Standing and Corporate Power. CTI and each
of its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized and
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. CTI and each
of its subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed, individually or in the aggregate, would not be
reasonably likely to have a material adverse effect on CTI. The corporate
records and minute books of CTI and its subsidiaries have been maintained in
accordance with all applicable requirements and are true, correct and complete
in all respects except as would not be reasonably likely to have a material
adverse effect on CTI. CTI has delivered or made available to Novuspharma
true, correct and complete copies of its Articles of Association and Bylaws
and the organizational documents of its subsidiaries, in each case as amended
to the date hereof.
3.2 Capital Structure; Subsidiaries. As of the date hereof,
the authorized capital stock of CTI consists of 100,000,000 shares of CTI
Common Stock and 10,000,000 shares of preferred stock, no par value per share
("CTI Preferred Stock"), 100,000 of which have been designated as Series C
Preferred Stock, all of which are reserved for issuance upon exercise of the
Rights issuable pursuant to the Rights Agreement and 10,000 of which have been
designated as Series D Preferred Stock, none of which are reserved for
issuance. The rights, preferences and privileges of CTI Common Stock and CTI
Preferred Stock are as stated in CTI's Articles of Incorporation and the WBCA.
The rights, preferences and privileges of the warrants to purchase CTI capital
stock listed on Schedule 3.2(a) of the CTI Disclosure Schedules are as stated
in the applicable warrant instruments, complete and correct copies of which
have been delivered or made available to Novuspharma. At the close of business
on the date hereof, (i) 33,279,148 shares of CTI Common Stock were issued and
outstanding and no shares of CTI Preferred Stock were issued and outstanding,
(ii) no shares of CTI were issued and held by CTI in its treasury, (iii)
6,024,820 shares of CTI Common Stock were reserved for issuance pursuant to
outstanding options to purchase CTI Common Stock ("CTI Stock Options") issued
under CTI's 1994 Plan, (iv) warrants to purchase 764,125 shares of CTI Common
Stock were issued and outstanding, (v) 8,546,000 shares of CTI Common Stock
were reserved for issuance upon conversion of the 5.75% Convertible Senior
Subordinated Notes due June 15, 2008 of CTI and (vi) 871,765 shares of CTI
Common Stock were reserved for issuance upon conversion of the 5.75%
Convertible Subordinated Notes due June 15, 2008. As of the date of this
Agreement, all issued and outstanding shares of capital stock of CTI are, and
all shares of CTI Common Stock which may be issued upon the exercise of (x)
options to purchase CTI Common Stock issued under CTI's 1994 Plan, or (y)
warrants to purchase CTI Common Stock will be duly authorized, validly issued,
fully paid and nonassessable. No issued or outstanding shares of CTI Common
Stock are subject to or were issued in violation of any preemptive rights or
were issued in violation of applicable securities laws. No Voting Debt of CTI
is issued or outstanding as of the date hereof. As of the date of this
Agreement, except as set forth above, there are no outstanding shares of
capital stock of, or other equity or voting interests in CTI, or securities,
options, warrants, calls, rights, commitments, agreements,
26
arrangements or undertakings of any kind to which CTI or any of its
subsidiaries is a party or by which any of them is bound obligating CTI to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting interests in CTI, Voting
Debt or other securities (whether voting or otherwise) of CTI or to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except as set forth in
Schedule 3.2 of the CTI Disclosure Schedules, as of the date hereof, there are
no outstanding contractual obligations of CTI (1) restricting the transfer of,
(2) affecting the voting rights of (including, without limitation, voting
trusts, voting agreements or irrevocable proxies), (3) requiring the
repurchase, redemption or disposition of, (4) requiring the registration for
sale of, or (5) granting any preemptive or antidilutive right with respect to,
any shares of CTI Common Stock or any CTI Stock Options. CTI has delivered or
made available to CTI and its counsel copies of all documents listed on
Schedule 3.2 of the CTI Disclosure Schedules. The execution and delivery of
this Agreement and the agreements contemplated hereby to which CTI is a party
do not, and the consummation of the transactions contemplated hereby and
thereby and the compliance with the provisions hereof and thereof will not,
give rise to any preemptive or antidilutive right of any person with respect
to any shares of CTI Common Stock or any CTI Stock Options. Except as set
forth in Schedule 3.2 of the CTI Disclosure Schedules, from the close of
business on December 31, 2002 to and including the date hereof, no shares of
CTI Common Stock or other capital stock or other equity or voting interests
in, or other securities (whether voting or otherwise) of CTI have been or will
be issued or transferred from CTI's treasury. There are no options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which CTI is a party or by which it is bound obligating CTI to acquire
or underwrite any capital stock or other equity or voting interests in, or any
other securities of, any corporation, partnership, limited partnership,
limited liability company, joint venture or other entity. CTI owns no
Novuspharma Ordinary Shares and since April 4, 2003 has not purchased or sold
any CTI Common Stock.
3.3 Authority. CTI has the requisite corporate power and
authority to enter into this Agreement and, subject to the CTI Shareholder
Approval, to consummate the transactions contemplated hereby. The Board of
Directors of CTI at a meeting of directors duly called and held: (a)
determined that the Merger and the Merger Plan are advisable and fair and in
the best interests of CTI and its shareholders; (b) approved the Merger, the
Merger Plan and this Agreement and the transactions contemplated by this
Agreement; (c) resolved to enter into this Agreement and to recommend approval
of the Merger and the Merger Agreement to the holders of CTI Common Stock; (d)
granted all necessary powers in order for the CTI Shareholders' Meeting to be
called as soon as necessary pursuant to this Agreement; and (e) directed that
the Merger and the Merger Agreement be submitted for consideration by the
holders of the CTI Common Stock. The execution and delivery of this Agreement
and the consummation by CTI of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of
CTI, subject only to the CTI Shareholder Approval. This Agreement has been
duly executed and delivered by CTI and constitutes a valid and binding
obligation of CTI, enforceable against CTI in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws
affecting the rights of creditors generally and general principles of equity.
3.4 Consents and Approvals; No Violations. Except as set
forth on Schedule 3.4 of the CTI Disclosure Schedules, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, (a) conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation
pursuant to, any CTI Material Contract (as defined
27
in Section 3.15 hereof), or to loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of CTI; (b)
conflict with or result in any violation of or default under the Articles of
Incorporation and Bylaws of CTI and its subsidiaries; (c) conflict with, or
result in any material violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation pursuant to, any Contract
applicable to CTI or its subsidiaries or their respective properties or assets
(d) conflict with or violate any license, permit or other instrument or
Contract granted by, or entered into with, a Regulatory Agency; (e) conflict
with or result in any material violation of or default (with or without notice
or lapse of time or both) under, or give rise to the right of termination,
cancellation or acceleration of any obligation pursuant to, any grant or
subsidized loan received by CTI from any United States federal or state or
other Governmental Entity; or (f) subject to the governmental filings and
other matters referred to in the following sentence, conflict with or violate
Applicable Laws applicable to CTI or its properties other than, in the case of
foregoing clauses (a), (c), (d), (e) or (f), any such conflicts, violations,
defaults, rights, loss or Liens that individually or in the aggregate would
not (x) be reasonably likely to have a material adverse effect on CTI, (y)
impair in any material respect the ability of CTI to perform its obligations
under this Agreement, or (z) prevent or materially delay the consummation of
any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by CTI or its subsidiaries in connection with
the execution and delivery of this Agreement by CTI or the consummation by CTI
of the transactions contemplated by this Agreement, except for (i) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required of or with the Specified Agencies under the HSR
Act, (ii) the filing with the CONSOB of the application for the authorization
to publish the Listing Particulars, (iii) the filing with the SEC of (A) the
Proxy Statement, (B) the Registration Statement, and (C) such reports under
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iv) receipt of an order from the
SEC accelerating the effectiveness of the Registration Statement, (v) the
filing with the Borsa Italiana of an application for listing of the shares of
CTI Common Stock on the Nuovo Mercato and the notification to the NASD of the
issuance and listing of the additional shares of CTI Common Stock on the
Nasdaq National Market, (vi) the filing, publication and recordation of the
Merger Deed or other appropriate documents and notices with the Companies'
Register at the Italian Chamber of Commerce in Milan, Italy, (vii) the filing
of the Articles of Merger with the Secretary of State of Washington in
accordance with the relevant provisions of the WBCA, (viii) such filings and
consents as may be required under any environmental, health or safety law or
regulation (including any rules and regulations of the FDA) pertaining to any
notification, disclosure or required approval triggered by the Merger or by
the transactions contemplated hereby, each of which is set forth in Schedule
3.4 of the CTI Disclosure Schedules, (ix) such consents, approvals or
authorizations as set forth in Schedule 3.4 of the CTI Disclosure Schedules
and (x) such other consents, approvals, orders, authorizations, registrations,
declarations and filings required by Applicable Laws, the failure of which to
be obtained or made would not, in the case of this clause (x), individually or
in the aggregate, (x) be reasonably likely to have a material adverse effect
on CTI, (y) impair in any material respect the ability of CTI to perform its
obligations under this Agreement, or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
Shareholders of CTI are not entitled to appraisal or
dissenters' rights under the WBCA.
3.5 SEC Documents; Financial Statements.
28
(a) Since January 1, 1999, CTI has timely filed with
the SEC all required reports, forms and other documents (the "SEC Documents").
As of their respective dates, the SEC Documents were prepared in accordance
and complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue, incorrect or incomplete 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. Except to the extent
that information contained in any SEC Document has been revised or superseded
by a later filed SEC Document filed and publicly available prior to the date
of this Agreement, none of the SEC Documents contains any untrue, incorrect or
incomplete 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 were made, not
misleading. None of CTI's subsidiaries is required to file any reports, forms
or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the SEC
Documents (the "CTI Financial Statements"), including each SEC Document filed
after the date hereof until the Closing: (i) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) were prepared in accordance with United States generally
accepted accounting principles ("US GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q, 8-K or any successor form under the
Exchange Act), and (iii) fairly presented in all material respects the
consolidated financial position of CTI and its consolidated subsidiaries as at
the respective dates thereof and the consolidated results of CTI's operations
and cash flows for the periods indicated. The audited financial statements of
CTI included in the SEC Documents have been duly audited by Ernst & Young LLP
in accordance with Applicable Laws. Except as required by US GAAP, CTI has
not, since December 31, 2002, made any change in the accounting practices or
policies applied in the preparation of the CTI Financial Statements. The
balance sheet of CTI contained in the SEC Documents dated as of March 31, 2003
is hereinafter referred to as the "CTI Balance Sheet" and March 31, 2003 is
hereinafter referred to as the "CTI Balance Sheet Date." The books and records
of CTI and its subsidiaries have been, and are being, maintained in all
material respects in accordance with US GAAP and other applicable legal and
accounting requirements. Except as set forth on the CTI Financial Statements
and for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the CTI Balance Sheet Date that
are not, individually or in the aggregate, material to CTI, CTI has (i) no
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by US GAAP to be recognized or disclosed on
the CTI Financial Statements, and (ii) no liabilities or obligations of any
nature (whether accrued, contingent or otherwise) that, individually or in the
aggregate, would be reasonably likely to have a material adverse effect on
CTI. No basis exists that would require, and to CTI's knowledge, no
circumstances exist that would be reasonably likely to require CTI to restate
any of the CTI Financial Statements.
3.6 Disclosure. None of the information supplied by CTI
specifically for inclusion or incorporation by reference in (a) the
Registration Statement, will, at the time the Registration Statement is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue, incorrect or
incomplete statement of a material fact or omit to state any material fact
required to be stated therein
29
or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, (b) the
Proxy Statement will, at the date the Proxy Statement is first mailed to CTI's
shareholders or at the time of the CTI Shareholders' Meeting, contain any
untrue, incorrect or incomplete 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, or (c) the Information Document and the Listing
Particulars will, at the date they are first filed with the Borsa Italiana and
the CONSOB, respectively, or, in the case of the Information Document, made
available at Novuspharma's registered office in Bresso, Italy, or at the time
of the Novuspharma Shareholders' Meeting contain any untrue, incorrect or
incomplete statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event with
respect to CTI or its subsidiaries or their officers or directors shall occur
which is required to be described in the Proxy Statement, the Registration
Statement, the Information Document or the Listing Particulars, (1) CTI shall
promptly advise Novuspharma of such event, and (2) if required by Applicable
Law, CTI shall promptly file an appropriate amendment or supplement thereto
with the SEC, the CONSOB or the Borsa Italiana, and, as required by Applicable
Law, disseminate such amendment or supplement to the shareholders of CTI;
provided, however, that, subject to the requirements of United States
securities laws, in no event shall CTI make any disclosure without the prior
written consent of Novuspharma if doing so would violate or cause a violation
of Italian securities laws or any other Applicable Laws. The Registration
Statement and Proxy Statement will comply as to form in all material respects
with the requirements of the Securities Act and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no representation or
warranty is made by CTI with respect to statements made or incorporated by
reference in the Registration Statement or Proxy Statement based on
information supplied by Novuspharma specifically for inclusion or
incorporation by reference therein.
3.7 Absence of Certain Changes or Events. Except as set
forth in Schedule 3.7 of the CTI Disclosure Schedules and except for this
Agreement and the documents executed in connection herewith and the
transactions contemplated thereby, (a) since the CTI Balance Sheet Date and
through the date of this Agreement, (i) CTI and its subsidiaries have
conducted their business only in the ordinary course of business consistent
with past practice, (ii) there has not been any declaration, setting aside or
payment of any dividend on, or other distribution (whether in case, stock or
property) in respect of, any of CTI's capital stock, or any purchase,
redemption or other acquisition by CTI of any of its capital stock or any
other securities of CTI or any options, warrants, calls or rights to acquire
any such shares or other securities except for repurchases from employees
following their termination pursuant to the terms of their pre-existing stock
option or purchase agreements, (iii) CTI has not acquired or agreed to acquire
any assets other than in the ordinary course of business consistent with past
practice and (iv) there has not been any split, combination or
reclassification of any of CTI's capital stock, and (b) since the CTI Balance
Sheet Date through the date of this Agreement (i) CTI and its subsidiaries
have not incurred any liability or obligation (indirect, direct or
contingent), that is not in the ordinary course of business or that would,
individually or in the aggregate, result in a material adverse effect on CTI,
(ii) CTI and its subsidiaries have not sustained any material damage,
destruction or loss, whether or not covered by insurance, and (iii) there has
been no event, circumstance or development that would be reasonably likely to
have a material adverse effect on CTI.
3.8 Taxes.
30
(a) CTI and its subsidiaries have timely filed
United States federal, state, local and foreign tax returns and reports
required to be filed by them through the date hereof and shall timely file all
such returns and reports required to be filed on or before the Effective Time
and all such returns and reports are true, correct and complete in all
material respects. CTI has timely paid and discharged any and all taxes shown
to be due on such returns. The most recent CTI Financial Statements filed
prior to the date of this Agreement and publicly available properly reflect in
accordance with US GAAP the tax situation of CTI and its subsidiaries for all
taxable periods and portions thereof through the date of such CTI Financial
Statements, including, but not limited to, an adequate reserve for taxes.
(b) No claim or deficiency for any taxes has been
proposed, threatened in writing or assessed by any United States or other
taxing authority or agency (including, without limitation, the IRS) against
CTI and its subsidiaries which would be reasonably likely to have a material
adverse effect upon CTI. Except as set forth on Schedule 3.8(b) of the CTI
Disclosure Schedules, as of the date hereof, no requests for refunds or
waivers of the time to assess any taxes have been granted or are pending. As
of the date hereof, no audit or examination with respect to taxes is presently
in progress and CTI has not received in writing a notice of audit or
examination or similar inquiry with respect to taxes.
(c) CTI and its subsidiaries have withheld and/or
paid over to the proper governmental authorities all material taxes required
to have been withheld and/or paid over and complied with all material
information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with
amounts paid to any employee, independent contractor, creditor or other third
party.
(d) Copies of (i) any tax examinations, (ii)
extensions of statutory limitations for the collection or assessment of taxes,
and (iii) the tax returns of CTI and its subsidiaries for the last five (5)
fiscal years have been made available to Novuspharma.
(e) There are (and, as of immediately following the
Effective Time, there will be) no material Liens on the assets of CTI and its
subsidiaries relating to or attributable to taxes, except for Liens for taxes
not yet due.
(f) To CTI's knowledge, there is no basis for the
assertion of any claim relating to or attributable to taxes that, if adversely
determined, would result in any Lien on the assets of CTI and its subsidiaries
or otherwise have a material adverse effect on CTI.
(g) CTI and its subsidiaries are not, and have not
been at any time, a party to a tax sharing, tax indemnity or tax allocation
agreement, and CTI and its subsidiaries have not assumed the tax liability of
any other person under Contract, or pursuant to Applicable Law.
3.9 Actions and Proceedings. Except as set forth on Schedule
3.9 of the CTI Disclosure Schedules, as of the date hereof, there is no suit,
action, investigation, audit or proceeding in any United States, EU or other
jurisdiction, including, without limitation, any product liability claim,
pending or, to the knowledge of CTI, threatened in writing against CTI or any
of its subsidiaries or their respective management that, individually or in
the aggregate, would be reasonably likely to (a) have a material adverse
effect on CTI, or (b) have a material adverse effect on the ability of CTI to
perform its obligations under this Agreement.
31
3.10 Certain Agreements. Except as set forth on Schedule 3.10 of the
CTI Disclosure Schedules, there are no stock option, stock appreciation rights,
restricted stock, stock purchase or other equity-based plan or agreement that
CTI maintains or to which CTI is a party (collectively, the "CTI Plans"). CTI
is not a party to any oral CTI Plans. A true, correct and complete copy of
each CTI Plan, has been made available to Novuspharma and its counsel. As of
the date of this Agreement, CTI is not a party to any written or unwritten
agreement or plan, including any CTI Plan, any of the benefits of which will
be increased by, or the vesting or exercisability of the benefits of which
will be accelerated by, or the value of any of the benefits of which will be
calculated on the basis of, any of the transactions contemplated by this
Agreement either alone or upon the occurrence of any additional or further
acts or events. No holder of any CTI Stock Options, or shares of CTI Common
Stock granted in connection with the performance of services for CTI, is or
will be entitled to receive cash from CTI in lieu of or in exchange for such
option or shares as a result of the transactions contemplated by this
Agreement either alone or upon the occurrence of any additional or further
acts or events (other than in lieu of fractional shares). CTI is not a party
or subject to any termination benefits agreement (or arrangement) or severance
agreement (or arrangement) or employment agreement (or arrangement), either
alone or upon the occurrence of any additional or further acts or events,
which would be triggered by the consummation of the transactions contemplated
by this Agreement, except as set forth in Schedule 3.10 of the CTI Disclosure
Schedules.
3.11 Employee Benefits; Social Security.
(a) CTI has delivered or made available to
Novuspharma correct and complete copies of all CTI Plans, "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), and all other collective bargaining
agreements or material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other material plans, arrangements or understandings, whether
written or unwritten (collectively, "CTI Benefit Plans") currently maintained,
or contributed to, or required to be maintained or contributed to, by CTI, or
any other person or entity that, together with CTI, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each a "Commonly
Controlled Entity"), or with respect to which CTI or any Commonly Controlled
Entity has any material liability, including, without limitation, all
employment, termination, change in control, severance or other Contracts for
the benefit of any current or former employees, officers or directors of CTI
that require any material future performance by CTI. CTI has delivered or made
available to Novuspharma correct and complete copies of the CTI Benefit Plans.
CTI has delivered to, or made available for review by, Novuspharma true,
correct and complete copies of (1) the three (3) most recent annual reports on
Form 5500 filed with the IRS with respect to each of its CTI Benefit Plans (if
any such report was required), including all schedules thereto, (2) the most
recently prepared actuarial report for each such CTI Benefit Plan for which
such a report is required, (3) the most recent summary plan description for
each such CTI Benefit Plan for which such summary plan description is
required, and all summaries of material modifications distributed since the
most recent summary plan description, (4) the most recently received IRS
determination letter for each such CTI Benefit Plan for which a determination
letter has been received, and (5) the most recent trust agreement (if any) and
group annuity contract (if any) relating to any such CTI Benefit Plan. Neither
CTI nor any Commonly Controlled Entity presently sponsors, maintains,
contributes to, is required to contribute to, nor has CTI or any Commonly
Controlled Entity, in the past three (3) years, ever sponsored, maintained,
contributed to, or been required to contribute to, any employee pension
benefit plan subject to Title IV or Section 302 of ERISA or Section 412 of the
Code, including, without limitation, any
32
multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA
or Section 412 of the Code.
(b) The CTI Benefit Plans have been administered in
accordance with their respective terms in all material respects. CTI and all
such CTI Benefit Plans are in material compliance with all applicable
provisions of ERISA and the Code.
(c) All of the CTI Benefit Plans intended to be
qualified under Section 401(a) of the Code have been the subject of
determination, opinion or advisory letters from the IRS to the effect that
such CTI Benefit Plans are qualified and exempt from federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code and no such
determination letter has been revoked nor, to the knowledge of CTI, has
revocation been threatened.
(d) None of CTI, any officer of CTI or any of the
CTI Benefit Plans which are subject to ERISA, any trusts created thereunder
or, to the knowledge of CTI, any trustee or administrator thereof, has engaged
in a non-exempt "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that would be reasonably likely to subject CTI or any officer
of CTI to tax or penalty under ERISA, the Code or other Applicable Laws that
is material to the business of CTI and that has not been corrected or has
remaining a period of time to be corrected. Neither any of such CTI Benefit
Plans nor any of such trusts has been terminated.
(e) The transactions contemplated by this Agreement,
either alone or upon the occurrence of any additional or further act or event,
will not result in any material payment or an increase in the amount of
compensation or benefits or accelerate the vesting, exercisability or timing
of payment of any benefits payable to or in respect of any current or former
employee, director, consultant or other independent contractor of CTI or the
beneficiary or dependent of any such person or entity.
(f) CTI has no unfunded liabilities pursuant to any
CTI Benefit Plan that is not intended to be qualified under Section 401(a) of
the Code and is an employee pension benefit plan within the meaning of Section
3(2) of ERISA, including, without limitation, any nonqualified deferred
compensation plan or an excess benefit plan, that, individually or in the
aggregate, would be reasonably likely to have a material adverse effect on
CTI.
3.12 Compliance with Applicable Laws.
(a) CTI and its subsidiaries have in effect all
Permits necessary, under Applicable Laws in effect on the date hereof, for it
to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit, except for the lack of Permits and for defaults under Permits, which
lack or default individually or in the aggregate would not be reasonably
likely to have a material adverse effect on CTI. CTI and its subsidiaries are
not in violation of and have no liabilities, whether accrued, absolute,
contingent or otherwise, under any Applicable Laws, except for violations of
or liabilities under Applicable Laws which, individually or in the aggregate,
would not be reasonably likely to have a material adverse effect on CTI or the
occurrence of the transactions contemplated by this Agreement in accordance
with the terms of this Agreement. As of the date hereof, there is no pending
proceeding for the revocation, withdrawal or limitation of any Permit, nor has
CTI or its subsidiaries received any written notice of the initiation of any
such proceeding, nor to CTI's knowledge, are there any circumstances or facts
that will cause the denial, limitation or revocation of any Permit for which
an application has been submitted.
33
(b) CTI and its subsidiaries are, and have been in
compliance with applicable Environmental Laws, except for noncompliance which,
individually or in the aggregate, would not have a material adverse effect on
CTI. The term "Environmental Laws" as used in this Section 3.12 means any
United States or other applicable law relating to: (i) emissions, discharges,
releases or threatened releases of Hazardous Material into the environment,
including, without limitation, into ambient air, soil, sediments, land surface
or subsurface, buildings or facilities, surface water, groundwater, publicly
owned treatment works, septic systems or land; (ii) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material; (iii) protection of the environment; or (iv) employee
health and safety.
(c) During the period of ownership or operation by
CTI and its subsidiaries of any of their current or previously owned or leased
properties, or to CTI's knowledge, during any period of prior ownership, there
have been no violations of Environmental Laws relating to Hazardous Material,
including releases in, on, under or affecting such properties or, to the
knowledge of CTI, any surrounding site, except in each case for those which,
individually or in the aggregate would not be reasonably likely to have a
material adverse effect on CTI. To CTI's knowledge, CTI and its subsidiaries
have not shipped any Hazardous Material to any disposal site for which it is
subject to any liability. As used in this Section 3.12, "Hazardous Material"
means (i) contaminants, medical wastes, hazardous or infectious wastes,
radioactive or toxic materials or materials that are otherwise a danger to
health or the environment or capable of damage to property, including without
limitation, PCBs, asbestos, urea-formaldehyde, ozone depleting substances, and
all the substances listed as hazardous or dangerous substances pursuant to
Applicable Laws, but excluding office and janitorial supplies, (ii) petroleum,
including crude oil and any fractions thereof, and (iii) natural gas,
synthetic gas and any mixtures thereof.
(d) CTI is in material compliance with the
Applicable Laws, rules and regulations of the NASD. CTI has not received any
written notice that the NASD has commenced or threatened to initiate any
actions to delist the CTI Common Stock listed on the Nasdaq National Market.
CTI has provided or made available (and, after the date hereof, will provide
or make available) to Novuspharma and its counsel, prior to the Closing Date,
copies of all material correspondence between CTI and the NASD.
(e) Except as set forth on Schedule 3.12(e) of the
CTI Disclosure Schedules, CTI and its subsidiaries are in compliance in all
material respects with all (i) Applicable Laws relating to the evaluation,
testing (including clinical testing), research, experimentation, marketing and
sale of drug products, in whatever stage of development, to the extent such
laws are applicable to CTI and its subsidiaries, including, without
limitation, FDCA, (ii) rules and regulations of any and all applicable
Italian, United States, EU and other foreign regulatory agencies, including,
without limitation, the Regulatory Agencies, to the extent such rules and
regulations are applicable to it and its activities, and (iii) product
applications (including INDs or the EU equivalent) which have been approved by
a Regulatory Agency under which CTI or any of its subsidiaries have
experimented, researched, studied, tested, manufactured, marketed or sold any
pharmaceutical or drug products on or after November 1, 2000. All
manufacturing, research, and clinical and non-clinical testing activities
conducted by CTI have been and are being conducted in material compliance with
current regulations relating to Good Manufacturing Practice, Good Clinical
Practice, Good Laboratory Practice, the reporting of adverse events, the
filing of reports and security promulgated by the FDA and other EU and Italian
Regulatory Agencies, as and if applicable.
34
(f) Schedule 3.12(f) of the CTI Disclosure Schedules
sets forth a complete and accurate list of the clinical products that are
being developed, tested, manufactured, marketed, distributed or sold by CTI as
of the date of this Agreement.
(g) CTI and its subsidiaries possess approval or
allowance by the applicable Regulatory Agency of all material investigational
or registered product applications as are currently legally required and are
necessary for the conduct of their businesses as now being conducted; a list
of all material investigational or registered product applications and similar
regulatory filings (including INDs) is attached hereto as Schedule 3.12(g) of
the CTI Disclosure Schedules, true, correct and complete copies of which
(including all supplements and amendments) have been provided or made
available by CTI to Novuspharma and its counsel.
(h) Schedule 3.12(h) of the CTI Disclosure Schedules
sets forth a true, complete and accurate list of (i) Notices of Adverse
Finding (or EU equivalent), (ii) Regulatory Agency inspectional observations,
and (iii) Warning Letters or other correspondence from any Regulatory Agency
in which the Regulatory Agency asserted that the operations of CTI or its
agents acting on its express authority may not be in compliance with
Applicable Laws, in each case received by CTI or its agents acting on its
express authority, and the response of CTI or its agents acting on its express
authority to such Regulatory Agency's notice in the case of (i) through (iii),
since January 1, 2000. True and complete copies of such correspondence have
heretofore been provided or made available to Novuspharma and its counsel.
(i) Except as set forth on Schedule 3.12(g) and
Schedule 3.12(h) of the CTI Disclosure Schedules, as to each drug of CTI for
which a product application has been approved by, or an IND (or EU equivalent)
has been filed with, the applicable Regulatory Agency, the applicant and all
persons performing operations covered by the application are in compliance in
all material respects with all applicable Italian, United States and other
foreign rules and regulations, as the case may be, including, without
limitation, the requirements of the FDCA and the implementing regulations of
the FDA, respectively, and all terms and conditions of the application.
(j) To CTI's knowledge, neither CTI nor any officer
or employee of CTI has made an untrue statement of a material fact or
fraudulent statement to any Regulatory Agency or other Governmental Entity,
failed to disclose a material fact required to be disclosed to the Regulatory
Agency or other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made, would
reasonably be likely to provide a basis for the Regulatory Agency or other
Governmental Entity to invoke FDA's policy (or any similar EU or Italian
policy) respecting Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities, set forth in 56 Fed. Reg. 46191 (September 10, 1991).
Neither CTI, nor, to the knowledge of CTI, any officer, or employee of CTI has
been convicted of any crime or engaged in any conduct for which debarment is
mandated by 21 U.S.C. ss. 35a(a) or any similar EU or Italian law or
regulation, or for which debarment is authorized by 21 U.S.C. ss. 55a(b) or
any similar EU or Italian law or regulation.
(k) CTI has made available to Novuspharma and its
counsels copies of any and all material written correspondence between CTI and
any Regulatory Agencies within the last three (3) years.
(l) Except as set forth on Schedule 3.12(l) of the
CTI Disclosure Schedules, at no time have CTI or any of its subsidiaries, any
person on behalf of CTI or any of
35
its subsidiaries , or any Regulatory Agency suspended, or, to CTI's knowledge,
threatened in writing to suspend, clinical trials of any of CTI's or any of
its subsidiaries' product candidates based upon the exposure, or potential
exposure, of participants in the clinical trials to unacceptable health risks
or otherwise.
(m) Except as set forth on Schedule 3.12(m) of the
CTI Disclosure Schedules, neither CTI nor any of its subsidiaries have
received any written notice that a Regulatory Agency has commenced or
threatened in writing to initiate (i) any action to withdraw its approval or
request the recall of any product of CTI or any of its subsidiaries, (ii) any
action to enjoin (A) any production at any facility owned or used by CTI or
any of its subsidiaries, or any person on behalf of CTI or any of its
subsidiaries, or (B) any facility (including any clinical facility where
testing and/or trials occur) owned or used by CTI or any of its subsidiaries,
and of any person on behalf of CTI or any of its subsidiaries, (iii) the
withdrawal of approval of any product application (including, any IND), or
(iv) any material civil penalty, injunction, seizure or criminal action.
(n) As to each product application (including, any
IND) submitted to, but not approved by, the applicable Regulatory Agency, and
not withdrawn by CTI or any of its subsidiaries, or applicants acting on its
behalf as of the date of this Agreement, CTI and its subsidiaries, and, to the
knowledge of CTI, applicants acting on its behalf, have complied in all
material respects with the applicable United States, or EU or other foreign
regulatory requirements, (including, without limitation, of the FDCA and
implementing FDA regulations), as the case may be, and has provided all
additional information and taken all additional action that has been deemed
appropriate by CTI in connection with such application.
(o) The clinical, pre-clinical, safety and other
studies and tests conducted by or on behalf of or sponsored by CTI were and,
if still pending, are being conducted in material compliance with standard
medical and scientific research procedures. CTI has not received any written
notices or other written correspondence from the FDA or any other Governmental
Entity requiring the termination, suspension or modification of any clinical,
pre-clinical, safety or other tests.
3.13 Intellectual Property.
(a) Except as set forth on Schedule 3.13(a) of the
CTI Disclosure Schedules, to CTI's knowledge, CTI owns or has a valid right to
use under applicable United States or foreign laws, as the case may be all
Intellectual Property used in or necessary for the conduct of the business of
CTI as currently conducted (the "CTI Intellectual Property").
(b) Schedule 3.13(b) of the CTI Disclosure Schedules
sets forth a true, correct and complete list of all Patents that are owned or
co-owned or exclusively licensed from a third party by CTI including, without
limitation, Patents for industrial inventions regarding molecules and/or
technologies related to products existing or currently under development by
CTI, or related to CTI's compounds.
(c) Schedule 3.13(c) of the CTI Disclosure Schedules
sets forth a true, correct and complete list of all material license
agreements to which CTI is a party or is otherwise bound, granting any right
to use or practice any Intellectual Property rights, whether CTI is the
licensee or licensor thereunder, and any written settlements relating to any
Intellectual Property to which CTI is a party or is otherwise bound
(collectively, the "CTI License Agreements"), indicating for each the title,
the parties, date executed and the Intellectual
36
Property covered thereby. The CTI License Agreements in which CTI is the
licensee, constitute all of the material licenses used by CTI in connection
with its business.
(d) Except as set forth in Schedule 3.13(d) of the
CTI Disclosure Schedules, CTI has not licensed or sublicensed its rights in
any material Intellectual Property, except pursuant to the CTI License
Agreements, and no royalties, honoraria or other fees are payable by CTI for
the use of or right to use any third party Intellectual Property, except
pursuant to the CTI License Agreements or non-exclusive end user agreements
for commercially available software.
(e) The Intellectual Property owned by CTI is free
and clear of all Liens, and CTI is listed in the records of the appropriate
United States and/or other foreign agency as the sole owner of record for each
patent and patent application listed in Schedule 3.13(b) of the CTI Disclosure
Schedules (except for those patents or patent applications designated on
Schedule 3.13(b) of the CTI Disclosure Schedules as jointly owned or
exclusively licensed from a third party).
(f) Except as set forth on Schedule 3.13(f) of the
CTI Disclosure Schedules, to CTI's knowledge, the Patents listed on Schedule
3.13(b) of the CTI Disclosure Schedules are valid, enforceable and subsisting,
in full force and effect, and have not expired or been cancelled or abandoned.
To CTI's knowledge, there is no pending or threatened nullification,
revocation, opposition, interference or cancellation proceedings involving the
Patents listed on Schedule 3.13(b) of the CTI Disclosure Schedules. Except as
set forth on Schedule 3.13(f) of the CTI Disclosure Schedules, to CTI's
knowledge, there is no prior art or circumstances that would render any of the
Patents listed on Schedule 3.13(b) of the CTI Disclosure Schedules invalid or
unenforceable.
(g) CTI has not received any written notice
asserting infringement or misappropriation of any Intellectual Property rights
of others nor has it received any written notice asserting the invalidity or
unenforceability of any CTI Intellectual Property. No person has notified CTI
in writing that it is claiming any ownership of or right to use any CTI
Intellectual Property, other than pursuant to the CTI License Agreements. No
person, to the knowledge of CTI, is infringing upon or misappropriating any
Intellectual Property rights owned or licensed by CTI. Except as set forth on
Schedule 3.13(g) of the Disclosure Schedules, to CTI's knowledge, the conduct
of the business of CTI as currently conducted does not conflict with, infringe
upon, misappropriate or otherwise violate the valid Intellectual Property
rights of any third party. To CTI's knowledge, no action has been instituted
against CTI that is presently outstanding alleging that CTI infringes upon,
misappropriates or otherwise violates any rights of a third party in or to
Intellectual Property. CTI has no knowledge that the claims of any Patent
owned or exclusively licensed from a third party by CTI has been previously
submitted to any patent office by another party or parties who have priority
rights with respect to such Patent.
(h) Except as set forth on Schedule 3.13(h) of the
CTI Disclosure Schedules, to CTI's knowledge, all present and former employees
and consultants of CTI have executed a written invention assignment or
consulting agreement pursuant to which such employee or consultant has
assigned to CTI all Intellectual Property rights arising out of the employment
or consulting relationship with CTI.
(i) Except as set forth on Schedule 3.13(i) of the
CTI Disclosure Schedules, the transactions contemplated by this Agreement will
not result in (i) the loss or material impairment of the Surviving
Corporation's rights to any CTI Intellectual Property; (ii) the
37
Surviving Corporation being bound by any material non-compete, exclusivity
obligation or other restriction on the operation of the business, the
products, or the Intellectual Property rights of the Surviving Corporation
(except to the same extent affecting specific CTI Intellectual Property rights
immediately prior to the Merger); or (iii) the Surviving Corporation granting
any rights to any Intellectual Property to a third party (except to the same
extent affecting specific CTI Intellectual Property rights immediately prior
to the Merger).
3.14 Agreements with Employees; Labor Disputes. Except as
set forth on Schedule 3.14 of the CTI Disclosure Schedules, as of the date
hereof (i) there is no labor strike, work stoppage or other labor dispute or
unrest, pending or threatened in writing by any employee of CTI that,
individually or in the aggregate, would be reasonably likely to have a
material adverse effect on CTI, and (ii) there are no asserted or threatened
claims made against CTI by any employees or other individuals, or labor,
administrative, social security, pension or insurance authorities, related to
discrimination, harassment, wrongful termination, unpaid benefits (including,
without limitation, severance) or otherwise, without limitation, that,
individually or in the aggregate, would be reasonably likely to have a
material adverse effect on CTI. CTI has complied in all respects with all
relevant applicable United States federal or state and company collective
bargaining agreements and the individual terms and conditions of employment or
service agreements with respect to each of its employees (and each of its
former employees and independent contractors or consultants), except where the
failure to be in such compliance would not, individually or in the aggregate,
have a material adverse effect on CTI. During the six months prior to the date
of this Agreement, CTI has not engaged in facility closings or employment
terminations sufficient in number to trigger application of the Worker
Adjustment and Retraining Notification Act (the "WARN Act") or any similar
state or local law or regulation.
3.15 Contracts; Debt Instruments(a) Except for this
Agreement and such other agreements contemplated hereby and except as set
forth on Schedule 3.15(a) of the CTI Disclosure Schedules, as of the date
hereof CTI is not a party to or bound by
(i) any Contract that requires payments or
repayments by CTI exceeding US$125,000 in any one fiscal year or
US$500,000 in the aggregate,
(ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any
material portion of the business of CTI, taken as a whole, is
conducted, or limiting the right of CTI to engage in any material
line of business,
(iii) any exclusive or material (A) supply,
distribution, marketing, research, development or purchase Contracts
or (B) CTI Intellectual Property licenses,
(iv) any material joint venture or other
strategic partnership, alliance or collaboration Contract,
(v) any Contract relating to the disposition or
acquisition by CTI after the date of this Agreement of a material
amount of assets not in the ordinary course of business or pursuant
to which CTI will acquire any material ownership interest in any
other person or business enterprise,
38
(vi) any mortgages, indentures, guarantees,
loans or credit agreements, security agreements or other Contracts to
which CTI is a party relating to the borrowing of money or extension
of credit, other than accounts receivable and payable in the ordinary
course of CTI's business,
(vii) any indemnification or guaranty Contract
to which CTI is party that is outside the ordinary course of CTI's
business, or
(viii) any current or pending Grants or
Subsidies to CTI (all contracts set forth in clauses (i) - (viii)
being referred to herein as "CTI Material Contracts").
(b) CTI has delivered or made available to
Novuspharma prior to the date of this Agreement, true, correct and complete
copies of all CTI Material Contracts, as amended through the date of this
Agreement. Each CTI Material Contract is valid and binding on CTI and, to the
knowledge of CTI, the other party or parties thereto, and is in full force and
effect, except to the extent they have previously expired in accordance with
their terms, and except if the failure to be in full force and effect,
individually or in the aggregate, would not be reasonably likely to have a
material adverse effect on CTI, and, except as set forth on Schedule 3.15(b)
of the CTI Disclosure Schedules, CTI has in all material respects performed
all obligations required to be performed by it to date under each CTI Material
Contract. Except as set forth on Schedule 3.15(b) of the CTI Disclosure
Schedules, as of the date hereof, CTI does not know of and has not received
written notice of (x) any actual or intended termination, cancellation or
revocation by the counterparty to a CTI Material Contract with respect to, or
(y) any material violation or default under (nor, to the knowledge of CTI,
does there exist any condition which, with the passage of time or the giving
of notice or both, would result in such a material violation or default under)
any CTI Material Contract.
3.16 Financial Advisors.
(a) CTI has received the opinion of CIBC World
Markets ("CIBC World Markets"), with its principal place of business at 000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to CTI.
(b) Neither CTI nor any of its officers, directors
or employees has employed any broker or finder (other than CIBC World
Markets), or incurred any liability for any brokerage, finder's, financial
advisor's or similar fee, expense or commission, and no broker or finder has
acted directly or indirectly for CTI, in connection with this Agreement or the
transactions contemplated hereby.
3.17 Title to Properties. CTI does not own any real
property. All current real property leases to which CTI is a party, and each
amendment thereto, that are in effect as of the date of this Agreement, are in
full force and effect, are valid and effective in accordance with their
respective terms and there is not, under any of the leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a material claim
against CTI. CTI has good and marketable title to, or valid leasehold
interests in, all its properties and assets, except where such failure,
individually or in the aggregate, would not be reasonably likely to have a
material adverse effect on CTI.
39
3.18 Third Party Reimbursement Policies. Except as set forth
on Schedule 3.18 of the CTI Disclosure Schedules, CTI is in material
compliance with all applicable United States and other foreign laws and
regulations governing reimbursement for the purchase of pharmaceutical
products. CTI has not received any indication from any public health service
or private health insurer that a satisfactory reimbursement policy will not be
made available to CTI for any of its products.
3.19 Voting Requirements. The approval of a majority of the
outstanding shares of CTI Common Stock are the only votes of the holders of
any class or series of CTI's capital stock necessary to approve the Merger and
the Merger Agreement and the other transactions contemplated by this
Agreement.
3.20 State Takeover Statutes; Certain Charter Provisions.
The Board of Directors of CTI has, to the extent such statutes are applicable,
taken all action (including appropriate approvals of the Board of Directors of
CTI) necessary to exempt CTI, its subsidiaries and affiliates, the Merger,
this Agreement, and the transactions contemplated hereby from the terms and
restrictions set forth in Chapter 23B.19 of the WBCA. No "fair price,"
"moratorium," "control share acquisition," or other similar antitakeover
statute or regulation enacted under the State of Washington or federal laws in
the United States applicable to CTI or any of its subsidiaries is applicable
to the Merger, this Agreement, or the transactions contemplated hereby.
3.21 Rights Plan. CTI has taken all action so that (i)
neither Novuspharma nor any shareholder of Novuspharma shall be an "Acquiring
Person" as a result of the transactions contemplated hereby, and (ii) the
entering into this Agreement and the consummation of the Merger and the other
transactions contemplated hereby will not result in the grant of any rights to
any person under the Rights Plan or enable or require the Rights to be
exercised, distributed or triggered.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Conduct of Business by Novuspharma. During the period
from the date of this Agreement to the Effective Time (or until the earlier
termination of this Agreement in accordance with its terms), Novuspharma
shall, except as otherwise contemplated by this Agreement or to the extent CTI
shall otherwise consent in writing, carry on its business in all material
respects, in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance, in all material respects,
with all Applicable Laws and regulations and, to the extent consistent
therewith, use commercially reasonable efforts consistent with past practice
to preserve intact its current business organization and keep available the
services of its current officers and employees. Without limiting the
generality of the foregoing, between the date of this Agreement and the
Effective Time or until the earlier termination of this Agreement pursuant to
its terms, Novuspharma shall not, except (i) as contemplated by this
Agreement, or (ii) with the prior written consent of CTI:
(a) (i) declare, set aside or pay (whether in cash,
stock, property or otherwise) any dividends on, or make any other
distributions in respect of, any of its capital stock or other securities
(whether voting or otherwise), (ii) split, combine or reclassify any of its
capital stock or other securities (whether voting or otherwise) or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or other securities (whether
voting or otherwise), or (iii) purchase, redeem or otherwise acquire any
shares of capital stock or
40
other securities (whether voting or otherwise) of Novuspharma or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) other than the issuance of Novuspharma Ordinary
Shares upon the exercise of Novuspharma Stock Options outstanding on the date
of this Agreement in accordance with their present terms or in accordance with
the terms of any employment agreements existing on the date of this Agreement
or as set forth on Schedule 2.11 of the Novuspharma Disclosure Schedules, (i)
issue, deliver, sell, award, pledge, dispose of or otherwise encumber or
authorize or propose the issuance, delivery, grant, sale, award, pledge or
other encumbrance (including limitations on voting rights) or authorization
of, any shares of its capital stock, any other securities (whether voting or
otherwise) or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, (ii) amend or otherwise modify the terms of any such rights,
warrants or options, or (iii) accelerate the vesting of any outstanding
Novuspharma Stock Options;
(c) amend or propose to amend its Articles of
Association or Bylaws;
(d) except as set forth on Schedule 4.1(d) of the
Novuspharma Disclosure Schedules, acquire or agree to acquire (for cash or
shares of stock or otherwise) (i) by merging or consolidating with, or by
purchasing any assets of, or by purchasing any equity or voting interest in,
or by any other manner, any business or any corporation, partnership, limited
liability company, joint venture, association or other business organization
or division thereof, or (ii) any assets other than in connection with
purchases of inventory, fixtures, furniture and equipment in the ordinary
course of business consistent with past practice;
(e) enter into or commit to enter into any lease or
sublease of real property (whether as a lessor, sublessor, lessee or
sublessee), or amend or otherwise modify the terms of any existing real
property lease or exercise any right to renew or similar option under any real
property lease (other than as set forth on Schedule 4.1(e) of the Novuspharma
Disclosure Schedules);
(f) except as set forth on Schedule 4.1(f) of the
Novuspharma Disclosure Schedules, mortgage or otherwise encumber or subject to
any Lien, or sell, lease, exchange or otherwise dispose of, any of its
material rights, properties or assets, except for mortgages, encumbrances or
Liens on, or sales, leases, exchanges or other dispositions of, its rights,
properties or assets in the ordinary course of business consistent with past
practice;
(g) repurchase, repay or incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of Novuspharma, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, other than (i) in connection with the
financing of ordinary course trade payables consistent with past practice or
(ii) as set forth on Schedule 4.1(g) of the Novuspharma Disclosure Schedules;
(h) make or agree to make any new capital
expenditures which individually exceed US$500,000 or which in the aggregate
exceed US$3,000,000, except for
41
leasehold improvements, furniture and fixtures in the ordinary course of
business consistent with past practice;
(i) (i) make or rescind any express or deemed
material election relating to taxes, (ii) settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, (iii) change any of its methods of reporting
income or deductions for tax purposes from those employed in the preparation
of its income tax returns for any taxable year, except as may be required by
Applicable Laws; (iv) consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment related to taxes, or (v)
surrender any right to claim a refund of taxes;
(j) except as set forth on Schedule 4.1(j) of the
Novuspharma Disclosure Schedules, settle, pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the consolidated Novuspharma Financial
Statements dated as of the Novuspharma Balance Sheet Date (or the notes
thereto) or incurred in the ordinary course of business consistent with past
practice;
(k) except as set forth on Schedule 4.1(k) of the
Novuspharma disclosure Schedules or otherwise required by Applicable Laws or
by the terms of any Novuspharma Benefit Plan set forth on Schedule 2.11 of the
Novuspharma Disclosure Schedules, (i) increase the rate or terms of
compensation payable or to become payable generally to any of Novuspharma's
directors, officers or employees other than previously agreed to increases to
non-management employees and except as required by employment agreements in
existence on the date hereof, (ii) pay or agree to pay any pension, retirement
allowance, severance, continuation or termination benefit or other employee
benefit not provided for by any existing pension plan, Novuspharma Benefit
Plan or employment agreement described on Schedule 4.1(k) of the Novuspharma
Disclosure Schedules, or (iii) establish, adopt, amend or commit itself to any
additional pension, profit sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, continuation pay, termination pay, retirement or other employee
benefit plan, agreement or arrangement, or increase the rate or terms of any
employee plan or benefit arrangement, or amend or modify or increase the rate
or benefits under or take any action to accelerate the rights or benefits
under any collective bargaining agreement or any employee benefit plan,
agreement or arrangement, including any Novuspharma Stock Option Plan or any
other Novuspharma Benefit Plan;
(l) except as set forth on Schedule 4.1(l) of the
Novuspharma Disclosure Schedules, except as required by Applicable Law, adopt
or enter into any collective bargaining agreement or other labor or union
Contract applicable to the employees of Novuspharma or terminate the
employment of any employee of Novuspharma;
(m) except as set forth on Schedule 4.1(m) of the
Novuspharma Disclosure Schedules, enter into, modify or amend in a manner
adverse in any material respect, or terminate any Novuspharma Material
Contract or waive, release or assign any material rights or claims thereunder,
in the case of any such waiver, release or assignment, in a manner adverse to
Novuspharma other than any modification, amendment, termination, release or
assignment of any such Novuspharma Material Contract in the ordinary course of
business, consistent with past practice;
42
(n) enter into any Contract the effect of which
would be to subject the Surviving Corporation or any of CTI's subsidiaries to
any non-compete or other material restrictions on their business following the
Effective Time;
(o) enter into any material Contract if consummation
of the transactions contemplated by this Agreement or compliance by
Novuspharma with the provisions of this Agreement will conflict with, or
result in any material violation or breach of, or material default (with or
without notice or lapse of time or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, or result in the creation of any Lien in or upon any
of the properties or assets of Novuspharma or the Surviving Corporation or any
of their respective subsidiaries under, any provision of such Contract;
(p) enter into any material written Contract,
prohibiting Novuspharma from assigning all or any material portion of its
rights, interests or obligations thereunder, unless such prohibition expressly
excludes any assignment to CTI or any of its subsidiaries in connection with
or following the consummation of the Merger and the other transactions
contemplated by this Agreement;
(q) enter into a new line of business material to
Novuspharma;
(r) change its fiscal year, or except as required by
Italian GAAP, revalue any of its material assets or make any changes in
financial or tax accounting methods, principles or practices; or
(s) authorize any of, or commit, resolve or agree to
take any of, the foregoing actions.
4.2 Conduct of Business by CTI. During the period from the
date of this Agreement to the Effective Time (or until the earlier termination
of this Agreement in accordance with its terms), CTI shall, and shall cause
its subsidiaries to, except as otherwise contemplated by this Agreement or to
the extent CTI shall otherwise consent in writing, carry on their respective
businesses, in all material respects, in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all Applicable Laws and regulations
and, to the extent consistent therewith, use all commercially reasonable
efforts consistent with past practice to preserve intact their current
business organizations and keep available the services of their current
officers and employees. Without limiting the generality of the foregoing,
between the date of this Agreement and the Effective Time or until the earlier
termination of this Agreement pursuant to its terms, CTI shall not, and shall
not permit any of its subsidiaries to, except (i) as contemplated by this
Agreement or (ii) with the prior written consent of Novuspharma:
(a) (i) declare, set aside or pay (whether in cash,
stock, property or otherwise) any dividends on, or make any other
distributions in respect of, any of its capital stock or other securities
(whether voting or otherwise), other than dividends and distributions by any
direct or indirect wholly-owned subsidiary of CTI, (ii) split, combine or
reclassify any of its capital stock or other securities (whether voting or
otherwise) or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
other securities (whether voting or otherwise) or (iii) except for redemption
of outstanding convertible notes of CTI or the repurchase of restricted stock,
in each case pursuant to the terms thereof, purchase, redeem or otherwise
acquire any shares of capital stock or other
43
securities (whether voting or otherwise) of CTI or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(b) other than (1) the issuance of CTI Common Stock
upon the exercise of CTI Stock Options or warrants outstanding on the date of
this Agreement in accordance with their present terms or in accordance with
the terms of any employment agreements existing on the date of this Agreement
or entered into in the ordinary course of business generally consistent with
past practice, (2) the issuance of CTI Stock Options under the CTI Stock
Option Plans in the ordinary course of business generally consistent with past
practice, (3) pursuant to the terms of this Agreement or CTI Permitted
Acquisitions, (4) the issuance of CTI Common Stock upon conversion of
outstanding convertible notes, (5) sales of securities of CTI sold to
investors not affiliated with CTI in arms-length financing transactions which
neither require approval of the CTI shareholders nor present a material risk
of delaying the Merger, or (6) as set forth on Schedule 4.2(b) of the CTI
Disclosure Schedules, (i) issue, deliver, sell, award, pledge, dispose of or
otherwise encumber or authorize or propose the issuance, delivery, grant,
sale, award, pledge or other encumbrance (including limitations in voting
rights) or authorization of, any shares of its capital stock, any other
securities (whether voting or otherwise) or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, (ii) amend or otherwise modify the terms
of any such rights, warrants or options, or (iii) accelerate the vesting of
outstanding CTI Stock Options;
(c) amend or propose to amend its Articles of
Incorporation, Bylaws or other comparable charter or organizational documents;
(d) other than CTI Permitted Acquisitions and as set
forth on Schedule 4.2(d) of the CTI Disclosure Schedules, acquire or agree to
acquire (for cash or shares of stock or otherwise) (i) by merging or
consolidating with, or by purchasing any assets of, or by purchasing any
equity or voting interest in or by any other manner, any business or any
corporation, partnership, limited liability company, joint venture,
association or other business organization or division thereof or (ii) any
assets other than in connection with purchases of inventory, fixtures,
furniture and equipment in the ordinary course of business consistent with
past practice;
For purposes of this Agreement, "CTI Permitted Acquisitions"
shall mean any of the transactions described in this subparagraph (d) above
(1) which do not present a material risk of delaying the Merger or making it
more difficult to obtain any necessary consent, (2) which are internal
reorganizations solely involving existing wholly-owned (except for de minimis
local ownership as required under applicable foreign laws) subsidiaries of
CTI, or (3) which are set forth in Schedule 4.2(d) of the CTI Disclosure
Schedules;
(e) except as set forth on Schedule 4.2(e) of the
CTI Disclosure Schedules, mortgage or otherwise encumber or subject to any
Lien, or sell, lease, exchange or otherwise dispose of any of, its material
rights, properties or assets, except for mortgages, encumbrances or Liens on,
or sales, leases, exchanges or other dispositions of, its rights, properties
or assets in the ordinary course of business consistent with past practice;
(f) repurchase, repay or incur any indebtedness for
borrowed money, or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of CTI, or any of its subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement
44
having the economic effect of any of the foregoing, other than (i) in
connection with the financing of ordinary course trade payables consistent
with past practice, (ii) pursuant to existing credit facilities as in effect
on the date hereof, (iii) issuances of debt securities of CTI sold to
investors not affiliated with CTI in arms-length financing transactions which
neither require approval of CTI shareholders nor present a material risk of
delaying the Merger, (iv) as set forth on Schedule 4.2(f) of the CTI
Disclosure Schedules or (v) any incurrences in the ordinary course of business
which are not, individually or in the aggregate, material to CTI (provided
that none of such transactions referred to in this clause (v) presents a
material risk of delaying the Merger or making it more difficult to obtain or
otherwise reasonably cause a delay in obtaining any necessary consent);
(g) except as set forth on Schedule 4.2(g) of the
CTI Disclosure Schedules, modify or amend in a manner adverse in any material
respect, or terminate any CTI Material Contract or waive, release or assign
any material rights or claims thereunder, in the case of any such waiver,
release or assignment, in a manner adverse to CTI other than any modification,
amendment, termination, release or assignment of any such CTI Material
Contract in the ordinary course of business consistent with past practice;
(h) except as required by Applicable Law or as set
forth on Schedule 4.2(h) of CTI Disclosure Schedules, adopt or enter into any
collective bargaining agreement or other labor or union contract applicable to
the employees of CTI;
(i) enter into a new line of business material to
CTI;
(j) change its fiscal year, or except as required by
U.S. GAAP, revalue any of its material assets or make any changes in financial
or tax accounting methods, principles or practices; or
(k) authorize any of, or commit, resolve or agree to
take any of, the foregoing actions.
4.3 No Solicitation by CTI.
(a) CTI shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its or its
subsidiaries' officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or its subsidiaries to, directly or indirectly, (i) solicit, initiate or
encourage, knowingly facilitate or induce any inquiries or the making of any
proposal the consummation of which would constitute a CTI Alternative
Transaction (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may be reasonably likely to lead to a CTI
Alternative Transaction; provided, however, that if, at any time prior to the
CTI Shareholder Approval, CTI receives an unsolicited, bona fide written offer
or proposal from a third party with respect to which the Board of Directors of
CTI determines in good faith, after consultation with outside legal counsel,
that the failure to provide such information or participate in such
negotiations or discussions would result in a reasonable likelihood that the
Board of Directors of CTI would breach its fiduciary duties to CTI's
shareholders under Applicable Laws, CTI may, in response to any such proposal
that was not solicited by it and which did not otherwise result from a breach
of this Section 4.3(a), and subject to compliance with Section 4.3(c) hereof,
(x) furnish information with respect to CTI to any person pursuant to a
customary confidentiality agreement containing terms as to
45
confidentiality no less restrictive than the Confidentiality Agreement dated
December 10, 2002 entered into between Novuspharma and CTI (the
"Confidentiality Agreement"), and (y) participate in negotiations regarding
such proposal. For purposes of this Agreement "CTI Alternative Transaction"
means any of (i) a transaction or series of transactions pursuant to which any
person (or group of persons) other than CTI, its subsidiaries or Novuspharma
(a "Third Party") acquires or would acquire, directly or indirectly,
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of 50%
or more of the outstanding shares of CTI, whether from CTI or pursuant to a
tender offer or exchange offer or otherwise, (ii) any acquisition or proposed
acquisition of CTI or any of its significant subsidiaries by a Third Party by
a merger or other business combination (including any so called "merger of
equals" and whether or not CTI or any of its significant subsidiaries is the
entity surviving any such merger or business combination), pursuant to which
the stockholders of CTI or its significant subsidiary, as the case may be,
immediately preceding such transaction hold less than 50% of the equity
interests in the surviving or resulting entity of such transaction, (iii) any
other transaction pursuant to which any Third Party acquires or would acquire,
directly or indirectly, control of assets (including for this purpose the
outstanding equity securities of subsidiaries of CTI and any entity surviving
any merger or combination, including CTI or any of its subsidiaries) of CTI or
any of its significant subsidiaries, as the case may be, for consideration
equal to 50% or more of the fair market value of all of the outstanding shares
of CTI Common Stock on the date prior to the date hereof, or (iv) any
liquidation or dissolution of CTI; provided, however, that the Merger and the
transactions contemplated by this Agreement shall not be deemed a CTI
Alternative Transaction in any case.
(b) Neither the Board of Directors of CTI nor any
committee thereof shall, except as expressly permitted by this Section 4.3,
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Novuspharma, the approval or recommendation by
such Board of Directors or such committee of the Merger or the Merger
Agreement, unless the Board of Directors of CTI determines in good faith,
after consultation with outside counsel, that the failure to change, withdraw,
qualify or modify such recommendation would result in a reasonable likelihood
that the Board of Directors of CTI would breach its fiduciary duties to CTI's
shareholders under Applicable Laws, in which case CTI may withdraw, qualify or
modify such approval or recommendation (a "CTI Subsequent Determination").
Notwithstanding any other provision of this Agreement, CTI shall submit the
Merger and the Merger Agreement to its shareholders whether or not the Board
of Directors of CTI makes a CTI Subsequent Determination.
(c) In addition to the obligations of CTI set forth
in paragraphs (a) and (b) of this Section 4.3, CTI shall promptly advise
Novuspharma orally and in writing of any request for information or of any
proposal in connection with a CTI Alternative Transaction, the material terms
and conditions of such request or proposal and the identity of the person
making such request or proposal, and CTI shall provide Novuspharma with a copy
of any documentation provided in connection therewith. CTI will keep
Novuspharma reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or proposal on a
current basis and shall promptly provide all written materials subsequently
provided in connection therewith.
(d) Nothing contained in this Section 4.3 shall
prohibit CTI from (i) taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange
Act, or (ii) making any disclosure to its shareholders if, in the good faith
judgment of the Board of Directors of CTI, after receipt of advice from
outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to holders of CTI's
46
securities under Applicable Laws; provided, however, that CTI agrees to
provide Novuspharma with a copy of such disclosure prior to such disclosure.
4.4 No Solicitation by Novuspharma.
(a) Novuspharma shall not, nor shall it authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
to, directly or indirectly, (i) solicit, initiate or encourage, knowingly
facilitate or induce any inquiries or the making of any proposal the
consummation of which would constitute a Novuspharma Alternative Transaction
(as hereinafter defined), or (ii) participate in any discussions or
negotiations regarding, or furnish any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may be reasonably likely to lead to a
Novuspharma Alternative Transaction; provided, however, that if, at any time
prior to the Novuspharma Shareholder Approval, Novuspharma receives an
unsolicited, bona fide written offer or proposal from a third party with
respect to which the Board of Directors of Novuspharma determines in good
faith, after consultation with outside legal counsel, that the failure to
provide such information or participate in such negotiations or discussions
would result in a reasonable likelihood that the Board of Directors of
Novuspharma would breach its fiduciary duties to Novuspharma's shareholders
under Applicable Laws, Novuspharma may, in response to any such proposal that
was not solicited by it or that did not otherwise result from a breach of this
Section 4.4(a), and subject to compliance with Section 4.4(c) hereof, (x)
furnish information with respect to Novuspharma to any person pursuant to a
customary confidentiality agreement containing terms as to confidentiality no
less restrictive than the terms of the Confidentiality Agreement, and (y)
participate in negotiations regarding such proposal. For purposes of this
Agreement, "Novuspharma Alternative Transaction" means any of (i) a
transaction or series of transactions pursuant to which a Third Party acquires
or would acquire, directly or indirectly, beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of 20% or more of the outstanding shares of
Novuspharma, whether from Novuspharma or pursuant to a tender offer or
exchange offer or otherwise, (ii) any acquisition or proposed acquisition of
Novuspharma by a Third Party by a merger or other business combination
(including any so called "merger of equals" and whether or not Novuspharma is
the entity surviving any such merger or business combination), pursuant to
which the shareholders of Novuspharma immediately preceding such transaction
hold less than 80% of the equity interests in the surviving or resulting
entity of such transaction, (iii) any other transaction pursuant to which any
Third Party acquires or would acquire, directly or indirectly, control of
assets of Novuspharma for consideration equal to 20% or more of the fair
market value of all of the outstanding Novuspharma Ordinary Shares on the date
prior to the date hereof, or (iv) any liquidation or dissolution of
Novuspharma; provided, however, that the Merger and the transactions
contemplated by this Agreement shall not be deemed a Novuspharma Alternative
Transaction in any case.
(b) Neither the Board of Directors of Novuspharma
nor any committee thereof shall (i) except as expressly permitted by this
Section 4.4, withdraw, qualify or modify, or propose publicly to withdraw,
qualify or modify, in a manner adverse to CTI, the approval or recommendation
by such Board of Directors or such committee of the Merger or this Agreement.
Notwithstanding the foregoing, in the event that prior to the Novuspharma
Shareholder Approval the Board of Directors of Novuspharma determines in good
faith, after it has received a Novuspharma Superior Proposal (as defined
below) and after receipt of advice from outside counsel, that the failure to
do so would result in a reasonable likelihood that the Board of Directors of
Novuspharma would breach its fiduciary duties to Novuspharma's shareholders
under Applicable Laws, the Board of Directors of Novuspharma may (subject to
47
this and the following sentences) withdraw, qualify or modify, or propose
publicly to withdraw, qualify or modify the approval or recommendation by the
Novuspharma Board of Directors of the Merger or this Agreement (a "Novuspharma
Subsequent Determination"), but only at a time that is after the seventh
business day following CTI's receipt of written notice advising CTI that the
Board of Directors of Novuspharma has received a Novuspharma Superior Proposal
(as hereinafter defined) specifying the material terms and conditions of such
Superior Proposal, identifying the person making such Novuspharma Superior
Proposal and stating that it intends to make a Novuspharma Subsequent
Determination. After providing such notice, Novuspharma shall provide a
reasonable opportunity to CTI to make such adjustments in the terms and
conditions of this Agreement as would enable Novuspharma to proceed with its
recommendation to shareholders without making a Novuspharma Subsequent
Determination; provided, however, that any such adjustments shall be at the
discretion of the parties at such time. For purposes of this Agreement, a
"Novuspharma Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a Third Party to
enter into a Novuspharma Alternative Transaction involving the sale of a
majority or more of the Novuspharma Ordinary Shares or sale of all or
substantially all of Novuspharma's assets or similar transaction which the
Board of Directors of Novuspharma determines in its good faith judgment (based
on the advice of an independent financial advisor of internationally
recognized reputation) to be more favorable to Novuspharma's shareholders than
the Merger taking into account all relevant factors (including whether, in the
good faith judgment of the Board of Directors of Novuspharma, after obtaining
advice from the independent financial advisor of internationally recognized
reputation, the third party is reasonably able to finance the transaction and
the likelihood of completing the transaction within a reasonable timeframe,
and any proposed changes to this Agreement that may be proposed by CTI in
response to such Alternative Transaction). Notwithstanding any other provision
of this Agreement, Novuspharma shall submit this Agreement and the other
matters requiring the approval of the shareholders in order to complete the
Merger, to its shareholders whether or not the Board of Directors of
Novuspharma makes a Novuspharma Subsequent Determination.
(c) In addition to the obligations of Novuspharma
set forth in paragraphs (a) and (b) of this Section 4.4, Novuspharma shall
promptly advise CTI orally and in writing of any request for information or of
any proposal in connection with a Novuspharma Alternative Transaction, the
material terms and conditions of such request or proposal and the identity of
the person making such request or proposal, and Novuspharma shall provide CTI
with a copy of any documentation provided in connection therewith. Novuspharma
will keep CTI reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or proposal on a
current basis and shall promptly provide all written materials subsequently
provided in connection therewith.
(d) Nothing contained in this Section 4.4 shall
prohibit Novuspharma from making any disclosure to its shareholders in
accordance with the applicable provisions of Italian Law if, in the good faith
judgment of the Board of Directors of Novuspharma, after receipt of advice
from outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to Novuspharma's shareholders under Applicable Laws;
provided, however, that Novuspharma shall provide a copy of such disclosure to
CTI prior to such disclosure.
4.5 Other Actions. Neither Novuspharma nor CTI shall, nor
shall CTI permit any of its subsidiaries to, take any action that would result
in (a) any of the representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming untrue, incorrect
or incomplete or (b) any of such representations and warranties that are not
so qualified becoming untrue, incorrect or incomplete in any material respect.
48
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement, Registration Statement,
Information Document and Listing Particulars; Shareholders' Meetings.
(a) As soon as possible, with the goal of not later
than 30 days after the execution of this Agreement, (i) CTI shall prepare and
file with the SEC a proxy statement relating to the meeting of the CTI
shareholders to obtain the CTI Shareholder Approval (together with any
amendments thereof or supplements thereto, the "Proxy Statement"), and (ii)
CTI shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "Registration Statement"), in which
the Proxy Statement shall be included as part of the prospectus, in connection
with the registration under the Securities Act of the shares of CTI Common
Stock to be issued to the holders of Novuspharma Ordinary Shares pursuant to
the Merger. CTI shall use all reasonable efforts to cause the Registration
Statement to become effective as promptly as practicable, and shall take all
or any action required under any applicable federal or state laws in
connection with the issuance of shares of CTI Common Stock pursuant to the
Merger. As promptly as practicable after the Registration Statement shall have
become effective, CTI shall mail the Proxy Statement to its shareholders in
accordance with Applicable Laws. As promptly as practicable after the CTI
Shareholders' Meeting, CTI shall prepare and file with the CONSOB and the
Borsa Italiana a listing application (the "Listing Particulars") in accordance
with the applicable rules and regulations of the Borsa Italiana for the
listing of the shares of CTI Common Stock on the Nuovo Mercato and Schedule J
hereto. As promptly as practicable after the signing of this agreement, CTI
will appoint the Sponsor Bank to manage the listing process in accordance with
the Italian law. The Sponsor Bank will be designated in consultation with
Novuspharma.
(b) As promptly as practicable after the date of
this Agreement, in accordance with applicable rules and regulations of the
CONSOB and the Borsa Italiana, Novuspharma shall prepare and file with the
Borsa Italiana and make available at Novuspharma's registered office in Milan,
Italy, an information document relating to the Merger (together with any
amendments thereof or supplements thereto, the "Information Document").
(c) Each of CTI and Novuspharma shall furnish all
information concerning itself to the other as the other may reasonably request
in connection with such actions and the preparation of the Information
Document, Proxy Statement, Registration Statement and Listing Particulars, and
each party hereby authorizes the other to use such information in each of the
Information Document, Proxy Statement, Registration Statement and Listing
Particulars, as the case may be; provided that neither party shall use any
such information without the prior consent of the other party or if doing so
would violate or cause a violation of United States or Italian securities laws
or any other Applicable Law. CTI will promptly advise Novuspharma when the
Registration Statement has become effective and of any supplements or
amendments thereto, and Novuspharma shall not distribute any written material
that would constitute, as advised by counsel to Novuspharma, a "prospectus"
relating to the Merger or the CTI Common Stock within the meaning of the
Securities Act or any applicable state securities law without the prior
written consent of CTI.
(d) CTI agrees promptly to advise Novuspharma if at
any time prior to the Novuspharma Shareholders' Meeting or, thereafter, until
the Effective Date or the first date of the listing of the shares of CTI
common stock, any information provided by it in the
49
Information Document is or becomes untrue, incorrect or incomplete in any
material respect and to provide Novuspharma with the information needed to
correct such inaccuracy or omission. CTI will furnish Novuspharma with such
supplemental information as may be necessary in order to cause the Information
Document, insofar as it relates to CTI and its subsidiaries, to comply with
Applicable Laws.
(e) Novuspharma agrees promptly to advise CTI if at
any time prior to the CTI Shareholders' Meeting or, thereafter, until the
Effective Date or the first date of the listing of the shares of CTI common
stock, any information provided by it in the Proxy Statement, Registration
Statement or Listing Particulars is or becomes untrue, incorrect or incomplete
in any material respect and to provide CTI with the information needed to
correct such inaccuracy or omission. Novuspharma will furnish CTI with such
supplemental information as may be necessary in order to cause the Proxy
Statement, Registration Statement or Listing Particulars insofar as it relates
to Novuspharma, to comply with Applicable Laws.
(f) As soon as practicable following the date of
this Agreement in accordance with all applicable rules and regulations of the
SEC, the CONSOB and the Borsa Italiana and WBCA and Italian Law, each of
Novuspharma and CTI shall call and hold a meeting of its respective
shareholders (the "Novuspharma Shareholders' Meeting" and the "CTI
Shareholders' Meeting", respectively), for the purpose of obtaining the
Novuspharma Shareholder Approval and the CTI Shareholder Approval,
respectively. CTI shall use reasonable efforts to obtain the CTI Shareholder
Approval, and through its Board of Directors, shall (subject to Section 4.3)
recommend to its shareholders the obtaining of the CTI Shareholder Approval.
Novuspharma shall use reasonable efforts to obtain the Novuspharma Shareholder
Approval, and through its Board of Directors, shall (subject to Section 4.4)
recommend to its shareholders the obtaining of the Novuspharma Shareholder
Approval. At the CTI Shareholders' Meeting, all of the shares of CTI Common
Stock then owned by Novuspharma, if any, shall be voted in favor of the
Merger. At the Novuspharma Shareholders' Meeting, all of the shares of
Novuspharma Common Stock then owned by CTI, if any, shall be voted in favor of
the Merger.
5.2 Access to Information; Regulatory Communications.
(a) Novuspharma and CTI shall, and CTI shall cause
its subsidiaries to, afford the other party, and the officers, employees,
accountants, counsel, financial advisors and other representatives of such
other party, reasonable access, by giving one (1) day prior notice, during
normal business hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments, personnel and
records and, during such period, Novuspharma and CTI shall, and CTI shall
cause each of its subsidiaries to, furnish promptly to the other party, (i) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of United States federal
or state or Italian securities laws, and (ii) all other information concerning
its business, including product development efforts, properties, results of
operations and personnel as such other party may reasonably request. Each of
Novuspharma and CTI will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any confidential information in accordance with the
Confidentiality Agreement.
(b) CTI and Novuspharma shall notify and consult
with each other promptly (i) after receipt of a communication from any
Regulatory Agency and before giving any material submission to such Regulatory
Agency, (ii) after receipt of any comments from any officials of any
Governmental Entity in connection with filings made pursuant hereto, (iii)
after
50
receipt of any material request by any officials of any Governmental
Entity for amendments or supplements to any filings made pursuant to, or
information provided to comply in with, Applicable Laws, and (iv) prior to
making any material change to a study protocol, the addition of new trials, or
a material change to the development timeline for any of its product
candidates or programs; provided, however, that in the event either CTI or
Novuspharma (x) is contacted by a Regulatory Agency, and (y) has made a good
faith effort to include representatives of the other party in such discussion
without success, then CTI or Novuspharma, as appropriate, shall be allowed to
participate in such discussions without the other party and shall promptly
inform the other party of the content of such discussions.
(c) No information or knowledge obtained in any
investigation or notification pursuant to this Section 5.2 shall affect or be
deemed to modify any representation or warranty contained herein, the
covenants or agreements of the parties hereto or the conditions to the
obligations of the parties under this Agreement.
5.3 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the making of all necessary
registrations and filings (including filings with Governmental Entities and
Regulatory Agencies, if any), (ii) the obtaining of all necessary actions,
consents, approvals or waivers from Governmental Entities, Regulatory Agencies
and other third parties, (iii) the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity or Regulatory Agency, (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement, (v) the defending of any lawsuits or other legal proceedings,
brought by third parties (other than Governmental Entities) challenging this
Agreement or the consummation of the transactions contemplated hereby or
thereby, including using commercially reasonable efforts to lift, rescind or
mitigate the effect of any injunction or restraining order or other order
adversely affecting the ability of any party hereto to consummate the
transactions contemplated hereby, (vi) the taking of all reasonable actions to
fulfill the conditions to the obligations of CTI or Novuspharma set forth in
Article VI of this Agreement, and (vii) the using of all reasonable efforts to
prevent, with respect to a threatened or pending temporary, preliminary or
permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order, the entry, enactment or promulgation thereof,
as the case may be; provided, however, that neither CTI nor Novuspharma shall
be obligated to take any action pursuant to the foregoing if the taking of
such action or the obtaining of any waiver, consent, approval or exemption is
reasonably likely to be materially burdensome to Novuspharma or CTI and its
subsidiaries (taken as a whole) or to impact in a materially adverse manner
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger. In
connection with and without limiting the foregoing, CTI and Novuspharma and
members of their respective Boards of Directors shall (1) grant such approvals
and take all such other actions as may be necessary so that no United States
federal or state or Italian takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated by this Agreement, and (2) if any United States
federal or state or Italian takeover statute or similar statute or regulation
becomes applicable to the Merger, this Agreement or any other transaction
51
contemplated by this Agreement, use commercially reasonable efforts to ensure
that the Merger and the other transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise to eliminate or minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by this
Agreement.
(b) Notwithstanding anything in this Agreement to
the contrary, nothing contained in this Agreement shall be deemed to require
any party hereto to take or agree to take any Action of Divestiture (as
defined below). For purposes of this Agreement, an "Action of Divestiture"
shall mean making proposals, executing or carrying out agreements or
submitting to Judgments providing for the license, sale or other disposition
or holding separate (through the establishment of a trust or otherwise) of any
material assets or categories of material assets or the holding separate of
Novuspharma Ordinary Shares or imposing or seeking to impose any limitation on
the ability of any party hereof to conduct its respective business in any
material respect or own such assets or to acquire, hold or exercise full
rights of ownership of Novuspharma's business.
(c) Novuspharma shall give prompt written notice to
CTI, and CTI shall give prompt written notice to Novuspharma, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue, incorrect or incomplete in any
respect or any such representation or warranty that is not so qualified
becoming untrue, incorrect or incomplete in any material respect, (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, or (iii) the occurrence of any change or event having, or which
insofar as can reasonably be foreseen as having, individually or in the
aggregate, a material adverse effect on Novuspharma or CTI, as the case may
be; provided, however, that no such notification shall (1) affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement, or (2)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
5.4 Termination of Novuspharma Stock Options, Assumption of
Novuspharma Stock Option Plans and Treatment of Novuspharma Employees.
(a) CTI shall assume the Novuspharma Stock Option
Plans at the Effective Time. Prior to the Effective Time, Novuspharma shall
use commercially reasonable efforts to provide that each outstanding
Novuspharma Stock Option shall accelerate and become fully vested and
exercisable, and to the extent not exercised prior to the Effective Time,
shall terminate and be cancelled and shall not be assumed by CTI. Novuspharma
shall take (or cause to be taken) all actions necessary or appropriate to
terminate, effective immediately prior to the Effective Time, each Novuspharma
Stock Option. In furtherance of the foregoing, Novuspharma shall provide a
notice to Novuspharma optionees informing them that the Novuspharma Stock
Options not exercised prior to the Effective Time shall terminate immediately
prior to the Effective Time, which notice shall be provided to the optionees
no later than fifteen (15) days prior to the Effective Time. The form and
substance of such notice shall be subject to advance review and approval of
CTI, which approval will not be unreasonably withheld.
(b) On or after the Effective Time, CTI shall issue
options to acquire CTI Common Stock to those Novuspharma employees and on such
other terms and conditions (including number of shares of CTI Common Stock and
vesting provisions) as determined by CTI in its discretion (the "New CTI
Options"). Prior to the mailing of the Information Document,
52
CTI shall inform each employee holding Novuspharma Stock Options of the terms
and conditions (including number of shares of CTI Common Stock and vesting
provisions) of the New CTI Options to be granted to such employee by CTI on or
after the Effective Time. The New CTI Options shall have a per share exercise
price equal to the greater of: (i) the average of the closing prices for a
share of CTI Common Stock on the Nasdaq National Market for each trading day
during the one-month period immediately preceding the Effective Time or the
relevant date of grant, and (ii) the average of the closing prices for a share
of CTI Common Stock on the Nuovo Mercato Telematico Azionario (if applicable)
for each trading day during the one-month period immediately preceding the
Effective Time or the relevant date of grant. The New CTI Options shall be
granted under and subject to the terms and conditions of the assumed
Novuspharma Stock Option Plans and written option agreements to be entered
into by and between CTI and each applicable optionee.
(c) CTI shall take such actions as are reasonable or
appropriate to effectuate the provisions of this Section 5.4, including the
reservation, issuance and listing of the shares of CTI Common Stock that are
subject to the New CTI Options and available for grant under the assumed
Novuspharma Stock Option Plans. CTI shall use commercially reasonable efforts
to file a registration statement on Form S-8 (or any successor form) for the
shares of CTI Common Stock issuable with respect to the New CTI Options and
available for grant under the assumed Novuspharma Stock Option Plans to the
extent Form S-8 (or any successor form) is available as soon as reasonably
practicable after the Effective Time, and shall use commercially reasonable
efforts to maintain such registration statement on Form S-8 (or any successor
form) thereafter for as long as such New CTI Options are outstanding or such
shares remain available for issuance under the assumed Novuspharma Stock
Option Plans.
(d) Novuspharma shall take such actions prior to the
Effective Time as are reasonable or appropriate to effect the provisions of
this Section 5.4, including, without limitation, (i) taking such actions as
may be required to confirm that the CTI Board of Directors shall, effective as
of the Effective Time, become the administrator of the assumed Novuspharma
Stock Option Plans and shall have any and all amendment authority with respect
thereto, and (ii) adopting such amendments and obtaining such consents as may
be required to effect the termination of Novuspharma Stock Options and
assumption of Novuspharma Stock Option Plans contemplated by this Section 5.4.
(e) CTI, Novuspharma and the Surviving Corporation
shall take all such steps as may be reasonably required to cause the
transactions contemplated by this Section 5.4 and any other dispositions of
equity securities of Novuspharma (including, without limitation, derivative
securities) or acquisitions of CTI equity securities (including, without
limitation, derivative securities) in connection with this Agreement by each
individual who (i) is a director or officer of Novuspharma, or (ii) at the
Effective Time, shall become a director or officer of the Surviving
Corporation, to be exempt under Rule 16b-3 promulgated under the Exchange Act,
such steps to be taken in accordance with and to the extent permissible under
that certain SEC No Action Letter [1999 Transfer Binder] Fed. Sec. L. Rep.
(CCH) 77,515 (Jan. 12, 1999).
(f) On and after the Effective Time, the Surviving
Corporation shall maintain plans for the benefit of each employee of
Novuspharma as of the Effective Time (collectively, the "Novuspharma
Employees") that provide benefits to each such employee that are no less
favorable, in the aggregate, to such employees than the benefits provided
under the Novuspharma Benefit Plans as of the Effective Time.
53
(g) Except as provided in Section 5.4(b), with
respect to each employee benefit plan, practice or policy of the Surviving
Corporation or any of its affiliates in which Novuspharma Employees
participate on or after the Effective Time, each such Novuspharma Employee
shall be given credit under such plan, practice or policy for all service with
Novuspharma or any predecessor employer or other entity, to the extent such
credit was given by Novuspharma or any predecessor employer or other entity
under a comparable Novuspharma Benefit Plan, for all purposes, including,
without limitation, for purposes of determining eligibility, vesting, benefit
accrual, and determination of benefit levels, and for all other purposes for
which such service is either taken into account; provided, however, that such
credit shall not result in duplication of benefits. Such service shall also
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any pre-existing condition limitations.
Novuspharma Employees shall be given full credit for amounts paid under any
Novuspharma Benefit Plan during the same calendar year in which they commence
participation in a comparable employee benefit plan of the Surviving
Corporation for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the comparable employee benefit plan of the Surviving
Corporation.
5.5 Conveyance Taxes. CTI and Novuspharma shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes which
become payable in connection with the transactions contemplated hereby that
are required or permitted to be filed on or before the Effective Time. All of
such taxes and expenses shall be borne equally by CTI and Novuspharma.
5.6 Indemnification, Exculpation and Insurance.
(a) (i) The Articles of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in CTI's Articles of
Incorporation on the date of this Agreement, and (ii) the Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Bylaws
attached hereto as Exhibit H, which provisions mentioned under clause (i) and
(ii) above shall 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 on or prior to the Effective Time
were directors, officers, employees or agents of Novuspharma, unless such
modification is required by Applicable Laws.
(b) For three (3) years from the Effective Time, the
Surviving Corporation shall maintain in effect directors' and officers'
liability insurance covering Novuspharma's directors and managers currently
covered by Novuspharma's directors' and officers' liability insurance policies
(copies of which have been heretofore delivered or made available to CTI)
which directors and managers are set forth on Schedule 5.6 of the Novuspharma
Disclosure Schedules (the "Covered Novuspharma Directors and Managers") on
terms no less favorable than the terms of such current insurance coverage;
provided, however, that in lieu of the purchase of such insurance by the
Surviving Corporation, CTI, with Novuspharma's written consent, may purchase a
three (3) year extended reporting period endorsement under its existing
Directors' and Officers' liability insurance coverage; provided further that
in no event will the Surviving Corporation be required to pay annualized
aggregate premiums for insurance under this Section 5.6(b) in excess of one
hundred and fifty percent
54
(150%) of the amount of the aggregate premiums paid by Novuspharma for such
coverage for the year ended December 31, 2002, and to the extent such premiums
would exceed one hundred and fifty percent (150%) of such amount, the
Surviving Corporation shall use all reasonable efforts to cause to be
maintained the maximum amount of coverage as is available for such one hundred
and fifty percent (150%) of such amount.
(c) This Section 5.6 shall survive the consummation
of the Merger, is intended to benefit Novuspharma, the Surviving Corporation
and the Covered Novuspharma Directors and Managers, shall be binding on all
successors and assigns of the Surviving Corporation, and shall be enforceable
by the Covered Novuspharma Directors and Managers. If the Surviving
Corporation or any of its successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in each
such case, the successors and assigns of the Surviving Corporation shall
assume the obligations set forth in this Section 5.6 and in Section 1.6.
5.7 Letters of Accountants. Novuspharma shall use its
commercially reasonable efforts to cause to be delivered to CTI a "comfort"
letter from KPMG S.p.A., Novuspharma's independent public accountants, in
connection with the financial information of Novuspharma to be included in the
Registration Statement, dated and delivered on the date on which the
Registration Statement shall become effective, addressed to CTI, in form and
substance reasonably satisfactory to CTI and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement. CTI
shall use its commercially reasonable efforts to cause to be delivered to
Novuspharma a "comfort" letter from Ernst & Young LLP, CTI's independent
public accountants, in connection with the financial information of CTI to be
included in the Information Document, dated and delivered on the date on which
the Information Statement shall become effective, addressed to Novuspharma, in
form and substance reasonably satisfactory to Novuspharma and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement.
5.8 Fees and Expenses. Except as expressly set forth in this
Agreement, including, without limitation, Section 7.2, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided that CTI shall pay two-thirds and Novuspharma
shall pay one-third of the filing fees and printing costs incurred in
connection with the filing and printing of the Registration Statement, the
Proxy Statement, the Information Document, the Listing Particulars, and any
prospectus to be printed in connection with any of the foregoing documents.
5.9 Public Announcements. CTI, on the one hand, and
Novuspharma, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, and will
use commercially reasonable efforts to agree on, any press release or other
public statements with respect to the transactions contemplated by this
Agreement (including the Merger) including, without limitation, those press
releases or other public statements that may be required by, or that are
otherwise published or disseminated pursuant to, Applicable Laws, court
process or by obligations pursuant to any listing agreement with any
55
United States or Italian securities exchange and will not issue any such press
release or make any such public statement prior to such consultation and (to
the extent practicable) agreement, except as may be required by Applicable
Laws or any listing agreement with any United States or Italian securities
exchange; provided, however, that CTI shall not make any disclosure without
the prior consent of Novuspharma if doing so would violate or cause a
violation of applicable Italian securities laws or other Applicable Laws for
Novuspharma, and Novuspharma shall not make any disclosure without the prior
written consent of CTI if doing so would violate or cause a violation of
applicable United States federal or state securities laws or other Applicable
Laws for CTI. In any event, the parties shall agree on the initial press
release announcing execution of this Agreement.
5.10 Novuspharma Representatives on the Surviving
Corporation. Subject to Applicable Law and the charter of CTI's Nominating
Committee applicable to all directors, CTI shall nominate for election as a
director, in the class specified on Schedule G, the persons specified on
Schedule G for the remainder of the terms of such classes at CTI's 2004 annual
meeting of shareholders. If, for any reason other than removal for cause by
the CTI shareholders, one or more of such directors is unable or unwilling to
serve as a director, the remaining directors specified on Schedule G shall
select a replacement candidate mutually agreeable to the CTI board of
directors which candidate shall in turn be nominated to fill the remaining
term of such replaced director.
5.11 Creditors' Claims. Novuspharma shall not post any bond,
in connection with the termination of the two-month period for creditors'
claims following the recording of the minutes of the Novuspharma Shareholder
Approval on the Companies' Register at the Italian Chamber of Commerce of
Milan, without the prior written consent of CTI.
5.12 Headquarters. As soon as practicable after the
Effective Time, the Surviving Corporation shall take all actions reasonably
necessary to transfer the headquarters of the Surviving Corporation's European
operations to Novuspharma's current offices in Bresso, Italy.
5.13 Favorable Tax Ruling. Promptly after the date hereof,
the parties shall cooperate in the preparation and filing by Novuspharma of a
request for a tax ruling from the competent Italian tax authorities pursuant
to article 11 of Law n. 212 of July 27, 2000, as to the tax-neutrality of the
Merger for Novuspharma and for holders of Novuspharma Ordinary Shares resident
in Italy.
5.14 Termination of 2001 Shareholders' Agreement.
Novuspharma shall use commercially reasonable efforts to terminate the
shareholders' agreement, dated as of November 13, 2001 by and among the
signatories identified therein, prior to the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions to Each Party's Obligations to Close. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver by such party (in writing) on or prior to the Closing
Date of the following conditions:
(a) Shareholder Approvals. The Shareholder Approvals
shall have been obtained.
(b) Stock Market Listing. The shares of CTI Common
Stock issuable to the holders of Novuspharma Ordinary Shares pursuant to this
Agreement and under the CTI
56
Stock Option Plans shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance, and the shares of CTI Common
Stock shall have been approved for listing on the Nuovo Mercato.
(c) No Injunctions or Restraints. No litigation
brought by a Governmental Entity shall be pending, and no litigation shall be
threatened by any Governmental Entity, which seeks to enjoin or prohibit the
consummation of the Merger, and no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(d) Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC, and no proceedings for that purpose shall
have been initiated or, to the knowledge of CTI or Novuspharma, threatened by
the SEC.
(e) Antitrust Approvals. Any applicable waiting
period (and any extension thereof) under any applicable antitrust laws shall
have expired or been terminated, and all material antitrust approvals, if any,
required to be obtained prior to the Merger in connection with the
transactions contemplated hereby shall have been obtained.
(f) Novuspharma and CTI Opinions. Novuspharma's
Italian tax counsel shall have delivered to Novuspharma a written opinion with
respect to the tax-neutrality of the Merger for Novuspharma and for the
holders of Novuspharma Ordinary Shares resident in Italy in customary form,
reasonably acceptable to Novuspharma. In preparing the Novuspharma tax
opinion, Novuspharma counsel may make and rely on reasonable assumptions and
may also rely on reasonable representations related thereto. CTI's Italian tax
counsel shall have delivered to CTI a written opinion in customary form,
reasonably acceptable to CTI. In preparing the CTI tax opinion, CTI counsel
may make and rely on reasonable assumptions and may also rely on reasonable
representations related thereto.
(g) Rescission Shares. Rescission rights under
article 2437 of the Italian Civil Code shall not have been exercised with
respect to an amount greater than US$ 25,000,000, to be converted into Euro at
the applicable exchange rate published in the daily newspaper Il Sole 24-Ore
on the third business day immediately prior to the date of the Novuspharma
Shareholders' Meeting.
(h) Expert Report. KPMG S.p.A. shall have delivered
to Novuspharma, in accordance with the applicable provisions of Italian Law, a
report confirming the fairness of the Exchange Ratio (a copy of which shall
have been provided to CTI prior to the Novuspharma Shareholders' Meeting).
6.2 Additional Conditions to Obligations of CTI. The
obligations of CTI to effect the Merger are also subject to the satisfaction
or waiver by CTI (in writing) on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Novuspharma contained in this Agreement
shall be true and correct as of the Closing Date as though made on and as of
the Closing Date (provided that those representations and warranties which
address matters only as of a particular date shall remain
57
true and correct as of such date), except in each case, or in the aggregate,
as does not constitute a material adverse effect on Novuspharma at the Closing
Date (it being understood that, for purposes of determining whether such
representations and warranties are true and correct, all "material adverse
effect" qualifications and qualifications based on the word "material" shall
be disregarded). CTI shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of Novuspharma to such effect.
(b) Agreements and Covenants. Novuspharma shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. CTI shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of Novuspharma to that
effect.
(c) Certificates and Other Deliveries. Novuspharma
shall have delivered, or caused to be delivered, to CTI (i) a certificate of
good standing (or appropriate counterpart) from the appropriate governmental
entity in Italy stating that Novuspharma is a validly existing joint stock
company in good standing; (ii) duly adopted resolutions of the Board of
Directors and shareholders of Novuspharma approving the execution, delivery
and performance of this Agreement and the instruments contemplated hereby and
thereby, certified by the Managing Director of Novuspharma, and (iii) a true,
correct and complete copy of the Articles of Association, as amended, of
Novuspharma certified by the appropriate governmental entity in Italy, and a
true, correct and complete copy of the Bylaws, as amended, of Novuspharma
certified by the Secretary of Novuspharma.
(d) No Material Adverse Effect. From and including
the date hereof, there shall not have occurred any material adverse effect on
Novuspharma.
(e) Consents and Approvals. Novuspharma shall have
received evidence, in form and substance reasonably satisfactory to it, that
such licenses, permits, consents, approvals, waivers, authorizations,
qualifications and orders of, and declarations, registrations and filings with
(collectively, "Consents and Filings") all Governmental Entities and third
parties set forth in Schedule 6.2(e) of the Novuspharma Disclosure Schedules
have been obtained.
(f) Expiration or Satisfaction of Novuspharma
Creditor Claims. The two-month period following the recording of the minutes
of the Novuspharma Shareholder Approval on the Companies' Register at the
Italian Chamber of Commerce of Milan shall have expired or otherwise been
satisfied.
6.3 Additional Conditions to Obligations of Novuspharma. The
obligations of Novuspharma to effect the Merger are also subject to the
satisfaction or waiver by Novuspharma (in writing) on or prior to the Closing
Date of the following conditions:
(a) Representations and Warranties. Each of the
representations of CTI contained in this Agreement shall be true and correct
as of the Closing Date as though made on and as of the Closing Date (provided
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date), except, in
each case, or in the aggregate as does not constitute a material adverse
effect on CTI at the Closing Date (it being understood that, for purposes of
determining whether such representations and warranties are true and correct,
all "material adverse effect" qualifications and qualifications based on the
word "material or similar phrases contained in such
58
representations and warranties shall be disregarded). Novuspharma shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of CTI to such effect.
(b) Agreements and Covenants. CTI shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. Novuspharma shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of CTI to such effect.
(c) Certificates and Other Deliveries. CTI shall
have delivered to Novuspharma (i) a certificate of good standing from the
Secretary of State of the State of Washington stating that CTI is a validly
existing corporation in good standing; (ii) duly adopted resolutions of the
Board of Directors of CTI approving the execution, delivery and performance of
this Agreement and the instruments contemplated hereby, and of the
shareholders of CTI approving the Merger, each certified by the Secretary of
CTI; and (iii) a true, correct and complete copy of the Articles of
Incorporation, as amended, of CTI certified by the Secretary of State of the
State of Washington, and a true, correct and complete copy of the Bylaws, as
amended, of CTI certified by the Secretary of CTI.
(d) No Material Adverse Effect. From and including
the date hereof, there shall not have occurred any material adverse effect on
CTI.
(e) Consents and Approvals. CTI shall have received
evidence, in form and substance reasonably satisfactory to it, that such
Consents and Filings with all Governmental Entities and third parties set
forth on Schedule 6.3(e) of the CTI Disclosure Schedules hereto have been
obtained.
(f) Directors of the Surviving Corporation. The
persons set forth on Schedule G shall have been appointed as directors of the
Surviving Corporation with such appointments to take effect as of the
Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, and (except in the case of 7.1(a), 7.1(g) or
7.1(h)) whether before or after the Shareholder Approvals:
(a) by mutual written consent of CTI and
Novuspharma, prior to receipt of the Shareholder Approvals, if the Board of
Directors of each so determines by the affirmative vote of a majority of the
members of its entire Board of Directors;
(b) by CTI (provided that CTI is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), (i) upon a breach of any representation, warranty, covenant
or agreement on the part of Novuspharma set forth in this Agreement or (ii) if
any representation or warranty of Novuspharma shall have become untrue or
incorrect, in each case such that the conditions set forth in Section 6.2(a)
or Section 6.2(b) hereof, as the case may be, would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become untrue; provided that if such inaccuracy or breach is curable by
Novuspharma prior to the End Date (as defined in Section
59
7.1(d)) through exercise of its commercially reasonable efforts, then CTI may
not terminate this Agreement under this Section 7.1(b) prior to thirty (30)
days following the receipt of written notice from CTI to Novuspharma of such
breach, provided that Novuspharma continues to exercise commercially
reasonable efforts to cure such breach through such thirty (30) day period (it
being understood that CTI may not terminate this Agreement pursuant to this
Section 7.1(b) if such breach by Novuspharma is cured within such thirty (30)
day period);
(c) by Novuspharma (provided that Novuspharma is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein), (i) upon a breach of any representation,
warranty, covenant or agreement on the part of CTI set forth in this
Agreement, or (ii) if any representation or warranty of CTI shall have become
untrue or incorrect, in each case such that the conditions set forth in
Section 6.3(a) or Section 6.3(b) hereof, as the case may be, would not be
satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue; provided that if such inaccuracy or
breach is curable by CTI prior to the End Date through exercise of its
commercially reasonable efforts, then Novuspharma may not terminate this
Agreement under this Section 7.1(c) prior to thirty (30) days following the
receipt of written notice from Novuspharma to CTI of such breach, provided
that CTI continues to exercise commercially reasonable efforts to cure such
breach through such thirty (30) day period (it being understood that
Novuspharma may not terminate this Agreement pursuant to this Section 7.1(c)
if such breach by CTI is cured within such thirty (30) day period);
(d) by either CTI or Novuspharma if the Merger shall
not have been consummated by April 15, 2004 (the "End Date"); provided,
however, that the right to terminate this Agreement under this Section 7.1(d)
shall not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a material
breach of this Agreement;
(e) by either CTI or Novuspharma, if any approval of
the shareholders of Novuspharma required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of Novuspharma's shareholders or at any
adjournment or postponement thereof; provided, however, that the right to
terminate this Agreement under this Section 7.1(e) shall not be available to
Novuspharma where the failure to obtain Novuspharma Shareholder Approval shall
have been caused by the action or failure to act of Novuspharma and such
action or failure to act constitutes a material breach by Novuspharma of this
Agreement;
(f) by either CTI or Novuspharma, if any approval of
the shareholders of CTI required for the consummation of the Merger shall not
have been obtained by reason of the failure to obtain the required vote at a
duly held meeting of CTI's shareholders or at any adjournment or postponement
thereof; provided, however, that the right to terminate this Agreement under
this Section 7.1(f) shall not be available to CTI where the failure to obtain
CTI Shareholder Approval shall have been caused by the action or failure to
act of CTI and such action or failure to act constitutes a material breach by
CTI of this Agreement;
(g) by Novuspharma, at any time prior to the CTI
Shareholders' Meeting, if the CTI Board of Directors shall have (i) failed to
include in the Proxy Statement its recommendation without modification or
qualification that the CTI shareholders approve this Agreement and the
transactions contemplated hereby, (ii) subsequently withdrawn such
recommendation, (iii) modified or qualified such recommendation in a manner
adverse to the
60
interests of Novuspharma, or (iv) failed to reconfirm such recommendation
within ten (10) business days of receipt of a written request from Novuspharma
to do so; or
(h) by CTI, at any time prior to the Novuspharma
Shareholders' Meeting, if the Novuspharma Board of Directors shall have (i)
failed to recommend without modification or qualification that the Novuspharma
Shareholders approve this Agreement and the transactions contemplated hereby,
(ii) subsequently withdrawn such recommendation, (iii) modified or qualified
such recommendation in a manner adverse to the interests of CTI or (iv) failed
to reconfirm such recommendation within ten (10) business days of receipt of a
written request from CTI to do so.
7.2 Effect of Termination.
(a) In the event of termination of this Agreement by
either Novuspharma or CTI as provided in Section 7.1 hereof, and subject to
the provisions of Section 8.1 hereof, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of
CTI or Novuspharma or their respective officers or directors, except as set
forth in this Section 7.2, and in Sections 2.16(b), 3.16(b), 5.8 and Article
VIII hereof, which shall survive termination, and to the extent that such
termination results from the willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement in which case such willfully breaching party shall not be relieved
from any liability or obligations. No termination of this Agreement shall
affect the obligations of the parties contained in the Confidentiality
Agreement, all of which obligations shall survive any termination of this
Agreement.
(b) If this Agreement is terminated (i) pursuant to
Sections 7.1(d), (f) or (g) hereof or (ii) by Novuspharma as a result of CTI's
material breach of Section 4.3 hereof, CTI shall pay to Novuspharma, promptly,
but in any event within five (5) days of such termination, a termination fee
of US$ 4,750,000 (the "CTI Termination Fee"); provided, that in the case of
termination under Section 7.1(d) or (f): (A) such payment shall be made only
if following the date hereof and prior to termination of this Agreement, there
has been any offer or proposal for a CTI Alternative Transaction with respect
to CTI and within twelve (12) months following the termination of this
Agreement CTI or its subsidiaries enters into an agreement providing for an
Acquisition of CTI or an Acquisition of CTI is consummated, and (B) such
payment shall be made promptly, but in no event later than one (1) business
day after the earlier of the entering into of such agreement or consummation
of such Acquisition of CTI, as the case may be. CTI hereby acknowledges and
agrees that the amount of the CTI Termination Fee is fair after taking into
account the value of the Merger, the transactions contemplated hereby and all
of the costs and expenses already incurred by the parties before entering into
this Agreement.
(c) If this Agreement is terminated (i) pursuant to
Sections 7.1(d), (e) or (h) hereof or (ii) by CTI as a result of Novuspharma's
material breach of Section 4.4, Novuspharma shall pay to CTI, promptly, but in
any event within five (5) days of such termination, a termination fee of US$
4,750,000 (the "Novuspharma Termination Fee"); provided, that in the case of
termination under Sections 7.1(d) or (e): (A) such payment shall be made only
if following the date hereof and prior to termination of this Agreement, there
has been any offer or proposal for a Novuspharma Alternative Transaction with
respect to Novuspharma and within twelve (12) months following the termination
of this Agreement Novuspharma enters into an agreement providing for an
Acquisition of Novuspharma or an Acquisition of Novuspharma is consummated,
and (B) such payment shall be made promptly, but in no event later than one
(1) business day after the earlier of the entering into of such agreement or
61
consummation of such Acquisition of Novuspharma, as the case may be.
Novuspharma hereby acknowledges and agrees that the amount of the Novuspharma
Termination Fee is fair after taking into account the value of the Merger, the
transactions contemplated hereby and all of the costs and expenses already
incurred by the parties before entering into this Agreement.
(d) The CTI Termination Fee and the Novuspharma
Termination Fee (individually, "Termination Fee") payable under Sections
7.2(b) and (c), respectively, shall each (i) be payable in immediately
available funds, and (ii) be paid free and clear of all deductions or
withholdings. With respect to the CTI Termination Fee and the Novuspharma
Termination Fee, in the event that a deduction or withholding is required by
law, the party owing the Termination Fee to the other shall pay such
additional amount as shall be required to ensure that the net amount received
by the party entitled to the Termination Fee shall equal the full amount which
would have been received by it, had no such deduction or withholding been
required to be made, and the owing party shall indemnify such other party for
such withholding or deductions, and interest, additions to tax and penalties
thereon.
(e) For the purposes of this Section 7.2 only,
"Acquisition," with respect to a party hereto, shall mean any of the following
transactions (other than the transactions contemplated by this Agreement): (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the party pursuant to which the
shareholders of the party immediately preceding such transaction hold less
than sixty percent (60%) of the aggregate voting securities in the surviving
or resulting entity of such transaction or any direct or indirect parent
thereof, (ii) a sale or other disposition by the party of assets representing
in excess of forty percent (40%) of the aggregate fair market value of the
party's business immediately prior to such sale, or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer
or issuance by the party or such person or group), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of securities
representing in excess of forty percent (40%) of the voting power of the then
outstanding voting securities of the party.
7.3 Amendment. This Agreement may be amended by the parties
at any time before or after the Shareholder Approvals; provided, however, that
after such Shareholder Approvals have been obtained there shall not be made
any amendment that by law requires further approval by either the shareholders
of Novuspharma or CTI without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties made by the other party contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.3 hereof, waive compliance with any of the
agreements or conditions of the other party contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing, signed by or on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE VIII
GENERAL PROVISIONS
62
8.1 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties that by
its terms contemplates performance after the Effective Time of the Merger.
8.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed duly given (a) on the date of delivery if delivered personally, (b) on
the date of confirmation of receipt (or the first business day following such
receipt if the date is not a business day) of transmission by telecopy or
telefacsimile, or (c) on the date of confirmation of receipt (or the first
business day following such receipt if the date is not a business day) if
delivered by an internationally recognized overnight courier service. All
notices hereunder shall be delivered as set forth below or (or at such other
address for a party as shall be specified by like notice):
(a) if to CTI, to
Cell Therapeutics, Inc.
000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
One Market, Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
Xxxxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Gianni, Origoni, Xxxxxx & Partners Studio Legale
Xxx xxxxx Xxxxxxx Xxxxxxx, 00
Xxxx, Xxxxx
Facsimile:00 00 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
(b) if to Novuspharma, to:
Novuspharma, S.p.A.
Xxx Xxxxxxx 00
00000 Xxxxxx (XX), Xxxxx
Facsimile: 00 (00) 000-00000
Attention: Xx. Xxxxxxx Xxxxxxxx
with a copy to:
63
Studio Legale Chiomenti
Xxx X. Xxxxx x.0
Xxxxx, Xxxxx 00000
Facsimile: 00 (00) 00000000
Attention: Xxxxxxxx Vianini Xxxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first
person;
(b) "business day" is a day on which banks are not
required or authorized to close in the City of New York or Milan, Italy;
(c) "material adverse change" or "material adverse
effect" means, when used in connection with Novuspharma, the Surviving
Corporation or CTI, any change or effect that is or is reasonably likely to be
materially adverse to the business, assets, financial condition or results of
operations of such party and its subsidiaries taken as a whole; provided,
however, none of the following shall be deemed by itself or by themselves,
either alone or in combination, to constitute a material adverse effect: (A) a
change in the market price or trading value or trading volume of Novuspharma
or CTI securities, (B) changes in conditions affecting any of the industries
in which such entity operates generally or the economies of the United States
or Italy, as applicable, (C) any change or effect resulting from compliance
with the terms of this Agreement, or (D) any change or effect resulting from
the announcement or pendency of the Merger;
(d) "person" means an individual, corporation,
partnership, joint stock corporation, joint venture, association, trust,
unincorporated organization or other entity; and
(e) a "subsidiary" of any person means another
person, the capital of which is controlled directly or indirectly by such
first person; for this purpose, the notion of a "controlled person" means a
person in which another person has at its disposal the majority of the votes
to be cast in a meeting of the holders of shares, stock, quotas or other
interests of any kind.
8.4 Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
64
interpretation of this Agreement. Whenever the words "include," "includes" and
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
8.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, and the documents and instruments contemplated hereby or referred
to herein constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter of this Agreement and except for the provisions of Section
5.6 hereof, are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
8.7 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN
UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF, EXCEPT TO THE EXTENT
THAT ANY MANDATORY PROVISIONS OF WASHINGTON STATE LAW OR ITALIAN LAW SHALL
APPLY. EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF ANY UNITED STATES FEDERAL COURT LOCATED IN THE
BOROUGH OF MANHATTAN, NEW YORK, NEW YORK, IN THE EVENT ANY DISPUTE ARISES OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
(B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C)
AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A
UNITED STATES FEDERAL COURT LOCATED IN THE BOROUGH OF MANHATTAN, NEW YORK, NEW
YORK. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY MAIL TO SUCH
PARTY'S ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. EACH PARTY NOT
LOCATED IN THE UNITED STATES IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, WHICH
CURRENTLY MAINTAINS A NEW YORK OFFICE AT 000 XXXXXX XXXXXX, XXX XXXX, XX
00000, XXXXXX XXXXXX OF AMERICA, AS ITS AGENT TO RECEIVE SERVICE OF PROCESS OR
OTHER LEGAL SUMMONS FOR PURPOSES OF ANY SUCH SUIT, ACTION OR PROCEEDING THAT
MAY BE INSTITUTED IN ANY UNITED STATES FEDERAL COURT LOCATED IN THE BOROUGH OF
MANHATTAN, NEW YORK, NEW YORK.
8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by any of the parties without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
8.9 Specific Performance. Each party hereto recognizes and
agrees that, if for any reason any of the provisions of this Agreement are not
performed by the other party in accordance with their specific terms or are
otherwise breached, immediate and irreparable harm
65
or injury would be caused to the non-breaching party for which money damages
would not be an adequate remedy. Accordingly, the parties agree that, in
addition to any other available remedies, the non-breaching party shall be
entitled to an injunction restraining any violation or threatened violation of
the provisions of this Agreement without the necessity of the non-breaching
party posting a bond or other form of security. In the event that any action
should be brought in equity to enforce the provisions of this Agreement, the
breaching party will not allege, and the breaching party hereby waives the
defense, that there is an adequate remedy at law.
8.10 Severability. Any term or provision of this Agreement
which is invalid, illegal or unenforceable in any jurisdiction by any rule or
law or public policy shall, as to that jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without rendering
invalid, illegal or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity, legality or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. Without
limiting the foregoing, upon such determination that any term or other
provision is invalid, illegal or unenforceable, 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 to the fullest extent permitted
by Applicable Law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent possible.
8.11 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY ACKNOWLEDGES AND AGREES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD, IN THE EVENT OF
LITIGATION, SEEK TO PREVENT OR DELAY ENFORCEMENT OF EITHER OF SUCH WAIVERS,
(II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III)
IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 8.11.
66
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IN WITNESS WHEREOF, CTI and Novuspharma have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
CELL THERAPEUTICS, INC.,
a Washington corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
NOVUSPHARMA, S.P.A.,
an Italian joint stock company
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxxx
Chief Executive Officer
[SIGNATURE PAGE TO MERGER AGREEMENT]
