EXHIBIT 1
EXECUTION COPY
==============================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of November 12, 2002
Among
XXXXXXX & XXXXXXX,
PIVOT MERGER SUB, INC.
And
ORAPHARMA, INC.
==============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger...................................................2
SECTION 1.02. Closing......................................................2
SECTION 1.03. Effective Time...............................................2
SECTION 1.04. Effects of the Merger........................................3
SECTION 1.05. Certificate of Incorporation and
By-laws....................................................3
SECTION 1.06. Directors....................................................3
SECTION 1.07. Officers.....................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock......................................3
SECTION 2.02. Exchange of Certificates.....................................5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company ..............................................8
SECTION 3.02. Representations and Warranties of Parent
and Sub..................................................42
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.........................................45
SECTION 4.02. No Solicitation.............................................52
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement;
Stockholders' Meeting.....................................56
SECTION 5.02. Access to Information; Confidentiality......................58
(i)
SECTION 5.03. Commercially Reasonable Efforts.............................58
SECTION 5.04. Company Stock Options;......................................60
SECTION 5.05. Indemnification, Exculpation and
Insurance.................................................61
SECTION 5.06. Fees and Expenses...........................................62
SECTION 5.07. Public Announcements........................................63
SECTION 5.08. Stockholder Litigation......................................63
SECTION 5.09. Rights Agreement............................................64
SECTION 5.10. Employee Matters............................................64
SECTION 5.11. Stockholder Agreement Legend................................65
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger.........................................67
SECTION 6.02. Conditions to Obligations of Parent
and Sub...................................................68
SECTION 6.03. Conditions to Obligation of the
Company...................................................69
SECTION 6.04. Frustration of Closing Conditions...........................70
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................................70
SECTION 7.02. Effect of Termination.......................................72
SECTION 7.03. Amendment...................................................72
SECTION 7.04. Extension; Waiver...........................................72
SECTION 7.05. Procedure for Termination or
Amendment.................................................72
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties................................................73
SECTION 8.02. Notices.....................................................73
SECTION 8.03. Definitions.................................................74
SECTION 8.04. Interpretation..............................................76
SECTION 8.05. Consents and Approvals......................................77
SECTION 8.06. Counterparts................................................77
SECTION 8.07. Entire Agreement; No Third-Party
Beneficiaries.............................................77
SECTION 8.08. GOVERNING LAW...............................................77
SECTION 8.09. Assignment..................................................77
SECTION 8.10. Specific Enforcement; Consent to
Jurisdiction..............................................77
(ii)
SECTION 8.11. Severability................................................78
Annex I Index of Defined Terms
Exhibit A Certificate of Incorporation of the Surviving
Corporation
(iii)
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of November 12, 2002,
among XXXXXXX & XXXXXXX, a New Jersey
corporation ("Parent"), PIVOT MERGER SUB, INC.,
a Delaware corporation and a wholly owned
Subsidiary of Parent ("Sub"), and ORAPHARMA,
INC., a Delaware corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par
value $.001 per share, of the Company ("Company Common Stock"), other than (i)
shares of Company Common Stock directly owned by Parent, Sub or the Company
and (ii) the Appraisal Shares, will be converted into the right to receive
$7.41 in cash;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, Parent and certain stockholders of the Company (the "Principal
Stockholders") entered into an agreement (the "Stockholder Agreement")
pursuant to which the Principal Stockholders agreed to vote, approve and adopt
this Agreement and to take certain other actions in furtherance of the
consummation of the Merger upon the terms and subject to the conditions set
forth in the Stockholder Agreement; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agree ments in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:
2
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged
with and into the Company at the Effective Time. Following the Effective Time,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations
of Sub in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or (to the
extent permitted by law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by law)
waiver of those conditions), at the offices of Cravath, Swaine & Xxxxx,
Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another
time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall
not have been satisfied or (to the extent permitted by law) waived on such
second business day, then the Closing shall take place on the first business
day on which all such conditions shall have been satisfied or (to the extent
permitted by law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "Certificate of Merger") executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, or at such other time as Parent and the Company shall agree and
shall specify in the
3
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Fourth Amended and Restated Certificate of Incorporation of the Company (the
"Company Certificate") shall be amended at the Effective Time to be in the
form of Exhibit A and, as so amended, such Company Certificate shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the direc tors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective suc cessors
are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Parent or
Sub:
(a) Capital Stock of Sub. Each issued and out standing share of
capital stock of Sub shall be converted into and become one validly
issued, fully
4
paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned Stock. Each
share of Company Common Stock that is directly owned by the Company,
Parent or Sub immediately prior to the Effective Time shall auto
matically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.01(b) and
the Appraisal Shares) shall be converted into the right to receive $7.41
in cash, without interest (the "Merger Consideration"). At the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate which immediately prior
to the Effective Time represented any such shares of Company Common Stock
(each, a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration. The right
of any holder of a Certificate to receive the Merger Consideration shall
be subject to and reduced by the amount of any withholding that is
required under applicable tax law.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common Stock
issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("Section 262")
shall not be converted into the right to receive the Merger Consideration
as provided in Section 2.01(c), but instead such holder shall be entitled
to payment of the fair value of such Appraisal Shares in accordance with
the provisions of Section 262. At the Effective Time, all Appraisal
Shares shall no longer be out standing, shall automatically be canceled
and shall cease to exist, and each holder of Appraisal Shares shall cease
to have any rights with respect thereto,
5
except the right to receive the fair value of such Appraisal Shares in
accordance with the provisions of Section 262. Notwithstanding the
foregoing, if any such holder shall fail to perfect or otherwise shall
waive, withdraw or lose the right to appraisal under Section 262, or a
court of competent jurisdiction shall determine that such holder is not
entitled to the relief provided by Section 262, then the right of such
holder to be paid the fair value of such holder's Appraisal Shares under
Section 262 shall cease and such Appraisal Shares shall be deemed to have
been converted at the Effective Time into, and shall have become, the
right to receive the Merger Consideration as provided in Section 2.01(c).
The Company shall serve prompt notice to Parent of any demands for
appraisal of any shares of Company Common Stock, and Parent shall have
the right to participate in and direct all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company
shall not, without the prior written consent of Parent, voluntarily make
any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall appoint JPMorgan Chase or another comparable
bank or trust company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. At the Effective Time, Parent shall
deposit, or cause the Surviving Corporation to deposit, with the Paying Agent,
for the benefit of the holders of Certificates, cash in an amount sufficient
to pay the aggregate Merger Consideration required to be paid pursuant to
Section 2.01(c) (such cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as practicable after the Effective
Time, Parent shall cause the Paying Agent to mail to each holder of record of
a Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and which shall be in customary form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Each
holder of record of a Certificate shall, upon surrender to the Paying Agent of
such Certificate, together with such letter of transmittal,
6
duly executed, and such other documents as may reasonably be required by the
Paying Agent, be entitled to receive in exchange therefor the amount of cash
which the number of shares of Company Common Stock previously represented by
such Certificate shall have been converted into the right to receive pursuant
to Section 2.01(c), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, payment of the
Merger Consideration may be made to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of such Certificate or establish to the reasonable satis
faction of Parent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder thereof
has the right to receive in respect of such Certificate pursuant to this
Article II. No interest shall be paid or will accrue on any cash payable to
holders of Certificates pursuant to the provisions of this Article II.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented
by such Certificates. At the close of business on the day on which the
Effective Time occurs, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, any Certificate is presented to the Surviving Corporation
for transfer, it shall be canceled against delivery of cash to the holder
thereof as provided in this Article II.
(d) Termination of the Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for nine
months after the Effective Time shall be delivered to Parent, upon demand,
7
and any holders of the Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for, and Parent shall
remain liable for, payment of their claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration shall, to the extent
permitted by applicable law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest the
cash in the Exchange Fund as directed by Parent. Any interest and other income
resulting from such investments shall be paid to Parent.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certifi cate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reason able
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
(h) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock such amounts as Parent, the Surviving Corporation or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall
8
be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent, the Surviving Corporation or the
Paying Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth in the disclosure schedule (with specific reference to the
particular Section or sub section of this Agreement to which the information
set forth in such disclosure schedule relates; provided, however, that any
information set forth in one section of the Company Disclosure Schedule shall
be deemed to apply to each other section thereof or hereof to which its
relevance is readily apparent on its face) delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its incorporation
or formation, as the case may be, and has all requisite power and
authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate
or other name and to own, lease or otherwise hold and operate its
properties and other assets and to carry on its business as presently
conducted, except where the failure to have such government licenses,
permits, authorizations or approvals individually or in the aggregate has
not had and would not reasonably be expected to have a Material Adverse
Effect. Each of the Company and 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, leasing or operation
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 has not had and would not
reasonably be expected to have a Material Adverse Effect. The Company has
made available to Parent prior to the execution of this
9
Agreement, complete and accurate copies of the Company Certificate and
its By-laws (the "Company By-laws"), and the comparable organizational
documents of each of its Subsidiaries, in each case as amended to the
date hereof. The Company has made available to Parent complete and
accurate copies of the minutes (or, in the case of minutes that have not
yet been finalized, drafts thereof) of all meetings of the stockholders
of the Company and each of its Subsidiaries, the Board of Directors of
the Company and each of its Subsidiaries and the committees of each of
such Board of Directors, in each case held since March 9, 2000 and prior
to the date hereof.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure Schedule
lists each of the Subsidiaries of the Company and, for each such
Subsidiary, the state of incorporation or formation and, as of the date
hereof, each jurisdiction in which such Subsidiary is qualified or
licensed to do business. All the issued and out standing shares of
capital stock of, or other equity interests in, each such Subsidiary have
been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
equity interests. Except for the capital stock of, or voting securities
or equity interests in, its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other voting securities
or equity interests in, any corporation, partnership, joint venture,
association or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $.001 per share ("Company Preferred
Stock"). At the close of business on November 8, 2002, (i) 13,633,886
shares of Company Common Stock were issued and outstanding, (ii) no
shares of Company Common Stock were held by the Company in its treasury,
(iii) 2,554,412 shares of Company Common Stock were reserved for issuance
pursuant to the 1996 Stock Option Plan of the Company, as amended, and
the 1999 Equity Compensation Plan of the Company, as amended (such
10
plans, collectively, the "Company Stock Plans") (of which 1,460,973
shares of Company Common Stock were subject to outstanding Company Stock
Options), (iv) no shares of Company Preferred Stock were issued or out
standing or were held by the Company as treasury shares, (v) warrants to
acquire 179,269 shares of Company Common Stock from the Company pursuant
to the warrant agreements set forth on Section 3.01(c) of the Company
Disclosure Schedule and previously delivered in complete and correct form
to Parent (the "Warrants") were issued and outstanding and (vi) 220,000
shares of Company Preferred Stock designated as Series E Junior
Participating Preferred Stock were reserved for issuance in connection
with the rights (the "Rights") issued pursuant to the Rights Agreement
dated as of August 1, 2002, between the Company and StockTrans, Inc., as
rights agent (the "Rights Agreement"). Except as set forth above in this
Section 3.01(c), at the close of business on November 8, 2002, no shares
of capital stock or other voting securities or equity interests of the
Company were issued, reserved for issuance or outstanding. There are no
outstanding stock appreciation rights, "phantom" stock rights,
performance units, rights to receive shares of Company Common Stock on a
deferred basis or other rights (other than Company Stock Options and
Warrants) that are linked to the value of Company Common Stock
(collectively, "Company Stock-Based Awards"). Section 3.01(c) of the
Company Disclosure Schedule sets forth a complete and accurate list, as
of November 8, 2002, of all outstanding options to purchase shares of
Company Common Stock (collectively, "Company Stock Options") under the
Company Stock Plans or otherwise, and all outstanding Warrants, the
number of shares of Company Common Stock (or other stock) subject
thereto, the grant dates, expiration dates, exercise or base prices (if
applicable) and vesting schedules thereof and the names of the holders
thereof. There are no outstanding shares of Company Common Stock in
respect of which the Company has a right under specified circumstances to
repurchase such shares at a fixed purchase price. All outstanding Company
Stock Options are evidenced by stock option agreements, restricted stock
purchase agreements or other award agreements, in each case in the forms
set forth in Section 3.01(c) of the Company Disclosure Schedule, and no
stock option agreement, restricted stock purchase agreement or other
award agreement contains terms that are inconsistent
11
with such forms. As of the close of business on November 8, 2002, there
were outstanding Company Stock Options to purchase 1,143,699 shares of
Company Common Stock with exercise prices on a per share basis lower than
the Merger Consideration, and the weighted average exercise price of such
Company Stock Options was equal to $4.1838. As of the close of business
on November 8, 2002, there were outstanding Warrants to purchase 68,652
shares of Company Common Stock with exercise prices on a per share basis
lower than the Merger Consideration. Each Company Stock Option may, by
its terms, be canceled in connection with the transactions contemplated
hereby for a lump sum cash payment in accordance with and to the extent
required by Section 5.04(a). All outstanding shares of capital stock of
the Company are, and all shares which may be issued pursuant to the
Company Stock Options or the Warrants will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may
vote. Except as set forth above in this Section 3.01(c), (x) there are
not issued, reserved for issuance or outstanding (A) any shares of
capital stock or other voting securities or equity interests of the
Company, (B) any securities of the Company convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or equity interests of the Company, (C) any warrants, calls,
options or other rights to acquire from the Company or any of its
Subsidiaries, and no obligation of the Company or any of its Subsidiaries
to issue, any capital stock, voting securities, equity interests or
securities convertible into or exchange able or exercisable for capital
stock or voting securities of the Company and (y) there are not any ou
tstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any of its Subsidiaries is a party to
any voting agreement with respect to the voting of any such securities.
Except as set forth above in this Section 3.01(c), there are no
outstanding (1) securities of the Company or any of
12
its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or equity interests of any
Subsidiary of the Company, (2) warrants, calls, options or other rights
to acquire from the Company or any of its Subsidiaries, and no obligation
of the Company or any of its Subsidiaries to issue, any capital stock,
voting securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of any
Subsidiary of the Company or (3) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any such
outstanding securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder Approval, to consummate the trans
actions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly author ized by
all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the consummation of the Merger, to the
obtaining of the Stockholder Approval. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of
equitable remedies. The Board of Directors of the Company, at a meeting
duly called and held at which all directors of the Company were present,
duly and unanimously adopted resolutions (i) approving and declaring
advisable this Agreement, the Merger and the other transactions
contemplated by this Agreement, (ii) declaring that it is in the best
interests of the stockholders of the Company that the Company enter into
this Agreement and consummate the Merger and the other transactions
13
contemplated by this Agreement on the terms and subject to the conditions
set forth in this Agreement, (iii) directing that the adoption of this
Agreement be submitted as promptly as practicable to a vote at a meeting
of the stockholders of the Company and (iv) recommending that the
stockholders of the Company adopt this Agreement, which resolutions, as
of the date of this Agreement, have not been subsequently rescinded,
modified or withdrawn in any way. The execution and delivery of this
Agreement do not, and the consummation of the Merger and the other trans
actions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties or
other assets of the Company or any of its Subsidiaries under, (x) the
Company Certificate or the Company By-laws or the comparable
organizational documents of any of its Subsidiaries, (y) any loan or
credit agreement, bond, debenture, note, mortgage, indenture, lease or
other contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit, franchise or license, whether oral or
written (each, including all amendments thereto, a "Contract"), to which
the Company or any of its Subsidiaries is a party or any of their
respective properties or other assets is subject or (z) subject to the
governmental filings, the obtaining of the Stockholder Approval and the
other matters referred to in the following sentence, any (A) statute,
law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or their respective properties or other assets or (B)
order, writ, injunction, decree, judgment or stipulation, in each case
applicable to the Company or any of its Subsidiaries or their respective
properties or other assets, other than, in the case of clauses (y) and
(z), any such conflicts, violations, breaches, defaults, rights, losses
or Liens that individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or
14
other governmental agency, commission or authority or any
non-governmental self-regulatory agency, commission or authority (each, a
"Governmental Entity") is required by or with respect to the Company or
any of its Subsidiaries in connection with the execution and delivery of
this Agreement by the Company or the consummation of the Merger or the
other transactions contemplated by this Agreement, except for (1) the
filing of a premerger notification and report form by the Company under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR Act"), and the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under the HSR Act or any other applicable competition, merger
control, antitrust or similar law or regulation, (2) the filing with the
Securities and Exchange Commission (the "SEC") of (A) a proxy statement
relating to the adoption by the stockholders of the Company of this
Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and (B) such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this Agreement,
(3) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (4) any filings required under
the rules and regulations of the Nasdaq National Market and (5) such
other consents, approvals, orders, authorizations, actions,
registrations, declarations and filings the failure of which to be
obtained or made individually or in the aggregate has not had and would
not reasonably be expected to have a Material Adverse Effect.
(e) Company SEC Documents. The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since March 9, 2000 (the "Company SEC Documents"). As of
their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company
15
SEC Documents, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any
Company SEC Document has been revised or superseded by a later-filed
Company SEC Document, none of the Company SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements (including the related
notes) of the Company included in the Company SEC Documents complied at
the time they were filed as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and each fairly presented in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Parent shall receive a
certificate signed by the chief executive officer and the chief financial
officer of the Company in their capacities as such, on or prior to the
Closing Date, with respect to the most recent annual report on Form 10-K
and all reports on Form 10-Q, all reports on Form 8-K and all definitive
proxy materials filed with the SEC, in each case subsequent to the filing
of the most recent Form 10-K and any amendments thereto filed prior to
the date hereof and except for any such reports or proxy materials that
have been certified pursuant to 18 U.S.C. ss.1350 (collectively, the
"Covered Reports") stating that, to the best of such person's knowledge,
(i) no Covered Report contained an untrue statement of material fact as
of the end of the period covered by such report (or in the case of a
report on Form 8-K or definitive proxy materials, as of the date on which
it
16
was filed) and (ii) no Covered Report omitted to state a material fact
necessary to make the statements in such Covered Report, in light of the
circumstances under which they were made, not misleading as of the end of
the period covered by such report (or in the case of a report on Form 8-K
or definitive proxy materials, as of the date on which it was filed).
Except as disclosed in the Company SEC Documents filed by the Company and
publicly available prior to the date of this Agreement (the "Filed
Company SEC Documents"), neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which individually or in the aggregate
have had or would reasonably be expected to have a Material Adverse
Effect. None of the Subsidiaries of the Company are, or have at any time
since March 9, 2000, been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
(f) Information Supplied. None of the informa tion supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by or on behalf of Parent
or Sub in writing specifically for inclusion or incorporation by
reference in the Proxy Statement. The Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement and except as disclosed in the
Filed Company SEC Documents or as expressly permitted pursuant to Section
4.01(a)(i) through (xvii), since the date of the most recent audited
financial statements included in the Filed Company SEC Documents, the
Company and its Subsidiaries have conducted their respective businesses
17
only in the ordinary course consistent with past practice, and there has
not been any Material Adverse Change, and from such date until the date
hereof there has not been (i) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its share holders,
(ii) any purchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any shares of capital stock or any other
securities of the Company or any of its Subsidiaries or any options,
warrants, calls or rights to acquire such shares or other securities,
(iii) any split, combination or reclassification of any capital stock of
the Company or any of its Subsidiaries or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of their respective capital stock,
(iv) (A) any granting by the Company or any of its Subsidiaries to any
current or former director, officer, employee or consultant of the
Company or its Subsidiaries of any increase in compensation, bonus or
fringe or other benefits or any granting of any type of compensation or
benefits to any current or former director, officer, employee or
consultant not previously receiving or entitled to receive such type of
compensation or benefit, except for normal increases in cash compensation
(including cash bonuses) in the ordinary course of business consistent
with past practice or as was required under any Company Benefit Agreement
or Company Benefit Plan in effect as of the date of the most recent
financial statements included in the Filed Company SEC Documents, (B) any
granting by the Company or any of its Subsidiaries to any current or
former director, officer, employee or consultant of the Company or any of
its Subsidiaries of any right to receive any increase in severance or
termination pay, or (C) any entry by the Company or any of its
Subsidiaries into, or any amendments of, (1) any employment, deferred
compensation, severance, change of control, termination or
indemnification agreement or any other agreement, plan or policy, or any
consulting agreement with aggregate amounts paid or payable in excess of
$10,000, with or involving any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries or (2)
any agreement
18
with any current or former director, officer, employee or consultant of
the Company or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of a nature
contemplated by this Agreement (all such agreements under this clause
(C), collectively, "Company Benefit Agreements"), (D) any adoption of,
any amendment to or any termination of any Company Benefit Plan, or (E)
any payment of any benefit under, or the grant of any award under, or any
amendment to, or termination of, any bonus, incentive, performance or
other compensation plan or arrangement, Company Benefit Agreement or
Company Benefit Plan (including in respect of stock options, "phantom"
stock, stock appreciation rights, restricted stock, "phantom" stock
rights, restricted stock units, deferred stock units, performance stock
units or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Company Benefit Agreement or
Company Benefit Plan or awards made thereunder) except as required to
comply with applicable law or any Company Benefit Agreement or Company
Benefit Plan in effect as of the date of the most recent financial
statements included in the Filed Company SEC Documents, (v) any damage,
destruction or loss, whether or not covered by insurance, that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or businesses, except insofar as may have been required by a
change in GAAP, (vii) any material tax election (including any election
to treat Microsphere Technology Holding LLC, a Delaware limited liability
company, as an entity other than a disregarded entity for Federal tax
purposes) or any settlement or compromise of any material income tax
liability or (viii) any sale, transfer, assignment, license or other
conveyance (in whole or in part) of any property (including cash),
Contract or liability to Microsphere Technology Holding LLC.
(h) Litigation. Except as disclosed in the Filed Company SEC
Documents, there is no suit, action or proceeding pending or, to the
Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would
19
reasonably be expected to have a Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against, or, to the Knowledge of the
Company, investigation by any Governmental Entity involving, the Company
or any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect.
(i) Contracts. Except as disclosed in the Filed Company SEC
Documents and except with respect to licenses and other agreements
relating to intellectual property, which are the subject of Section
3.01(p), as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to, and none of their respective properties or
other assets is subject to, any contract or agreement that is of a nature
required to be filed as an exhibit to a report or filing under the
Securities Act or the Exchange Act and the rules and regulations
promulgated thereunder. None of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any party thereto is in violation of or
in default under (nor does there exist any condition which upon the
passage of time or the giving of notice or both would cause such a
violation of or default under) any Contract (including the Manufacturer
and Supply Agreement, dated February 16, 2001, between the Company and
aaiPharma Inc., the Packaging Agreement, dated November 9, 2000, between
the Company and Packaging Corporation Inc., and the Distribution
Agreement, dated March 28, 2001, between the Company and Cord Logistics,
Inc.), to which it is a party or by which it or any of its properties or
other assets is bound, except for violations or defaults that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has entered into any Contract with any Affiliate of
the Company that is currently in effect other than agreements that are
disclosed in the Filed Company SEC Documents. Neither the Company nor any
of its Subsidiaries is a party to or otherwise bound by any agreement or
covenant restricting the Company's or any of its Subsidiaries' ability to
compete or by any agreement or covenant restricting in any respect the
research, development, distribution, training, sale,
20
supply, license, marketing or manufacturing of products or services of
the Company or any of its Subsidiaries.
(j) Compliance with Laws; Environmental Matters. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and taxes, which are the subjects of
Sections 3.01(j)(ii), 3.01(l) and 3.01(n), respectively, and except as
set forth in the Filed Company SEC Documents, each of the Company and its
Subsidiaries is in compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Governmental Entity
applicable to it, its properties or other assets or its business or
operations (collectively, "Legal Provisions"), except for failures to be
in compliance that individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect. Each
of the Company and its Subsidiaries has in effect all approvals,
authorizations, certificates, filings, franchises, licenses, notices and
permits of or with all Governmental Entities (collectively, "Permits"),
including all Permits under the Federal Food, Drug and Cosmetic Act of
1938, as amended (the "FDCA"), and the regulations of the Federal Food
and Drug Administration (the "FDA") promulgated thereunder, necessary for
it to own, lease or operate its properties and other assets and to carry
on its business and operations as presently conducted, except where the
failure to have such Permits individually or in the aggregate has not had
and would not reasonably be expected to have a Material Adverse Effect.
There has occurred no default under, or violation of, any such Permit,
except for any such default or violation that individually or in the
aggregate as has not had and would not reasonably be expected to have a
Material Adverse Effect. The consummation of the Merger, in and of
itself, would not cause the revocation or cancelation of any such Permit
that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect. No action, demand, requirement or
investigation by any Governmental Entity and no suit, action or
proceeding by any other person, in each case with respect to the Company
or any of its Subsidiaries or any of their respective properties or other
assets under any Legal Provision, is pending or, to the Knowledge of the
Company, threatened, other than, in each case, those the outcome of which
individually or in the aggregate
21
have not had and would not reasonably be expected to have a Material
Adverse Effect.
((ii) Except for those matters disclosed in the Filed Company SEC
Documents and those matters that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect: (A) each of the Company and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws and has obtained and
complied with all Permits required under any Environmental Laws to own,
lease or operate its properties or other assets and to carry on its
business and operations as presently conducted; (B) there have been no
Releases or threatened Releases of Hazardous Materials in, on, under or
affecting any properties currently or formally owned, leased or operated
by the Company or any of its Subsidiaries; (C) there is no investigation,
suit, claim, action or proceeding pending, or to the Knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries relating to or arising under Environmental Laws, and neither
the Company nor any of its Subsidiaries has received any notice of any
such investigation, suit, claim, action or proceeding; (D) neither the
Company nor any of its Subsidiaries has entered into or assumed by
contract or operation of law or otherwise, any obligation, liability,
order, settlement, judgment, injunction or decree relating to or arising
under Environmental Laws; and (E) to the Knowledge of the Company, there
are no facts, circumstances or conditions that would reasonably be
expected to form the basis for any investigation, suit, claim, action,
proceeding or liability against or affecting the Company or any of its
Subsidiaries relating to or arising under Environmental Laws. The term
"Environmental Laws" means all Federal, state, local and foreign laws
(including the common law), statutes, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices, Permits,
treaties or binding agreements issued, promulgated or entered into by any
Governmental Entity, relating in any way to the environment, preservation
or reclamation of natural resources or endangered species, the presence,
management, Release or threat of Release of, or exposure to, Hazardous
Materials, or to human health and safety. The term "Hazardous Materials"
means (1) petroleum products and by-products, asbestos and
22
asbestos-containing materials, urea formaldehyde foam insulation, medical
or infectious wastes, poly chlorinated biphenyls, radon gas,
chlorofluorocarbons and all other ozone-depleting substances or (2) any
chemical, material, substance, waste, pollutant or contaminant that is
prohibited, limited or regulated by or pursuant to any Environmental Law.
The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any natural or
man- made structure.
(k) Absence of Changes in Company Benefit Plans; Labor Relations.
Except as disclosed in the Filed Company SEC Documents or as expressly
permitted pursuant to Section 4.01(a)(i) through (xvii), since the date
of the most recent audited financial statements included in the Filed
Company SEC Documents, there has not been any adoption or amendment by
the Company or any of its Subsidiaries of any collective bargaining
agreement or any employment, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock option, "phantom" stock,
performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) maintained, contributed to or required to be maintained or
contributed to by the Company or any of its Subsidiaries or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity"), in each case providing benefits to any
current or former director, officer, employee or consultant (which, in
the case of individual agreements with consultants, involve aggregate
amounts paid or payable in excess of $10,000) of the Company or any of
its Subsidiaries (collectively, the "Company Benefit Plans"), or any
material change in any actuarial or other assumption used to calculate
funding obligations with respect to any Company Pension Plans, or any
change in the manner in which contributions to any Company Pension Plans
are made or the basis on which such contributions are
23
determined, other than amendments or other changes as required to ensure
that such Company Benefit Plan is not then out of compliance with
applicable law, or reasonably determined by the Company to be necessary
or appropriate to preserve the qualified status of a Company Pension Plan
under Section 401(a) of the Code. Except as disclosed in the Filed
Company SEC Documents, there exist no currently binding material Company
Benefit Agreements. There are no collective bargaining or other labor
union agreements to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound. As of
the date hereof, none of the employees of the Company or any of its
Subsidiaries are represented by any union with respect to their
employment by the Company or such Subsidiary. As of the date hereof,
since March 9, 2000, neither the Company nor any of its Subsidiaries has
experienced any labor disputes, union organization attempts or work
stoppages, slowdowns or lockouts due to labor disagreements.
(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each Company
Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) (sometimes referred to herein as a "Company
Pension Plan"), each Company Benefit Plan that is an "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and all other Company
Benefit Plans. The Company has provided to Parent complete and accurate
copies of (A) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof), (B) the two most recent
annual reports on Form 5500 required to be filed with the Internal
Revenue Service (the "IRS") with respect to each Company Benefit Plan (if
any such report was required), (C) the most recent summary plan
description for each Company Benefit Plan for which such summary plan
description is required and (D) each trust agreement and insurance or
group annuity contract relating to any Company Benefit Plan. Each Company
Benefit Plan has been administered in all material respects in accordance
with its terms. The Company, its Subsidiaries and all the Company Benefit
Plans are all in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other applicable laws, including
laws of foreign
24
jurisdictions, and the terms of all collective bargaining
agreements.
(ii) All Company Pension Plans intended to be tax- qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications with respect to
"GUST" (as defined in Section 1 of Notice 2001-42), to the effect that
such Company Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked (or, to the Knowledge of the
Company, has revocation been threatened) and no event has occurred since
the date of the most recent determination letter or application therefor
relating to any such Company Pension Plan that would reasonably be
expected to adversely affect the qualification of such Company Pension
Plan or materially increase the costs relating thereto or require
security under Section 307 of ERISA. All Company Pension Plans required
to have been approved by any foreign Governmental Entity have been so
approved, no such approval has been revoked (or, to the Knowledge of the
Company, has revocation been threatened) and no event has occurred since
the date of the most recent approval or application therefor relating to
any such Company Pension Plan that would reasonably be expected to
materially affect any such approval relating thereto or materially
increase the costs relating thereto. The Company has delivered to Parent
a complete and accurate copy of the most recent determination letter
received prior to the date hereof with respect to each Company Pension
Plan, as well as a complete and accurate copy of each pending application
for a determination letter, if any. The Company has also provided to
Parent a complete and accurate list of all amendments to any Company
Pension Plan as to which a favorable determination letter has not yet
been received.
(iii) Neither the Company nor any Commonly Controlled Entity has (A)
maintained, contributed to or been required to contribute to any Company
Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
25
(iv) All reports, returns and similar documents with respect to all
Company Benefit Plans required to be filed with any Governmental Entity
or distributed to any Company Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
Subsidiaries has received notice of, and to the Knowledge of the Company,
there are no investigations by any Governmental Entity with respect to,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Company Benefit Plans), suits or
proceedings against or involving any Company Benefit Plan or asserting
any rights or claims to benefits under any Company Benefit Plan that
would give rise to any material liability, and, to the Knowledge of the
Company, there are not any facts that could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding.
(v) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been
made as of the date hereof in accordance with the terms of the Company
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference into
the Filed Company SEC Documents. Neither any Company Pension Plan nor any
single-employer plan of any Commonly Controlled Entity has an
"accumulated funding deficiency" (as such term is defined in Section 302
of ERISA or Section 412 of the Code), whether or not waived.
(vi) With respect to each Company Benefit Plan, (A) there has not
occurred any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) in which the Company or any of its
Subsidiaries or any of their respective employees, or any trustee,
administrator or other fiduciary of such Company Benefit Plan, or any
agent of the foregoing, has engaged that would reasonably be expected to
subject the Company or any of its Subsidiaries or any of their respective
employees, or a trustee, administrator or other fiduciary of any trust
created under any Company Benefit Plan, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company nor
any of
26
its Subsidiaries nor, to the Knowledge of the Company, any trustee,
administrator or other fiduciary of any Company Benefit Plan nor any
agent of any of the fore going, has engaged in any transaction or acted
in a manner, or failed to act in a manner, that would reasonably be
expected to subject the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any trustee, administrator or other fiduciary,
to any liability for breach of fiduciary duty under ERISA or any other
applicable law. No Company Benefit Plan or related trust has been
terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived with respect to any Company Benefit Plan
during the last five years, and no notice of a reportable event will be
required to be filed in connection with the transactions contemplated by
this Agreement.
(vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
discloses whether each Company Benefit Plan that is an employee welfare
benefit plan is (A) unfunded or self-insured, (B) funded through a
"welfare benefit fund", as such term is defined in Section 419(e) of the
Code, or other funding mechanism or (C) insured. Each such employee
welfare benefit plan may be amended or terminated (including with respect
to benefits provided to retirees and other former employees) without
material liability (other than benefits then payable under such plan
without regard to such amendment or termination) to the Company or any of
its Subsidiaries at any time after the Effective Time. Each of the
Company and its Subsidiaries complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code or any similar
state statute with respect to each Company Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code or
such state statute. Neither the Company nor any of its Subsidiaries has
any material obligations for retiree health or life insurance benefits
under any Company Benefit Plan (other than for continuation coverage
required under Section 4980(f) of the Code).
(viii) None of the execution and delivery of this Agreement, the
Stockholder Agreement, the obtaining of the Stockholder Approval or the
consummation of the Merger or any other transaction expressly
contemplated
27
by this Agreement or the Stockholder Agreement (including as a result of
any termination of employment on or following the Effective Time) will
(A) entitle any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries to severance or
termination pay, (B) accelerate the time of payment or vesting, or
trigger any payment or funding (through a grantor trust or otherwise) of,
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any Company Benefit Plan or
Company Benefit Agreement or (C) result in any breach or violation of, or
a default under, any Company Benefit Plan or Company Benefit Agreement.
The Company's good faith estimate as of the date hereof of the total
amount of all payments and the fair market value of all non-cash benefits
that may become payable or provided to any director, officer, employee or
consultant of the Company or any of its Subsidiaries under the Company
Benefit Agreements (assuming for such purpose that such individuals'
employment were terminated immediately following the Effective Time as if
the Effective Time were the date hereof) is set forth in Section
3.01(l)(viii) of the Company Disclosure Schedule.
(ix) Neither the Company nor any of its Subsid iaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or any of its Subsidiaries.
(x) No deduction by the Company or any of its Subsidiaries in
respect of any "applicable employee remuneration" (within the meaning of
Section 162(m) of the Code) has been disallowed or is subject to dis
allowance by reason of Section 162(m) of the Code.
(m) No Excess Parachute Payments. Other than payments or benefits
that may be made to the persons listed in Section 3.01(m) of the Company
Disclosure Schedule ("Primary Company Executives"), no amount or other
entitlement or economic benefit that could be received (whether in cash
or property or the vesting of property) as a result of the execution and
delivery of
28
this Agreement, the Stockholder Agreement, the obtaining of the
Stockholder Approval, the consummation of the Merger or any other
transaction contemplated by this Agreement or the Stockholder Agreement
(including as a result of termination of employment on or following the
Effective Time) by or for the benefit of any director, officer, employee
or consultant of the Company or any of its Affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any Company Benefit Plan, Company
Benefit Agreement or otherwise would be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code), and no disqualified individual is entitled to receive any
additional payment from the Company or any of its Subsidiaries, the
Surviving Corporation or any other person in the event that the excise
tax required by Section 4999(a) of the Code is imposed on such dis
qualified individual (a "Parachute Gross Up Payment"). Section 3.01(m) of
the Company Disclosure Schedule sets forth, calculated as of the date of
this Agreement, (i) the "base amount" (as such term is defined in Section
280G(b)(3) of the Code) for each Primary Company Executive and each other
disqualified individual (defined as set forth above) whose Company Stock
Options will vest pursuant to their terms in connection with the
execution and delivery of this Agreement, the Stockholder Agreement, the
obtaining of the Stockholder Approval, the consummation of the Merger or
any other transaction contemplated by this Agreement or the Stockholder
Agreement (including as a result of any termination of employment on or
following the Effective Time) and (ii) the estimated maximum amount that
could be paid or provided to each Primary Company Executive as a result
of the execution and delivery of this Agreement, the Stockholder
Agreement, the obtaining of the Stockholder Approval, the consummation of
the Merger or any other transaction contemplated by this Agreement or the
Stockholder Agreement (including as a result of any termination of
employment on or following the Effective Time).
(n) Taxes. (i) Each of the Company, its Subsidiaries and each
Company Consolidated Group has filed or has caused to be filed in a
timely manner (within any applicable extension period) all tax returns
required to be filed with any taxing authority pursuant to the Code (and
any applicable U.S. Treasury
29
regulations) or applicable state, local or foreign tax laws. All such tax
returns are complete and accurate in all material respects and have been
prepared in substantial compliance with all applicable laws and
regulations. Each of the Company, its Subsidiaries and each Company
Consolidated Group has paid or caused to be paid (or the Company has paid
on its behalf) all taxes shown as due and owing on such tax returns, and
the most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve (determined in accordance with
GAAP) (excluding any reserves for deferred taxes established to reflect
timing differences between book and tax income) for all taxes payable by
the Company and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No material tax return of the Company or any of its
Subsidiaries or any Company Consolidated Group is under audit or
examination by any taxing authority, and no notice of such an audit or
examination has been received by the Company or any of its Subsidiaries
or any Company Consolidated Group. There is no deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to
any material amount of taxes due and owing by the Company or any of its
Subsidiaries or any Company Consolidated Group. Each deficiency resulting
from any completed audit or examination relating to taxes by any taxing
authority has been timely paid or is being contested in good faith and
has been reserved for on the books of the Company. No issues relating to
any material amount of taxes were raised by the relevant taxing authority
in any completed audit or examination that could reason ably be expected
to recur in a later taxable period. There is no currently effective
agreement or other document extending, or having the effect of extending,
the period of assessment or collection of any taxes of the Company or its
Subsidiaries or any Company Consolidated Group, nor has any request been
made in writing for any such extension, and no power of attorney (other
than powers of attorney authorizing employees of the Company to act on
behalf of the Company) with respect to any taxes has been executed or
filed with any taxing authority.
(iii) None of the Company or any of its Subsidiaries will be
required to include in a taxable
30
period ending after the Effective Time taxable income attributable to
income that accrued (for purposes of the financial statements of the
Company included in the Filed Company SEC Documents) in a prior taxable
period (or portion of a taxable period) but was not recognized for tax
purposes in any prior taxable period as a result of (A) an open
transaction disposition made on or before the Effective Time, (B) a
prepaid amount received on or prior to the Effective Time, (C) the
installment method of accounting, (D) the completed contract method of
accounting, (E) the long-term contract method of accounting, (F) the cash
method of accounting or Section 481 of the Code or (G) any comparable
provisions of state or local tax law, domestic or foreign, or for any
other reason, other than any amounts that are reflected in a reserve for
taxes on the financial statements of the Company included in the Filed
Company SEC Documents.
(iv) The Company and its Subsidiaries have complied with all
applicable statutes, laws, ordinances, rules and regulations relating to
the payment and withholding of any material amount of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code and similar provisions under any Federal, state, local or
foreign tax laws) and have, within the time and the manner prescribed by
law, withheld from and paid over to the proper governmental authorities
all material amounts required to be so withheld and paid over under
applicable laws.
(v) None of the Company or any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
dis tribution of stock outside of the affiliated group of which the
Company is the common parent qualifying or intended to qualify for
tax-free treatment (in whole or in part) under Section 355(a) or 361 of
the Code.
(vi) Neither the Company nor any of its Subsidiaries has filed a
consent under Section 341 of the Code concerning collapsible
corporations.
(vii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period in the filing of any affiliated,
aggregate, consolidated, combined or unitary tax return other than
31
consolidated tax returns for the consolidated group of which the Company
is the common parent.
(viii) No claim has ever been made by any authority in a
jurisdiction where any of the Company or its Subsidiaries does not file a
tax return that it is, or may be, subject to a material amount of tax by
that jurisdiction.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(x) To the Knowledge of the Company, all information set forth in
Section 3.01(n)(x) of the Company Disclosure Schedule supplied to Parent
relating to changes in ownership of the Company is accurate in all
material respects.
(xi) No taxing authority has asserted any material liens for taxes
with respect to any assets or properties of the Company or its
Subsidiaries, except for statutory liens for taxes not yet due and
payable.
(xii) The Company Common Stock is "regularly traded on an
established securities market" as described in Temporary Regulation
ss.1.897-9T(d).
(xiii) As used in this Agreement (A) "tax" or "taxes" shall include
(whether disputed or not) all (x) Federal, state, local and foreign
income, property, sales, use, excise, withholding, payroll, employment,
social security, capital gain, alternative minimum, transfer and other
taxes and similar governmental charges, including any interest, penalties
and additions with respect thereto, (y) liability for the payment of any
amounts of the type described in clause (x) as a result of being a member
of an affiliated, consolidated, combined, unitary or aggregate group and
(z) liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the payment of
any amounts of the type described in clause (x) or (y); (B) "Company
Consolidated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code, or any
32
other similar state, local or foreign law, in which the Company (or any
Subsidiary of the Company) is or has ever been a member or any group of
corporations with which the Company files, has filed or is or was
required to file an affiliated, consolidated, combined, unitary or
aggregate tax return; (C) "taxing authority" means any Federal, state,
local or foreign government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising tax
regulatory authority; and (D) "tax return" or "tax returns" means all
returns, declarations of estimated tax payments, reports, estimates,
information returns and statements, including any related or supporting
information with respect to any of foregoing, filed or to be filed with
any taxing authority in connection with the determination, assessment,
collection or administration of any taxes.
(o) Title to Properties. (i) Each of the Company and its
Subsidiaries has good and valid title to, or valid leasehold interests or
other comparable contract right in, all its properties and other assets
necessary for the conduct of its business as currently conducted, except
as have been disposed of in the ordinary course of business and except
for defects in title, easements, restrictive covenants and similar
encumbrances that individually or in the aggregate have not materially
interfered with, and would not reason ably be expected to materially
interfere with, its ability to conduct its business as presently
conducted. All such properties and other assets, other than properties
and other assets in which the Company or any of its Subsidiaries has a
leasehold interest or other comparable contract right, are free and clear
of all Liens, except for Liens that individually or in the aggregate have
not materially interfered with, and would not reasonably be expected to
materially inter fere with, the ability of the Company or any of its
Subsidiaries to conduct their respective businesses as presently
conducted.
(ii) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a
party and under which it is in occupancy, and all leases to which the
Company is a party and under which it is in occupancy are in full force
and effect, except for such failure to be in full force and effect that
individually or in the
33
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. Each of the Company and its Subsidiaries is in
possession of the properties or assets purported to be leased under all
its material leases.
(p) Intellectual Property. (i) Subject to Section 3.01(p)(ii), each
of the Company and its Subsidiaries owns, or is validly licensed or
otherwise has the right to use (without any obligation to make any fixed
or contingent payments, including royalty payments) all patents, patent
applications, trademarks, trademark rights, trade names, trade name
rights, domain names, service marks, service xxxx rights, copy rights,
software, technical know-how and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property
Rights") which are material to the conduct of the business of the Company
and its Subsidiaries, taken as a whole, in each case free and clear of
all Liens. The Company has the legal power to convey the rights granted
to it under any license for any Intellectual Property Right taken by the
Company and its Subsidiaries.
(ii) No claims are pending or, to the Knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing
(including with respect to the manufacture, use or sale by the Company or
any of its Subsidiaries of their respective commercial products) the
rights of any person with regard to any Intellectual Property Right which
individually or in the aggregate have had or would reasonably be expected
to have a Material Adverse Effect. To the Knowledge of the Company, no
person or persons are infringing the rights of the Company or any of its
Subsidiaries with respect to any Intellectual Property Right in a manner
which individually or in the aggregate has had or would reasonably be
expected to have a Material Adverse Effect.
(iii) No claims are pending or, to the Knowledge of the Company,
threatened with regard to the ownership by the Company or any of its
Subsidiaries of any of their respective Intellectual Property Rights
which individu ally or in the aggregate have had or would reasonably be
expected to have a Material Adverse Effect.
34
(iv) Section 3.01(p)(iv) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
material patents, registered trademarks and applications therefor, domain
name registrations and copyright registrations (if any) owned by or
licensed to the Company or any of its Subsidiaries. All patents and
patent applications listed in Section 3.01(p)(iv) of the Company
Disclosure Schedule are either (a) owned by the Company or a Subsidiary
of the Company or (b) licensed to the Company or a Subsidiary of the
Company, in each case, free and clear of all Liens. The patent
applications listed in Section 3.01(p)(iv) of the Company Disclosure
Schedule that are owned by the Company or any of its Subsidiaries are
(and such applications that are licensed to the Company or any of its
Subsidiaries are to the Company's knowledge) pending and have not been
abandoned, and have been and continue to be timely prosecuted. All
patents, registered trademarks and applications therefor owned by the
Company or any of its Subsidiaries have been (and all such patents,
registered trademarks and applications licensed to the Company or any of
its Subsidiaries have been to the Company's Knowledge) duly registered
and/or filed with or issued by each appropriate Governmental Entity in
the jurisdiction indicated in Section 3.01(p)(iv) of the Company
Disclosure Schedule, all necessary affidavits of continuing use have been
(or, with respect to licenses, to the Company's Knowledge have been)
filed, and all necessary maintenance fees have been (or, with respect to
licenses, to the Company's Knowledge have been) timely paid to continue
all such rights in effect. None of the patents listed in Section
3.01(p)(iv) of the Company Disclosure Schedule that are owned by the
Company or any of its Subsidiaries has (and no such patents that are
licensed to the Company or any of its Subsidiaries has to the Company's
Knowledge) expired or been declared invalid, in whole or in part, by any
Governmental Entity. There are no ongoing interferences, oppositions,
reissues, reexaminations or other proceedings involving any of the
patents or patent applications listed in Section 3.01(p)(iv) of the
Company Disclosure Schedule and owned by the Company or any of its
Subsidiaries (or to the Company's Knowledge, licensed to the Company or
any of its Subsidiaries), including ex parte and post- grant proceedings,
in the United States Patent and Trademark Office or in any foreign patent
office or
35
similar administrative agency, other than as have not had or would not
reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, there are no published patents, patent
applications, articles or other prior art references that could adversely
affect the validity of any patent listed in Section 3.01(p)(iv) of the
Company Disclosure Schedule in a material way. Each of the patents and
patent applications listed in Section 3.01(p)(iv) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries properly identifies (and such patents and applications
licensed to the Company or any of its Subsidiaries to the Company's
Knowledge properly identifies) each and every inventor of the claims
thereof as determined in accordance with the laws of the jurisdiction in
which such patent is issued or such patent application is pending. Each
inventor named on the patents and patent applications listed in Section
3.01(p)(iv) of the Company Disclosure Schedule that are owned by the
Company or any of its Subsidiaries has executed (and such inventors named
on such patents and applications licensed to the Company or any of its
Subsidiaries to the Company's Knowledge have executed) an agreement
assigning his, her or its entire right, title and interest in and to such
patent or patent application, and the inventions embodied and claimed
therein, to the Company or a Subsidiary of the Company. Each such
inventor has (or to the Company's Knowledge has, as applicable) executed
an agreement with the Company or a Subsidiary of the Company obligating
such inventor to assign the entire right, title and interest in and to
such patent or patent application, and inventions embodied and claimed
therein, to the Company or such Subsidiary, and, to the Knowledge of the
Company, no such inventor has any contractual or other obligation that
would preclude any such assignment or otherwise conflict with the
obligations of such inventor to the Company or such Subsidiary under such
agreement with the Company or such Subsidiary.
(v) Section 3.01(p)(v) of the Company Disclosure Schedule sets forth
a complete and accurate list of all options, rights, licenses or
interests of any kind relating to Intellectual Property Rights granted
(i) to the Company or any of its Subsidiaries (other than software
licenses for generally available software and except pursuant to employee
proprietary inventions
36
agreements (or similar employee agreements), non-dis closure agreements
and consulting agreements entered into by the Company or any of its
Subsidiaries in the ordinary course of business), or (ii) by the Company
or any of its Subsidiaries to any other person.
(vi) The Company and its Subsidiaries have used reasonable efforts
to maintain their material trade secrets in confidence, including
entering into licenses and contracts that generally require licensees,
contractors and other third persons with access to such trade secrets to
keep such trade secrets confidential.
(q) Voting Requirements. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders' Meeting or any adjournment or postponement thereof to adopt
this Agreement (the "Stockholder Approval") is the only vote of the
holders of any class or series of capital stock of the Company necessary
to adopt this Agreement and approve the transactions contemplated hereby.
(r) State Takeover Statutes. The Board of Directors of the Company
has unanimously approved the terms of this Agreement and the Stockholder
Agreement and the consummation of the Merger and the other trans actions
contemplated by this Agreement and the Stockholder Agreement, and such
approval represents all the action necessary to render inapplicable to
this Agreement, the Stockholder Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement, the provisions of Section 203 of the DGCL ("Section 203") to
the extent, if any, Section 203 would otherwise be applicable to this
Agreement, the Stockholder Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement. No other state takeover statute or similar statute or
regulation applies to this Agreement, the Stockholder Agreement, the
Merger or the other transactions contemplated by this Agreement or the
Stockholder Agreement.
(s) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than Xxxxxx Xxxxxxx, Xxxxxxx
Xxxxx Xxxxxx and U.S. Bancorp Xxxxx Xxxxxxx), the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other
37
similar fee or commission in connection with the trans actions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company. The Company has delivered to Parent complete and
accurate copies of all agreements under which any such fees or expenses
are payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable. The fees and
expenses of any accountant, broker, financial advisor (including Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxx Xxxxxx and U.S. Bancorp Xxxxx Xxxxxxx), legal
counsel (including Dechert) or other person retained by the Company in
connection with this Agreement or the Stockholder Agreement or the
transactions contemplated hereby or thereby incurred or to be incurred by
the Company will not exceed the fees and expenses set forth in Section
3.01(s) of the Company Disclosure Schedule.
(t) Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxx Xxxxxxx, dated the date hereof, to the effect that, as
of such date, the Merger Consideration is fair, from a financial point of
view, to the holders of shares of Company Common Stock, a signed copy of
which opinion has been delivered to Parent.
(u) Development, Distribution, Marketing, Supply and Manufacturing
Agreements. (i) Section 3.01(u) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
Contracts to which the Company or any of its Subsidiaries is a party
relating to (x) the research, development, training, sale, supply,
license, marketing or manufacturing that have a remaining obligation of
$75,000 or more individually (provided that the aggregate obligations
with respect to such Contracts not so scheduled shall not exceed
$200,000) and (y) the distribution, in each case, by third parties of any
product of the Company or any Subsidiary of the Company or any product or
patent or other Intellectual Property Right licensed by the Company or
any Subsidiary of the Company. The Company has made available to Parent a
complete and accurate copy of each such Contract.
(ii) None of the Contracts to which the Company or any of its
Subsidiaries is a party relating to the research, development,
distribution, training, sale, supply, license, marketing or manufacturing
by third
38
parties of any product of the Company or any Subsidiary of the Company or
any product, patent or other Intellectual Property Right licensed by the
Company or any Subsidiary of the Company grant an exclusive right to such
third party for the research, development, distribution, supply, license,
marketing or manufacturing of any such product, patent or other
Intellectual Property Right.
(v) Rights Agreement. The Company has taken all actions necessary to
cause the Rights Agreement to be amended to (i) render the Rights
Agreement inapplicable to this Agreement, the Stockholder Agreement, the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement, (ii) ensure that (x) none of Parent, Sub or any
other Subsidiary of Parent is an Acquiring Person (as defined in the
Rights Agreement) and (y) a Distribution Date, a Triggering Event or a
Stock Acquisition Date (as such terms are defined in the Rights
Agreement) does not occur, in the case of clauses (x) and (y), solely by
reason of the execution of this Agreement or the Stockholder Agreement or
the consummation of the Merger or the other transactions contemplated by
this Agreement and the Stockholder Agreement and (iii) provide that the
Final Expiration Date (as defined in the Rights Agreement) shall occur
immediately prior to the Effective Time.
(w) Regulatory Compliance. (i) As to each product subject to the
FDCA and the FDA regulations promulgated thereunder or similar Legal
Provisions in any foreign jurisdiction that are manufactured, tested,
distributed and/or marketed by the Company or any of its Subsidiaries
(each such product, a "Medical Device" or a "Drug", as the case may be),
each such Medical Device or Drug is being manufactured, tested,
distributed and/or marketed in compliance with all applicable
requirements under the FDCA and similar Legal Provisions, including those
relating to investigational use, premarket clearance or marketing
approval to market a Medical Device, and applications or abbreviated
applications to market a new Drug, good manufacturing practices,
labeling, advertising, record keeping, filing of reports and security,
except for failures in compliance that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect. Neither
39
the Company nor any of its Subsidiaries has received any material notice
or other material communication from the FDA or any other Governmental
Entity (A) contesting the premarket clearance or approval of, the uses of
or the labeling and promotion of any products of the Company or any of
its Subsidiaries or (B) otherwise alleging any violation applicable to
any Medical Device or Drug by the Company or any of its Subsidiaries of
any Legal Provision.
(ii) No Medical Device or Drug has been recalled, withdrawn,
suspended or discontinued by the Company or any of its Subsidiaries in
the United States or outside the United States (whether voluntarily or
otherwise). No proceedings in the United States or outside of the United
States of which the Company has Knowledge (whether completed or pending)
seeking the recall, withdrawal, suspension or seizure of any Medical
Device or Drug are pending against the Company or any of its Subsidiaries
nor have any such proceedings been pending at any prior time.
(iii) As to each biological or drug of the Company or any of its
Subsidiaries for which a biological license application, new drug
application, investiga tional new drug application or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in compliance with 21 U.S.C. xx.xx. 355 or 21 C.F.R.
Parts 312, 314 or 430 et seq., respectively, and similar Legal Provisions
and all terms and conditions of such applications, except for any such
failure or failures to be in compliance which individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. As to each such drug, the Company and any
relevant Subsidiary of the Company, and the officers, employees or agents
of the Company or such Subsidiary, have included in the application for
such drug, where required, the certification described in 21 U.S.C. ss.
335a(k)(1) or any similar Legal Provision and the list described in 21
U.S.C. ss. 335a(k)(2) or any similar Legal Provision, and each such
certification and list was true, complete and correct in all material
respects when made. In addition, the Company and its Subsidiaries are in
substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. ss. 360 and 21 C.F.R. Part 207 and
all similar Legal Provisions.
40
(iv) No article of any biological or drug manufactured and/or
distributed by the Company or any of its Subsidiaries is (A) adulterated
within the meaning of 21 U.S.C. ss. 351 (or similar Legal Provisions),
(B) misbranded within the meaning of 21 U.S.C. ss. 352 (or similar Legal
Provisions) or (C) a product that is in violation of 21 U.S.C. ss. 355
(or similar Legal Provisions), except for failures to be in compliance
with the foregoing that individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect.
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any 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 expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C. ss. 335a(a) or any similar
Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded
from participating in the federal health care programs under Section 1128
of the Social Security Act or any similar Legal Provision.
(vi) Neither the Company nor any of its Subsidiaries has received
any written notice that the FDA or any other Governmental Entity has (a)
commenced, or threatened to initiate, any action to withdraw its approval
or request the recall of any Medical Device or
41
Drug, (b) commenced, or threatened to initiate, any action to enjoin
production of any Medical Device or Drug or (c) to the Company's
Knowledge, commenced, or threatened to initiate, any action to enjoin the
production of any medical device or drug produced at any facility where
any Medical Device or Drug is manufactured, tested or packaged, except
for any such action that individually or in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any investigation, suit, claim, action or proceeding against or
affecting the Company or any of its Subsidiaries relating to or arising
under (a) the FDCA or the regulations of the FDA promulgated thereunder
or (b) the Social Security Act or regulations of the Office of the
Inspector General of the Department of Health and Human Services, except
for any such investigation, suit, claim, action or proceeding that
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect.
(x) Insurance. Section 3.01(x) of the Company Disclosure Schedule
contains a complete and accurate list of all policies of fire, liability,
workers' compensation, title and other forms of insurance owned, held by
or applicable to the Company (or its assets or business) as of the date
hereof, and the Company has heretofore delivered to Parent a complete and
accurate copy of all such policies, including all occurrence- based
policies applicable to the Company (or its assets or business) for all
periods prior to the Closing Date. All such policies (or substitute
policies with substantially similar terms and underwritten by insurance
carriers with substantially similar or higher ratings) are in full force
and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been paid, and no notice of
cancelation or termination has been received with respect to any such
policy except for such policies, premiums, cancelations or terminations
that individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect. Such policies
are sufficient for compliance by
42
the Company with (i) all requirements of applicable laws and (ii) all
Contracts to which the Company is a party, and each of the Company and
its Subsidiaries has complied in all material respects with the
provisions of each such policy under which it is an insured party. The
Company has not been refused any insurance with respect to its assets or
operations by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance, during the last five
(5) years. There are no pending or, to the Knowledge of the Company,
threatened claims under any insurance policy that individually or in the
aggregate have had or would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Except as set forth in the disclosure schedule (with specific reference to the
particular Section or subsection of this Agreement to which the information
set forth in such disclosure schedule relates; provided, how ever, that any
information set forth in one section of the Parent Disclosure Schedule shall
be deemed to apply to each other section thereof or hereof to which its
relevance is readily apparent on its face) delivered by Parent and Sub to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule"), Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is duly qualified
or licensed to do business and is in good standing in each material
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of Parent
and Sub and no
43
other corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement and the transactions contemplated hereby do not
require approval of the holders of any shares of capital stock of Parent.
This Agreement has been duly executed and delivered by each of Parent and
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Sub, as applicable, enforce able against Parent and Sub, as applicable,
in accordance with its terms, subject to bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of
creditors generally and the availability of equitable remedies. The
execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of, or
result in, termination, cancelation or acceleration of any obligation or
to the loss of a benefit under, or result in the creation of any Lien in
or upon any of the properties or other assets of Parent or Sub under (x)
the Restated Certificate of Incorporation or By-laws of Parent or the
Certificate of Incorporation or By-laws of Sub, (y) any Contract to which
Parent or Sub is a party or any of their respective properties or other
assets is subject, in any way that would prevent, materially impede or
materially delay the consummation by Parent of the Merger (including the
payments required to be made pursuant to Article II) or the other
transactions contemplated hereby or (z) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation applicable to Parent or Sub
or their respective properties or other assets or (B) order, writ,
injunction, decree, judgment or stipulation, in each case applicable to
Parent or Sub or their respective properties or other assets, and in each
case, in any way that would prevent, materially impede or materially
delay the consummation by Parent of the Merger (including the payments
required to be made pursuant to Article II) or the other transactions
contemplated hereby. No material consent, approval, order or
authorization of, action by or in respect of,
44
or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by Parent under the HSR Act and the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under the HSR Act or any other applicable competition, merger
control, antitrust or similar law or regulation and (2) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware.
(c) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(e) Capital Resources. Parent has sufficient cash to pay the
aggregate Merger Consideration.
(f) Ownership of Company Stock. As of the date hereof, Parent, Sub
or any of their respective Subsidiaries do not "beneficially own" (as
such term is defined for purposes of Section 13(d) of the Exchange Act)
any shares of capital stock of the Company, except as they may be deemed
to beneficially own such shares solely by virtue of this Agreement or the
Stockholder Agreement, and except for any such shares that may be owned
by any employee benefit or other plan administered by or on behalf of
Parent or any of its Subsidiaries, to the extent the determination to
acquire such shares was not directed by Parent or Sub.
45
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except as consented to in writing in advance by Parent or as otherwise
permitted pursuant to this Section 4.01(a)(i) through (xvii), the Company
shall, and shall cause each of its Subsidiaries to, carry on its business in
the ordinary course consistent with past practice (including in respect of
research and development activities and programs) and in compliance with all
applicable laws, rules, regulations and treaties and, to the extent consistent
therewith, use all commercially reasonable efforts to preserve intact its
current business organizations, keep available the services of its current
officers, employees and consultants and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it with the intention that its goodwill and ongoing
business shall be unimpaired at the Effective Time. In addition to and without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as otherwise set forth in Section
4.01(a) of the Company Disclosure Schedule, the Company shall not, and shall
not permit any of its Subsidiaries to, without Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, other than dividends or distributions by a
direct or indirect wholly owned Subsidiary of the Company to its
shareholders, (y) split, combine or reclassify any of its capital stock
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 (z)
purchase, redeem or otherwise acquire any shares of its capital stock or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities, except for purchases,
redemptions or other acquisitions of capital stock or other securities
required under the terms of any plans, arrangements or agreements
existing on the date hereof between the Company or any of its
46
Subsidiaries and any director or employee of the Company or any of its
Subsidiaries (complete and accurate copies of which have been heretofore
delivered to Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units, including pursuant
to Contracts as in effect on the date hereof (other than the issuance of
shares of Company Common Stock upon the exercise of Company Stock Options
or Warrants, in each case outstanding on the date hereof in accordance
with their terms on the date hereof), other than the issuance of Rights
and capital stock pursuant to the terms of the Rights Agreement;
(iii) amend the Company Certificate or the Company By-laws or other
comparable charter or organizational documents of any of the Company's
Subsidiaries, except as may be required by law or the rules and
regulations of the SEC or The Nasdaq Stock Market, Inc.;
(iv) directly or indirectly acquire (x) by merging or consolidating
with, or by purchasing assets of, or by any other manner, any person or
division, business or equity interest of any person or (y) any asset or
assets that, individually, has a purchase price in excess of $50,000 or,
in the aggregate, have a purchase price in excess of $200,000, except for
new capital expenditures, which shall be subject to the limitations of
clause (vii) below, and, except for purchases of components, raw
materials or supplies in the ordinary course of business consistent with
past practice, and Parent agrees to respond in writing as promptly as
practicable under the circumstances to any request by the Company for a
consent with respect to this clause (iv);
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or other assets or any interests therein (including
securitizations), except for sales of inventory and
47
used equipment in the ordinary course of business consistent with past
practice; or (y) enter into, modify or amend any lease of property,
except for modifications or amendments that are not materially adverse to
the Company and its Subsidiaries taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
calls, options, warrants or other rights to acquire any debt securities
of the Company 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 having the economic effect of any of the foregoing
or (y) make any loans, advances or capital contributions to, or
investments in, any other person, other than to employees in respect of
travel expenses in the ordinary course of business consistent with past
practice;
(vii) make any new capital expenditure or expenditures which,
individually, is in excess of $50,000 or, (x) during the period beginning
on October 1, 2002 and ending on December 31, 2002, in the aggregate, are
in excess of $300,000, or (y) during the period beginning on January 1,
2003, in the aggregate, are in excess of $100,000 during any calendar
month, and Parent agrees to respond in writing as promptly as practicable
under the circumstances to any request by the Company for a consent with
respect to this clause (vii);
(viii) except as required by law or any judgment (v) pay, discharge,
settle or satisfy any claims, liabilities, obligations or litigation
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge, settlement or satisfaction in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent audited financial statements (or the
notes thereto) of the Company included in the Filed Company SEC Documents
(for amounts not in excess of such reserves) or incurred since the date
of such financial statements in the ordinary course of business
consistent with past
48
practice, (w) cancel any indebtedness, (x) waive or assign any claims or
rights of substantial value or (y) waive any benefits of, or agree to
modify in any respect, or, subject to the terms hereof, fail to enforce,
or consent to any matter with respect to which consent is required under,
any standstill or similar agreement to which the Company or any of its
Subsidiaries is a party or (z) waive any material benefits of, or agree
to modify in any material respect, or, subject to the terms hereof, fail
to enforce in any material respect, or consent to any matter with respect
to which consent is required under, any material confidentiality or
similar agreement to which the Company or any of its Subsidiaries is a
party;
(ix) enter into any Contracts (other than confidentiality agreements
containing customary terms which do not impose any obligations on the
Company or its Subsidiaries other than those relating to the treatment of
confidential information) relating to the research, development,
distribution, training, sale, supply, license, marketing, co-promotion or
manufacturing by third parties of products of the Company or any
Subsidiary of the Company or products licensed by the Company or any
Subsidiary of the Company which, individually, has aggregate future
payment or other obligations with a value in excess of $10,000 or, in the
aggregate, have future payment or other obligations with a value in
excess of $50,000, and Parent agrees to respond in writing as promptly as
practicable under the circumstances to any request by the Company for a
consent with respect to this clause (ix);
(x) enter into, modify, amend or terminate any Contract or waive,
release or assign any material rights or claims thereunder, which if so
entered into, modified, amended, terminated, waived, released or assigned
would reasonably be expected to (A) adversely affect in any material
respect the Company, (B) impair in any material respect the ability of
the Company to perform its obligations under this Agreement or (C)
prevent or materially delay the consummation of the transactions
contemplated by this Agreement;
(xi) enter into any Contract to the extent consummation of the
transactions contemplated by this
49
Agreement or compliance by the Company with the provisions of this
Agreement would reasonably be expected to conflict with, or result in a
violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or to the loss
of a benefit under, or result in the creation of any Lien in or upon any
of the properties or other assets of the Company or any of its
Subsidiaries under, or give rise to any increased, additional,
accelerated, or guaranteed right or entitlements of any third party
under, or result in any material alteration of, any provision of such
Contract;
(xii) enter into any Contract containing any restriction on the
ability of the Company or any of its Subsidiaries to assign its rights,
interests or obligations thereunder, unless such restriction expressly
excludes any assignment to Parent or any of its Subsidiaries in
connection with or following the consummation of the Merger and the other
transactions contemplated by this Agreement;
(xiii) sell, transfer or license to any person or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of the
Company or any of its Subsidiaries;
(xiv) except as otherwise contemplated by this Agreement or as
required to ensure that any Company Benefit Plan or Company Benefit
Agreement is not then out of compliance with applicable law or to comply
with any Contract or Company Benefit Agreement entered into prior to the
date hereof (complete and accurate copies of which have been heretofore
delivered to Parent), (A) adopt, enter into, terminate or amend (I) any
collective bargaining agreement or Company Benefit Plan or (II) any
Company Benefit Agreement or other agreement, plan or policy involving
the Company or any of its Subsidiaries and one or more of their
respective current or former directors, officers, employees or
consultants, (B) increase in any manner the compensation, bonus or fringe
or other benefits of, or pay any bonus of any kind or amount whatsoever
to, any current or former director, officer, employee or consultant,
except increases in cash compensation (including cash bonuses) to
directors, officers and employees in the ordinary course of business;
provided,
50
however, that such increases in cash compensation and that such amounts
of cash bonuses shall not, in the aggregate, exceed the amounts set forth
in Section 4.01(a)(xiv) of the Company Disclosure Schedule, (C) pay any
benefit or amount not required under any Company Benefit Plan or Company
Benefit Agreement or any other benefit plan or arrangement of the Company
or any of its Subsidiaries as in effect on the date of this Agreement,
other than as contemplated in clause (B), (D) grant or pay any severance
or termination pay or increase in any manner the severance or termination
pay of any current or former director, officer, employee or consultant of
the Company or any of its Subsidiaries, (E) grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement,
Company Benefit Agreement or Company Benefit Plan (including the grant of
Company Stock Options, "phantom" stock, stock appreciation rights,
"phantom" stock rights, stock based or stock related awards, performance
units or restricted stock or the removal of existing restrictions in any
Company Benefit Agreements, Company Benefit Plans or agreements or awards
made thereunder), other than as contemplated in clause (B), (F) amend or
modify any Stock Option or Warrant, (G) take any action to fund or in any
other way secure the payment of compensation or benefits under any
employee plan, agreement, contract or arrangement or Company Benefit Plan
or Company Benefit Agreement, (H) take any action to accelerate the
vesting or payment of any compensation or benefit under any Company
Benefit Plan or Company Benefit Agreement or (I) materially change any
actuarial or other assumption used to calculate funding obligations with
respect to any Company Pension Plan or change the manner in which
contributions to any Company Pension Plan are made or the basis on which
such contributions are determined;
(xv) except as required by GAAP, revalue any material assets of the
Company or any of its Subsidiaries or make any change in accounting
methods, principles or practices;
(xvi) sell, convey, transfer, assign, license or otherwise convey
(in whole or in part) any property (including cash), Contract or
liability to Microsphere Technology Holding LLC; or
51
(xvii) authorize any of, or commit, resolve, propose or agree to
take any of, the foregoing actions.
(b) Other Actions. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that
would, or that would reasonably be expected to, result in any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material respect
or (ii) the failure of it (and, in the case of Parent, of Sub) 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; provided, however, that
no such notification shall affect the representations, warranties, covenants
or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement. The Company
and Parent shall, to the extent permitted by law, promptly provide the other
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, (i) timely file all tax returns ("Post-Signing Returns")
required to be filed by or on behalf of each such entity; (ii) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (iii) accrue a reserve in the books and records and financial
statements of any such entity in accordance with past practice for all taxes
payable by such entity for which no Post-Signing Return is due prior to the
Effective Time; (iv) promptly notify Parent of any suit, claim, action,
investigation, proceeding or audit (collectively, "Actions") pending against
or with respect to the Company or any of its Subsidiaries in respect of any
material amount of tax and
52
not settle or compromise any such Action without Parent's consent; (v) not
make any material tax election (including any election which would cause
Microsphere Technology LLC to be treated as an entity other than a disregarded
entity for Federal tax purposes) or settle or compromise any material tax
liability, other than with Parent's consent or other than in the ordinary
course of business; and (vi) cause all existing tax sharing agreements, tax
indemnity obligations and similar agreements, arrangements or practices with
respect to taxes to which the Company or any of its Subsidiaries is or may be
a party or by which the Company or any of its Subsidiaries is or may otherwise
be bound to be terminated as of the Closing Date so that after such date
neither the Company nor any of its Subsidiaries shall have any further rights
or liabilities thereunder. Any tax returns described in this Section 4.01(d)
shall be complete and correct in all material respects and shall be prepared
on a basis consistent with the past practice of the Company and in a manner
that does not distort taxable income (e.g. by deferring income or accelerating
deductions).
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other advisor, agent or represen tative (collectively,
"Representatives") retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or knowingly
encourage, or take any other action designed to, or which could reasonably be
expected to, facilitate, any Takeover Proposal or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information, or otherwise cooperate in any way with, any
Takeover Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
Representative of the Company or any of its Subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its
Subsidiaries or otherwise, shall be a breach of this Section 4.02(a) by the
Company. The Company shall, and shall cause its Subsidiaries to, immediately
cease and cause to be terminated all existing discussions or negotiations with
any person conducted heretofore with respect to any Takeover Proposal or which
were otherwise permitted during the term of the Exclusivity Agreement dated as
of August 9, 2002 (the "Exclusivity Agreement") and request the prompt return
or destruction of
53
all confidential information previously furnished. Notwithstanding the
foregoing, at any time prior to obtaining the Stockholder Approval, in
response to a bona fide written Takeover Proposal that the Board of Directors
of the Company determines in good faith (after consultation with outside
counsel and a financial advisor of nationally recognized reputation)
constitutes or is reasonably likely to lead to a Superior Proposal, and which
Takeover Proposal was not solicited after the date hereof and was made after
the date hereof and did not otherwise result from a breach of this Section
4.02(a) or a breach of the Exclusivity Agreement, the Company may, if its
Board of Directors determines in good faith (after consultation with outside
counsel) that it is required to do so in order to comply with its fiduciary
duties to the stockholders of the Company under applicable law, and subject to
compliance with Section 4.02(c), (x) furnish information with respect to the
Company and its Subsidiaries to the person making such Takeover Proposal (and
its Representatives) pursuant to a customary confidentiality agreement (which
need not restrict such person from making an unsolicited Takeover Proposal)
not less restrictive of such person than the Confidentiality Agreement,
provided that all such information has previously been provided to Parent or
is provided to Parent prior to or substantially concurrent with the time it is
provided to such person, and (y) participate in discussions or negotiations
with the person making such Takeover Proposal (and its Representatives)
regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or any of its Subsidiaries or of any resulting
parent company of the
54
Company, other than the transactions contemplated by this Agreement and the
Stockholder Agreement.
The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
shareholders) owning, directly or indirectly, all or substantially all of the
shares of Company Common Stock then outstanding (or of the surviving entity in
a merger or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all the assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be (i) more
favorable to the stockholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably capable of being completed, taking into account all financial,
legal, regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (any action described in this clause (i) being referred to as a
"Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of its
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement constituting or related to, or that is intended to or
would reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement"). Notwithstanding the foregoing, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may (i) make a
Company Adverse Recommendation Change if such Board of Directors determines
55
in good faith (after consultation with outside counsel) that it is required to
do so in order to comply with its fiduciary duties to the stockholders of the
Company under applicable law or (ii) cause the Company to enter into a
Contingent Acquisition Agreement with respect to a Superior Proposal that was
unsolicited and made after the date hereof and that did not otherwise result
from a breach of this Section 4.02; provided, however, that no Company Adverse
Recommendation Change may be made, or Contingent Acquisition Agreement entered
into, until after the fourth business day following Parent's receipt of
written notice (a "Notice of Adverse Recommendation") from the Company
advising Parent that the Board of Directors of the Company intends to take
such action and specifying the reasons therefor, including the terms and
conditions of the Superior Proposal that is the basis of the proposed action
by the Board of Directors (it being understood and agreed that any amendment
to the financial terms or any other material term of such Superior Proposal
shall require a new Notice of Adverse Recommendation and a new four business
day period). In determining whether to make a Company Adverse Recommendation
Change or enter into a Contingent Acquisition Agreement, the Board of
Directors of the Company shall take into account any changes to the financial
terms of this Agreement proposed by Parent in response to a Notice of Adverse
Recommendation or otherwise. A "Contingent Acquisition Agreement" is any
Acquisition Agreement with respect to a Superior Proposal that expressly
provides that (i) such Acquisition Agreement shall not become effective unless
and until the termination of this Agreement prior to the consummation of the
Merger and the transactions contemplated by this Agreement and the Stockholder
Agreement, in which case it may become automatically effective without further
action by the parties thereto and (ii) no action by the Company or any of its
Subsidiaries may take place with respect to the transactions contemplated by
such Acquisition Agreement prior to the termination of this Agreement. If the
Company enters into a Contingent Acquisition Agreement in accordance with the
terms herein, then the existence of such Contingent Acquisition Agreement
shall not be deemed a breach of or default under this Agreement. Immediately
following the execution of a Contingent Acquisition Agreement, the Company
shall deliver to Parent a complete and accurate copy of such agreement and all
related agreements, documents, exhibits and schedules.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02,
56
the Company shall promptly advise Parent orally and in writing of any Takeover
Proposal, the material terms and conditions of any such Takeover Proposal or
inquiry (including any changes thereto) and the identity of the person making
any such Takeover Proposal or inquiry. The Company shall (i) keep Parent fully
informed of the status and details (including any change to the terms thereof)
of any such Takeover Proposal or inquiry and (ii) provide to Parent as soon as
practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to the Company or
any of its Subsidiaries from any person that describes any of the terms or
conditions of any Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y) making
any disclosure to the stockholders of the Company if, in the good faith
judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would be inconsistent with its
obligations under applicable law, including the Board of Directors' duty of
candor to the stockholders of the Company; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 4.02(b).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders'
Meeting. (a) As promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall file with the SEC
the Proxy Statement and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to any comments of the SEC with
respect thereto and to cause the Proxy Statement to be mailed to the
stockholders of the Company as promptly as practicable following the date of
this Agreement. The Company shall promptly notify Parent upon the receipt of
any comments from the SEC or the staff of the SEC or any request from the SEC
or the staff of the SEC for amendments or supplements to the Proxy Statement
and shall provide Parent with copies of all correspondence between the Company
and its Representatives, on the one
57
hand, and the SEC and the staff of the SEC, on the other hand. Notwithstanding
the foregoing, prior to filing or mailing the Proxy Statement (or any
amendment or supplement thereto) or responding to any comments of the SEC or
the staff of the SEC with respect thereto, the Company (i) shall provide
Parent an opportunity to review and comment on such document or response and
(ii) shall include in such document or response all comments reasonably
proposed by Parent.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
solely for the purpose of obtaining the Stockholder Approval. Subject to
Section 4.02(b), the Company shall, through its Board of Directors, recommend
to its stockholders adoption of this Agreement and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company's obligations pursuant to the first sentence of this
Section 5.01(b) shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to the Company of any Takeover
Proposal or (ii) the withdrawal or modification by the Board of Directors of
the Company or any committee thereof of such Board of Directors' or such
committee's approval or recommendation of this Agreement, the Merger or the
other transactions contemplated by this Agreement; provided, however, that no
breach of this Section 5.01(b) shall be deemed to have occurred if the Company
adjourns or postpones the Stockholders' Meeting for a reasonable period of
time, each such period of time not to exceed ten business days, provided that
(i) at the time of such adjournment or postponement the Board of Directors
shall be prohibited by the terms of this Agreement from making a Company
Adverse Recommendation Change, and the Stockholders' Meeting is then scheduled
to occur within four business days of the time of such adjournment or
postponement or (ii) at the time the Board of Directors announces a Company
Adverse Recommendation Change, the Stockholders' Meeting is then scheduled to
occur no later than ten business days from the date of such Company Adverse
Recommendation Change; provided that the Company may not adjourn or postpone
the Stockholders' Meeting pursuant to this clause (ii) more than two times or
for more than fifteen business days in the aggregate.
58
SECTION 5.02. Access to Information; Confidentiality. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other Representatives, reasonable access
(including for the purpose of coordinating integration activities and
transition planning with the employees of the Company and its Subsidiaries)
during normal business hours and upon reasonable prior notice to the Company
during the period prior to the Effective Time or the termination of this
Agreement to all its and its Subsidiaries' properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its and its Subsidiaries' business, properties and personnel as
Parent may reasonably request; provided that such access shall not materially
interfere with normal business activities. Except for disclosures expressly
permitted by the terms of the Amended and Restated Confidentiality Agreement
dated as of August 2, 2002, between Parent and the Company (as it may be
amended from time to time, the "Confidentiality Agreement"), Parent shall
hold, and shall cause its officers, employees, accountants, counsel, financial
advisors and other Representatives to hold, all information received from the
Company, directly or indirectly, in confidence in accordance with the
Confidentiality Agreement. No investigation pursuant to this Section 5.02 or
information provided or received by any party hereto pursuant to this
Agreement will affect any of the representations or warranties of the parties
hereto contained in this Agreement or the conditions hereunder to the
obligations of the parties hereto.
SECTION 5.03. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its 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 and the Stockholder Agreement, including using commercially
reasonable efforts to accomplish the following: (i) the taking of all acts
necessary to cause the conditions to Closing to be satisfied as promptly as
practicable,
59
(ii) the obtaining of all necessary actions or nonactions, waivers, consents
and approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and
the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity and
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties; provided that none of the Company, Parent or Sub shall be required to
make any payment to any such third parties or concede anything of value to
obtain such consents. In connection with and without limiting the foregoing,
the Company and Parent shall duly file with the U.S. Federal Trade Commission
and the Antitrust Division of the Department of Justice the notification and
report form (the "HSR Filing") required under the HSR Act with respect to the
transactions contemplated by this Agreement as promptly as practicable. The
HSR Filing shall be in substantial compliance with the requirements of the HSR
Act. Each party shall cooperate with the other party to the extent necessary
to assist the other party in the preparation of its HSR Filing, to request
early termination of the waiting period required by the HSR Act and, if
requested, to promptly amend or furnish additional information thereunder. The
Company and its Board of Directors shall (1) take all action necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to this Agreement, the Stockholder Agreement, the Merger or
any of the other transactions contemplated by this Agreement or the
Stockholder Agreement and (2) if any state takeover statute or similar statute
becomes applicable to this Agreement, the Stockholder Agreement, the Merger or
any of the other transactions contemplated by this Agreement or the
Stockholder Agreement, take all action necessary to ensure that the Merger and
the other transactions contemplated by this Agreement and the Stockholder
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholder Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Stockholder Agreement, the Merger and the other transactions contemplated by
this Agreement and the Stockholder Agreement. Nothing in this Agreement shall
be deemed to require Parent to agree to, or proffer to, divest or hold
separate any assets or any portion of any business of Parent, the Company or
any of their respective Subsidiaries.
60
SECTION 5.04. Company Stock Options; Warrants. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) adjust the terms of all outstanding Company Stock Options,
whether vested or unvested, as necessary to provide that, at the
Effective Time, each Company Stock Option outstanding immediately prior
to the Effective Time shall be canceled and the holder thereof shall then
become entitled to receive, as soon as practicable following the
Effective Time, a single lump sum cash payment equal to the product of
(1) the number of shares of Company Common Stock for which such Company
Stock Option shall not theretofore have been exercised and (2) the
excess, if any, of the Merger Consideration over the exercise price per
share of such Company Stock Option; and
(ii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the
Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company shall adopt such resolutions or take such
other actions (if any) as may be required to provide that each Warrant
outstanding immediately prior to the Effective Time shall be canceled in
exchange for a lump sum cash payment equal to (i) the product of (A) the
number of shares of Company Common Stock subject to such Warrant and (B) the
Merger Consideration, minus (ii) the product of (A) the number of shares of
Company Common Stock subject to such Warrant and (B) the per share exercise
price of such Warrant (provided that if such calculation results in a negative
number, the lump sum cash payment shall be deemed to be $0). Such payment
shall be made promptly following the Effective Time. All amounts payable
pursuant to this Section 5.04(b) shall be subject to any required withholding
of taxes and shall be paid without interest. The Company has obtained all
consents of the holders of the Warrants necessary to effectuate the foregoing.
(c) All amounts payable to holders of the Company Stock Options
pursuant to Section 5.04(a) shall be subject
61
to any required withholding of Taxes and shall be paid without interest as
soon as practicable following the Effective Time.
(d) The Company shall ensure that following the Effective Time, no
holder of a Company Stock Option (or former holder of a Company Stock Option)
or any participant in any Company Stock Plan, Company Benefit Plan or Company
Benefit Agreement shall have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation or any other equity interest
therein (including "phantom" stock or stock appreciation rights).
SECTION 5.05. Indemnification, Exculpation and Insurance. (a) Parent
shall cause the Surviving Corporation to assume the obligations with respect
to all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time now existing in favor of
the current or former directors or officers of the Company as provided in the
Company Certificate, the Company By-laws or any indemnification agreement
between such directors or officers and the Company (in each case, as in effect
on the date hereof), without further action, as of the Effective Time and such
obligations shall survive the Merger and shall continue in full force and
effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and other assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation shall expressly assume the obligations
set forth in this Section 5.05.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect
62
to such coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided, however, that Parent may (i) substitute
therefor policies of Parent containing terms with respect to coverage and
amount no less favorable to such directors and officers or (ii) request that
the Company obtain such extended reporting period coverage under its existing
insurance programs (to be effective as of the Effective Date); provided
further, however, that in satisfying its obligation under this Section
5.05(c), neither the Company nor Parent shall be obligated to pay aggregate
annual premiums in excess of 200% of the amount paid by the Company in its
last full fiscal year (which premiums are hereby represented and warranted by
the Company to be $301,000), it being understood and agreed that Parent shall
nevertheless be obligated to provide such coverage as may be obtained for such
200% amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06. Fees and Expenses. (a) Except as provided in paragraph
(b) of this Section 5.06, all fees and expenses incurred in connection with
this Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e) or (ii) (A) prior to the obtaining of the
Stockholder Approval, a Takeover Proposal shall have been made to the Company
or shall have been made directly to the stockholders of the Company generally
or shall have otherwise become publicly known or any person shall have
publicly announced an intention (whether or not conditional) to make a
Takeover Proposal, (B) thereafter this Agreement is terminated by either
Parent or the Company pursuant to Section 7.01(b)(i) (but only if a vote to
obtain the Stockholder Approval or the Stockholders' Meeting has not been
held) or Section 7.01(b)(iii) and (C) within 12 months after such termination,
the Company enters into a definitive agreement to consummate, or consummates,
the transactions contemplated by any Takeover Proposal, then the Company shall
pay Parent
63
a fee equal to $4.4 million (the "Termination Fee") by wire transfer of
same-day funds on the first business day following (x) in the case of a
payment required by clause (i) above, the date of termination of this
Agreement and (y) in the case of a payment required by clause (ii) above, the
date of the first to occur of the events referred to in clause (ii)(C).
(c) The Company acknowledges and agrees that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.06(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the Termination Fee
from the date such payment was required to be made until the date of payment
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
SECTION 5.07. Public Announcements. Except with respect to any
Company Adverse Recommendation Change, Parent and the Company shall consult
with each other before issuing, and give each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as such party may reasonably conclude may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.08. Stockholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Stockholder Agreement, and
no such settlement shall be agreed to without Parent's prior written consent.
64
SECTION 5.09. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.01(v)) reasonably requested by Parent in order to render the Rights
issued pursuant to the Rights Agreement to purchase Series E Junior
Participating Preferred Stock of the Company inapplicable to the Merger and
the other transactions contemplated by this Agreement and the Stockholder
Agreement. Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement, the
Board of Directors of the Company shall not, without the prior written consent
of Parent, (a) amend the Rights Agreement or (b) take any action with respect
to, or make any determination under, the Rights Agreement, including a
redemption of the Rights or any action to facilitate a Takeover Proposal.
SECTION 5.10. Employee Matters. (a) Subject to applicable collective
bargaining agreements, for a period of not less than twelve months following
the Effective Time, the employees of the Company who remain in the employment
of the Surviving Corporation and its Subsidiaries (the "Continuing Employees")
shall receive employee benefits that are substantially comparable in the
aggregate to the employee benefits provided to the employees of the Company
immediately prior to the Effective Time; provided that neither Parent nor the
Surviving Corporation nor any of their Subsidiaries shall have any obligation
to issue, or adopt any plans or arrangements providing for the issuance of
shares of capital stock, warrants, options, stock appreciation rights or other
rights in respect of any shares of capital stock of any entity or any
securities convertible or exchangeable into such shares pursuant to any such
plans or arrangements; provided, further, that no plans or arrangements of the
Company or any of its Subsidiaries providing for such issuance shall be taken
into account in determining whether employee benefits are substantially
comparable in the aggregate.
(b) Nothing contained herein shall be construed as requiring Parent
or the Surviving Corporation to continue any specific plans or to continue the
employment of any specific person.
(c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined
65
benefit pension plan, (ii) for purposes of eligibility for vacation under
Parent's vacation program, (iii) for purposes of eligibility and participation
under any health or welfare plan maintained by Parent (other than any
post-employment health or post-employment welfare plan) and (iv) unless
covered under another arrangement with or of the Company, for benefit accrual
purposes under Parent's severance plan (in the case of each of clauses (i),
(ii), (iii) and (iv), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation), but not for
purposes of any other employee benefit plan of Parent.
(d) Subject to applicable collective bargaining agreements, with
respect to any welfare plan maintained by Parent in which Continuing Employees
are eligible to participate after the Effective Time, Parent shall, and shall
cause the Surviving Corporation to, (i) waive all limitations as to
preexisting conditions and exclusions with respect to participation and
coverage requirements applicable to such employees to the extent such
conditions and exclusions were satisfied or did not apply to such employees
under the welfare plans of the Company and its Subsidiaries prior to the
Effective Time and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.
SECTION 5.11. Stockholder Agreement Legend. The Company will
inscribe upon any Certificate representing Subject Shares tendered by a
Stockholder (as such terms are defined in the Stockholder Agreement) for such
purpose the following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.001 PER
SHARE, OF ORAPHARMA, INC. REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDER AGREEMENT DATED AS OF NOVEMBER 12, 2002, AND ARE SUBJECT TO THE
TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICES OF ORAPHARMA, INC.".
66
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by law) waiver on or
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) HSR Act. The waiting period (and any exten sion thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by
any court of competent jurisdiction or other statute, law, rule, legal
restraint or prohibition (collectively, "Restraints") shall be in effect
(i) preventing the consummation of the Merger or (ii) which otherwise has
had or would reasonably be expected to have a Material Adverse Effect.
67
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in Sections 3.01(b) (but only with
respect to the second and third sentences thereof), 3.01(c), 3.01(d)(but
only with respect to the first four sentences thereof), 3.01(g)(i)
through (iv), 3.01(i) (but only with respect to the last sentence
thereof), 3.01(l)(viii), 3.01(p) (but only with respect to clauses (i)
and (iv) thereof), 3.01(r), 3.01(s), 3.01(u)(ii) and 3.01(w)(i) and (ii)
(but in the case of clause (i), only with respect to the last sentence
thereof) to the extent that they are qualified as to materiality shall be
true and correct, and such representations and warranties of the Company
to the extent that they are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement and
as of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier
date, in which case as of such earlier date and (ii) all other
representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date,
in which case as of such earlier date, and except further, in the case of
this clause (ii), to the extent that such representations and warranties
are not so true and correct as of such dates (without giving effect to
any qualifications or limitations as to materiality or Material Adverse
Effect set forth therein), individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect.
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and the chief financial officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it
68
under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such
effect.
(c) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or
seeking to place limitations on the ownership of shares of Company Common
Stock (or shares of common stock of the Surviving Corporation) by Parent
or Sub or seeking to obtain from the Company, Parent or Sub any damages
that are material in relation to the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective Subsidiaries of any portion of any business or of any
assets of the Company, Parent or any of their respective Subsidiaries, or
to compel the Company, Parent or any of their respective Subsidiaries to
divest or hold separate any portion of any business or of any assets of
the Company, Parent or any of their respective Subsidiaries, as a result
of the Merger, (iii) seeking to prohibit Parent or any of its
Subsidiaries from effectively controlling in any material respect the
business or operations of the Company or any of its Subsidiaries or (iv)
otherwise having, or being reasonably expected to have, a Material
Adverse Effect.
(d) Restraints. No Restraint that would reasonably be expected to
result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of paragraph (c) of this Section 6.02 shall be
in effect.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or (to the extent permitted by law) waiver on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement that are
qualified as to
69
materiality shall be true and correct, and the representations and
warranties of Parent and Sub contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date. The Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent
to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to such effect.
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by and subject to
Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
March 15, 2003; provided, however, that the right to terminate this
Agreement under this Section 7.01(b)(i) shall not be available to
any party whose breach of a
70
representation or warranty in this Agreement or whose action or
failure to act has been a principal cause of or resulted in the
failure of the Merger to be consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final and
nonappealable; or
(iii) if the Stockholder Approval shall not have been obtained
at the Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representa tions, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.02(a) or
6.02(b) and (B) is incapable of being cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent or (ii) if any Restraint having the
effects referred to in clauses (i) through (iv) of Section 6.02(c) shall
be in effect and shall have become final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.03(a) or
6.03(b) and (B) is incapable of being cured by Parent within 30 calendar
days following receipt of written notice of such breach or failure to
perform from the Company; or
(e) by Parent, in the event that prior to the obtaining of the
Stockholder Approval (i) a Company Adverse Recommendation Change shall
have occurred or (ii) the Board of Directors of the Company fails
publicly to reaffirm its recommendation of this Agreement, the Merger or
the other transactions contemplated by this Agreement within ten business
days of receipt of a written request by Parent to provide such
reaffirmation following a Takeover Proposal.
71
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.01(s), the penultimate sentence of Section 5.02,
Section 5.06, this Section 7.02 and Article VIII, which provisions shall
survive such termination, and except to the extent that such termination
results from the wilful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company or the approval of the shareholders of Parent
without such approval having been obtained. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
law, waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso to the first sentence of Section 7.03 and to the extent permitted by
law, waive compliance with any of the agreements or conditions contained
herein. 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 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 such
rights.
SECTION 7.05. Procedure for Termination or Amendment. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, requires, in the
case of Parent or the Company, action by its Board of Directors or, with
respect to any amendment of this Agree ment pursuant to Section 7.03, the duly
authorized committee of its Board of Directors to the extent permitted by law.
72
ARTICLE VIII
General Provisions
SECTION 8.01. 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 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
73
if to the Company, to:
OraPharma, Inc.
000 Xxxxx Xxxxx, Xxx 0000
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
SECTION 8.03. 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) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of such person's
executive officers after making due inquiry of the other executives and
managers having primary responsi bility for such matter;
(c) "Material Adverse Change" or "Material Adverse Effect" means any
(i) change, (ii) effect, (iii) event, (iv) occurrence, (v) state of facts
or (vi) development or developments which individually or in the
aggregate would reasonably be expected to result in any change or effect,
that (A) is materially adverse to the business, financial condition,
results of operations or prospects of the Company and its Subsidiaries,
taken as a whole, or (B) would reasonably be expected to prevent or
materially impede, interfere with, hinder or delay the consummation by
the Company of the Merger or the other transactions contemplated by this
Agreement; provided,
74
that for purposes of analyzing whether any change, effect, event,
occurrence, state of facts or development constitutes a "Material Adverse
Change" or "Material Adverse Effect" under this definition, the parties
agree that (x) materiality shall be analyzed from the viewpoint of
whether there is a significant likelihood that the disclosure of such
state of facts, change, development, effect, condition or occurrence
would be viewed by a reasonable investor as having significantly altered
the total mix of information about the Company and its Subsidiaries
available to such investor if the total mix of such information consisted
solely of (I) the representations and warranties of the Company contained
in this Agreement, (II) the Filed Company SEC Documents and (III) the
Company Disclosure Schedule to the extent readily apparent on its face to
be applicable to the analysis of whether a Material Adverse Change or a
Material Adverse Effect has occurred or would reasonably be expected to
occur, and (y) the analysis of materiality shall not be limited solely to
the standpoint of a long-term investor, and (z) each of the terms
contained in clauses (i) through (vi) above are intended to be separate
and distinct; provided, further, that none of the following shall be
deemed, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has
been or will be, a Material Adverse Effect or a Material Adverse Change:
(a) any change relating to the United States economy or securities
markets in general, (b) any failure, in and of its itself, by the Company
to meet any internal or published projections, forecasts, or revenue or
earnings predictions for any period ending on or after the date of this
Agreement (it being understood that the facts or occurrences giving rise
or contributing to such failure may be deemed to constitute, or be taken
into account in determining whether there has been or will be, a Material
Adverse Effect or a Material Adverse Change) and (c) any adverse change,
effect, event, occurrence, state of facts or development attributable to
conditions affecting the industry in which the Company participates
(other than as may arise or result from regulatory action by a
Governmental Entity), so long as the effects do not disproportionately
impact the Company.
75
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(e) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting partnership
interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, 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 interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule and the Parent Disclosure Schedule.
All terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
76
SECTION 8.05. Consents and Approvals. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
SECTION 8.06. Counterparts. This Agreement may be executed in one or
more counterparts (including by facsimile), 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.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Stockholder Agreement and the Confidentiality Agreement (a)
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, the Stockholder Agreement and the
Confidentiality Agreement and (b) except for the provisions of Article II and
Section 5.05, are not intended to confer upon any person other than the
parties any legal or equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any assignment without such consent
shall be null and void, except that Sub, upon prior written notice to the
Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. 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.
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction. The
parties agree that irreparable damage
77
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in any state court in the State of Delaware, this being
in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any Federal court located in the State of
Delaware or of any state court located in the State of Delaware in the event
any dispute arises out of this Agreement or 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
the transactions contemplated by this Agreement in any court other than a
Federal court located in the State of Delaware or a state court located in the
State of Delaware.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
78
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers hereunto duly authorized, all as of the date first
written above.
XXXXXXX & XXXXXXX,
by /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Member, Executive
Committee; Worldwide
Chairman, Consumer &
Personal Care Group
PIVOT MERGER SUB, INC.,
by /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
ORAPHARMA, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and CEO
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term
Acquisition Agreement...........................................Section 4.02(b)
Actions.........................................................Section 4.01(d)
Affiliate.......................................................Section 8.03(a)
Agreement..............................................................Preamble
Appraisal Shares................................................Section 2.01(d)
Certificate.....................................................Section 2.01(c)
Certificate of Merger..............................................Section 1.03
Class Action Suit...............................................Section 3.01(h)
Closing............................................................Section 1.02
Closing Date.......................................................Section 1.02
Code............................................................Section 2.02(h)
Commonly Controlled Entity......................................Section 3.01(k)
Company................................................................Preamble
Company Adverse Recommendation Change...........................Section 4.02(b)
Company Benefit Agreements......................................Section 3.01(g)
Company Benefit Plans...........................................Section 3.01(k)
Company By-laws.................................................Section 3.01(a)
Company Certificate.............................................Section 1.05(a)
Company Common Stock...................................................Preamble
Company Consolidated Group......................................Section 3.01(n)
Company Disclosure Schedule........................................Section 3.01
Company Pension Plan............................................Section 3.01(l)
Company Preferred Stock.........................................Section 3.01(c)
Company SEC Documents...........................................Section 3.01(e)
Company Stock-Based Awards......................................Section 3.01(c)
Company Stock Options...........................................Section 3.01(c)
Company Stock Plans.............................................Section 3.01(c)
Confidentiality Agreement..........................................Section 5.02
Contingent Acquisition Agreement................................Section 4.02(b)
Continuing Employees............................................Section 5.10(a)
Contract........................................................Section 3.01(d)
Covered Reports.................................................Section 3.01(e)
DGCL...............................................................Section 1.01
Drug............................................................Section 3.01(w)
Effective Time.....................................................Section 1.03
Environmental Laws..............................................Section 3.01(j)
ERISA...........................................................Section 3.01(j)
Exchange Act....................................................Section 3.01(d)
Exchange Fund...................................................Section 2.02(a)
Exclusivity Agreement...........................................Section 4.02(a)
FDA.............................................................Section 3.01(j)
FDCA............................................................Section 3.01(j)
Filed Company SEC Documents.....................................Section 3.01(e)
GAAP............................................................Section 3.01(e)
Governmental Entity.............................................Section 3.01(d)
Hazardous Materials.............................................Section 3.01(j)
HSR Act.........................................................Section 3.01(d)
HSR Filing.........................................................Section 5.03
Intellectual Property Rights....................................Section 3.01(p)
IRS.............................................................Section 3.01(l)
Knowledge.......................................................Section 8.03(b)
Legal Provisions................................................Section 3.01(j)
Liens...........................................................Section 3.01(b)
ANNEX I
TO THE MERGER AGREEMENT
Term
Material Adverse Change.........................................Section 8.03(c)
Material Adverse Effect.........................................Section 8.03(c)
Medical Device..................................................Section 3.01(w)
Merger.................................................................Preamble
Merger Consideration............................................Section 2.01(c)
Notice of Adverse Recommendation................................Section 4.02(b)
Parachute Grass Up Payment......................................Section 3.01(m)
Parent.................................................................Preamble
Parent Disclosure Schedule.........................................Section 3.02
Paying Agent....................................................Section 2.02(a)
Permits.........................................................Section 3.01(j)
person..........................................................Section 8.03(d)
Post-Signing Returns............................................Section 4.01(d)
Primary Company Executives......................................Section 3.01(m)
Principal Stockholders.................................................Preamble
Proxy Statement.................................................Section 3.01(d)
Representatives.................................................Section 4.02(a)
Release.........................................................Section 3.01(j)
Restraints......................................................Section 6.01(c)
Rights..........................................................Section 3.01(c)
Rights Agreement................................................Section 3.01(c)
SEC.............................................................Section 3.01(d)
Section 203.....................................................Section 3.01(r)
Section 262.....................................................Section 2.01(d)
Securities Act..................................................Section 3.01(e)
Stockholder Agreement..................................................Preamble
Stockholder Approval............................................Section 3.01(q)
Stockholders' Meeting...........................................Section 5.01(b)
Sub....................................................................Preamble
Subsidiary......................................................Section 8.03(e)
Superior Proposal...............................................Section 4.02(a)
Surviving Corporation..............................................Section 1.01
Takeover Proposal...............................................Section 4.02(a)
taxes...........................................................Section 3.01(n)
taxing authority................................................Section 3.01(n)
tax returns.....................................................Section 3.01(n)
Termination Fee.................................................Section 5.06(b)
Warrants........................................................Section 3.01(c)
EXHIBIT A
TO THE MERGER AGREEMENT
Certificate of Incorporation
of the Surviving Corporation
FIRST: The name of the corporation (hereinafter called the
"Corporation") is OraPharma, Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is Corporate
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, County of New
Castle; and the name of the registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director or
officer derived an improper personal benefit. No amendment to or repeal of
this Article SIXTH shall apply to or have any effect on the liability or
alleged liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring prior
to such amendment or repeal.
2
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.
The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.
3
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
