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EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
ARRIS PHARMACEUTICAL CORPORATION,
a Delaware corporation;
BEAGLE ACQUISITION SUB, INC,
a California corporation; and
SEQUANA THERAPEUTICS, INC.,
a California corporation
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Dated as of November 2, 1997
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TABLE OF CONTENTS
PAGE
SECTION 1. DESCRIPTION OF TRANSACTION...................................... 2
1.1 Merger of Merger Sub into the Company........................... 2
1.2 Effect of the Merger............................................ 2
1.3 Closing; Effective Time......................................... 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers.... 2
1.5 Conversion of Shares............................................ 3
1.6 Closing of the Company's Transfer Books......................... 4
1.7 Exchange of Certificates........................................ 4
1.8 Dissenting Shares............................................... 6
1.9 Tax Consequences................................................ 6
1.10 Accounting Consequences......................................... 7
1.11 Further Action.................................................. 7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 7
2.1 Due Organization; Subsidiaries; Etc............................. 7
2.2 Articles of Incorporation and Bylaws. .......................... 8
2.3 Capitalization, Etc............................................. 8
2.4 SEC Filings; Financial Statements............................... 10
2.5 Absence of Changes.............................................. 10
2.6 Title to Assets................................................. 11
2.7 Xxxxx-Xxxxx Agreement........................................... 11
2.8 Payments Under Corporate Partnering Agreements.................. 11
2.9 Real Property; Equipment; Leasehold............................. 12
2.10 Proprietary Assets.............................................. 12
2.11 Material Contracts.............................................. 14
2.12 Liabilities..................................................... 17
2.13 Compliance with Legal Requirements.............................. 17
2.14 Certain Business Practices...................................... 17
2.15 Governmental Authorizations..................................... 17
2.16 Tax Matters..................................................... 18
2.17 Employee and Labor Matters; Benefit Plans....................... 19
2.18 Environmental Matters........................................... 21
2.19 Insurance....................................................... 22
2.20 Transactions with Affiliates.................................... 22
2.21 Legal Proceedings; Orders....................................... 23
2.22 Authority; Binding Nature of Agreement.......................... 23
2.23 No Existing Discussions......................................... 24
2.24 Vote Required................................................... 24
2.25 Non-Contravention; Consents..................................... 24
2.26 Fairness Opinion................................................ 25
2.27 Financial Advisor............................................... 25
2.28 Full Disclosure................................................. 25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 25
3.1 Due Organization, Subsidiaries, Etc............................. 26
3.2 Certificate/Articles of Incorporation and Bylaws................ 26
3.3 Capitalization, Etc............................................. 26
3.4 SEC Filings; Financial Statements............................... 28
3.5 Absence of Changes.............................................. 29
3.6 Title to Assets................................................. 29
3.7 Payments Under Corporate Partnering Agreements.................. 30
3.8 Real Property; Equipment; Leasehold............................. 30
3.9 Proprietary Assets.............................................. 31
3.10 Material Contracts.............................................. 32
3.11 Liabilities..................................................... 35
3.12 Compliance with Legal Requirements.............................. 35
3.13 Certain Business Practices...................................... 35
3.14 Governmental Authorizations..................................... 35
3.15 Tax Matters..................................................... 36
3.16 Employee and Labor Matters; Benefit Plans....................... 37
3.17 Environmental Matters........................................... 38
3.18 Insurance....................................................... 39
3.19 Transactions with Affiliates.................................... 39
3.20 Legal Proceedings; Orders....................................... 40
3.21 Authority; Binding Nature of Agreement.......................... 40
3.22 No Existing Discussions......................................... 40
3.23 Vote Required................................................... 40
3.24 Non-Contravention; Consents..................................... 41
3.25 Fairness Opinion................................................ 42
3.26 Valid Issuance.................................................. 42
3.27 Financial Advisor............................................... 42
3.28 Full Disclosure................................................. 42
SECTION 4. CERTAIN COVENANTS OF THE PARTIES................................ 42
4.1 Access and Investigation........................................ 42
4.2 Operation of the Company's Business............................. 43
4.3 Operation of Parent's Business.................................. 46
4.4 No Solicitation by Company...................................... 49
4.5 No Solicitation by Parent....................................... 50
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES............................. 52
5.1 Registration Statement; Joint Proxy Statement................... 52
5.2 Company Shareholders' Meeting................................... 53
5.3 Parent Stockholders' Meeting.................................... 54
5.4 Regulatory Approvals............................................ 55
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.5 Stock Options; ESPP............................................. 56
5.6 Warrants........................................................ 56
5.7 Indemnification of Officers and Directors....................... 57
5.8 Additional Agreements........................................... 58
5.9 Disclosure...................................................... 58
5.10 Tax Matters..................................................... 59
5.11 Letter of Accountants........................................... 59
5.12 Resignation of Officers and Directors........................... 59
5.13 FIRPTA Matters.................................................. 59
5.14 Affiliate Agreements............................................ 60
5.15 Election of Directors........................................... 60
5.16 Registration Rights............................................. 60
5.17 Modification of Corange Agreement............................... 61
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.... 61
6.1 Accuracy of Representations..................................... 61
6.2 Performance of Covenants........................................ 61
6.3 Effectiveness of Registration Statement......................... 61
6.4 Shareholder Approval............................................ 61
6.5 Consents........................................................ 62
6.6 Documents....................................................... 62
6.7 No Material Adverse Change...................................... 62
6.8 HSR Act......................................................... 62
6.9 Listing......................................................... 62
6.10 No Restraints................................................... 62
6.11 No Governmental Litigation...................................... 63
6.12 No Other Litigation............................................. 63
6.13 Assumption of Warrants.......................................... 63
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY............... 64
7.1 Accuracy of Representations..................................... 64
7.2 Performance of Covenants........................................ 64
7.3 Effectiveness of Registration Statement......................... 64
7.4 Shareholder Approval............................................ 64
7.5 Documents....................................................... 64
7.6 No Material Adverse Change...................................... 65
7.7 HSR Act......................................................... 65
7.8 Listing......................................................... 65
7.9 No Restraints................................................... 65
7.10 Directors....................................................... 65
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 8. TERMINATION..................................................... 65
8.1 Termination..................................................... 65
8.2 Effect of Termination........................................... 67
8.3 Expenses; Termination Fees...................................... 67
SECTION 9. MISCELLANEOUS PROVISIONS........................................ 69
9.1 Amendment....................................................... 69
9.2 Waiver.......................................................... 69
9.3 No Survival of Representations and Warranties................... 69
9.4 Entire Agreement; Counterparts; Applicable Law.................. 69
9.5 Jury Waiver..................................................... 70
9.6 Disclosure Schedule............................................. 70
9.7 Attorneys' Fees................................................. 70
9.8 Assignability................................................... 70
9.9 Notices......................................................... 70
9.10 Cooperation..................................................... 71
9.11 Construction.................................................... 71
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is made
and entered into as of November 2, 1997, by and among: ARRIS PHARMACEUTICAL
CORPORATION, a Delaware corporation ("Parent"); BEAGLE ACQUISITION SUB, INC., a
California corporation and a wholly owned subsidiary of Parent ("Merger Sub");
and SEQUANA THERAPEUTICS, INC., a California corporation (the "Company").
Certain capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the California
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly-owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For financial reporting purposes, it is intended that the
Merger be accounted for as a purchase.
C. The respective boards of directors of Parent, Merger Sub and the
Company have adopted this Agreement and approved the Merger.
D. Certain shareholders of the Company have executed Voting and
Non-Disposition Agreements in connection with the Merger.
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AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation"). At the
election of Parent, any direct wholly-owned subsidiary of Parent may be
substituted for Merger Sub as a constituent corporation in the Merger. In such
event, the parties hereto agree to execute an appropriate amendment of this
Agreement to reflect such substitution.
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the California General
Corporation Law ("CGCL").
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx, at 10:00 a.m. on a date to be agreed by Parent and the Company (the
"Closing Date"), which shall be no later than the tenth business day after the
satisfaction or waiver of the conditions set forth in Sections 6 and 7.
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed agreement of merger conforming to the requirements of Chapter
11 of the CGCL shall be filed with the Secretary of State of the State of
California. The Merger shall take effect at the time such agreement of merger is
filed with the Secretary of State of the State of California (the "Effective
Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise agreed by Parent and the Company prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation
shall be amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals who are
directors and officers of Merger Sub immediately prior to the Effective Time.
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1.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Merger Sub, the Company or any shareholder
of the Company or of Merger Sub:
(i) any shares of Company Common Stock then held by the
Company or any subsidiary of the Company shall be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor;
(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other subsidiary of Parent shall be canceled and retired
and shall cease to exist, and no consideration shall be delivered in
exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 1.5(b), 1.5(d) and 1.8, each share of Company Common
Stock then outstanding shall be converted into the right to receive one
and thirty five one hundredths (1.35) fully paid and nonassessable shares
of Parent Common Stock; and
(iv) each share of the common stock, no par value, of Merger
Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.
(b) The fraction of a share of Parent Common Stock specified in
Section 1.5(a)(iii) (as such fraction may be adjusted in accordance with this
Section 1.5(b)) is hereinafter referred to as the "Exchange Ratio." If, between
the date of this Agreement and the Effective Time, the outstanding shares of
Company Common Stock or Parent Common Stock are changed into a different number
or class of shares by reason of any stock split, stock dividend, reverse stock
split, reclassification, recapitalization, exchange of shares or other similar
transaction, or if Parent pays an extraordinary dividend or makes an
extraordinary distribution, then the Exchange Ratio shall be appropriately
adjusted.
(c) Except as set forth in the Company Disclosure Schedule, if any
shares of Company Common Stock outstanding immediately prior to the Effective
Time are unvested or are subject to a repurchase option, risk of forfeiture or
other condition under any applicable restricted stock purchase agreement or
other agreement with the Company or under which the Company has any rights, then
the shares of Parent Common Stock issued in exchange for such shares of Company
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends. The Company shall take all action that may be necessary to ensure that,
from and after the Effective Time, Parent is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement.
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(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Common Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and, upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.6), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Parent Common Stock on the Nasdaq National Market on the date the Merger becomes
effective.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time: (a)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as shareholders of the Company except the right to receive
(i) certificates representing the number of fully paid and nonassessable shares
of Parent Common Stock into which such shares of Company Common Stock were
converted at the Effective Time and (ii) any cash in lieu of fractional shares
of Parent Common Stock, to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 1.7; and (b) the stock
transfer books of the Company shall be closed with respect to all shares of
Company Common Stock outstanding immediately prior to the Effective Time. No
further transfer of any such shares of Company Common Stock shall be made on
such stock transfer books after the Effective Time. If, after the Effective
Time, a valid certificate previously representing any of such shares of Company
Common Stock (a "Company Stock Certificate") is presented to the Exchange Agent
(as defined in Section 1.7) or to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) On or prior to the Effective Time, Parent shall select a
reputable bank or trust company reasonably acceptable to the Company to act as
exchange agent in the Merger (the "Exchange Agent"). As of the Effective Time,
Parent shall deposit with the Exchange Agent (i) certificates representing the
shares of Parent Common Stock issuable pursuant to this Section 1, and (ii) cash
sufficient to make payments in lieu of fractional shares in accordance with
Section 1.5(d). The shares of Parent Common Stock and cash amounts so deposited
with the Exchange Agent, together with any dividends or distributions with
respect to such shares with a record date on or after the Effective Time, are
referred to collectively as the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective Time,
and in any event within five (5) business days, the Exchange Agent will mail to
the holders of Company Stock Certificates (i) a letter of transmittal in
customary form and containing such provisions as
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Parent may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, (1) the holder of such Company Stock Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5, any cash in lieu of any
fractional share(s) of Parent Common Stock, and any dividends or other
distributions to which such holder is entitled, and (2) the Company Stock
Certificate so surrendered shall be canceled. Until surrendered as contemplated
by this Section 1.7, each Company Stock Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive shares of
Parent Common Stock, any cash in lieu of any fractional share(s) of Parent
Common Stock, and any dividends or other distributions to which such holder is
entitled, each as contemplated by Section 1. If any Company Stock Certificate
shall have been lost, stolen or destroyed, Parent may, in its discretion and as
a condition precedent to the issuance of any certificate representing Parent
Common Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct) as indemnity against any claim that may be
made against the Exchange Agent, Parent or the Surviving Corporation with
respect to such Company Stock Certificate. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a Person other than the Person in whose
name the certificate so surrendered is registered, if, upon presentation to the
Exchange Agent, such certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of Parent
Common Stock to a Person other than the registered holder of such certificate or
establish to the satisfaction of Parent that such tax has been paid or is not
applicable.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional share nor any other cash payment shall be paid
to any such holder, until such holder surrenders such Company Stock Certificate
in accordance with this Section 1.7 (at which time such holder shall be
entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends, distributions and cash payments, without interest).
(d) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 365 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock
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Certificates who have not theretofore surrendered their Company Stock
Certificates in accordance with this Section 1.7 shall thereafter look only to
Parent for satisfaction of their claims for Parent Common Stock, cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state, local
or foreign tax law or under any other applicable Legal Requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable
to any holder or former holder of Company Common Stock or to any other Person
with respect to any shares of Parent Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal
Requirement.
1.8 DISSENTING SHARES. Notwithstanding anything to the contrary
contained in this Agreement, any shares of Company Common Stock outstanding
immediately prior to the Effective Time that are or may become "dissenting
shares" within the meaning of Section 1300(b) of the CGCL ("Dissenting Shares")
shall not be converted into or represent the right to receive Parent Common
Stock in accordance with Section 1.5(a)(iii) (or cash in lieu of fractional
shares in accordance with Section 1.5(d)), and each holder of Dissenting Shares
shall be entitled only to such rights as may be granted to such holder under
Chapter 13 of the CGCL. From and after the Effective Time, a holder of
Dissenting Shares shall not have and shall not be entitled to exercise any of
the voting rights or other rights of a shareholder of the Surviving Corporation.
If any holder of Dissenting Shares shall fail to assert or perfect, or shall
waive, rescind, withdraw or otherwise lose, such holder's right to dissent and
obtain payment under Chapter 13 of the CGCL, then such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of Company Stock Certificate(s) previously representing such
shares) Parent Common Stock in accordance with Section 1.5(a)(iii) (and cash in
lieu of any fractional share in accordance with Section 1.5(d) and any dividends
or other distributions to which such holder is entitled in accordance with
Section 1.7).
1.9 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
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1.10 ACCOUNTING CONSEQUENCES. For financial reporting purposes, the
Merger is intended to be accounted for as a purchase.
1.11 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, except as
set forth in the disclosure schedule delivered by the Company to Parent prior to
the execution of this Agreement and signed by an executive officer of the
Company (the "Company Disclosure Schedule"), as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the corporations
identified in the Company Disclosure Schedule; and neither the Company nor any
of the other corporations identified in the Company Disclosure Schedule owns any
capital stock of, or any equity interest of any nature in, any other Entity,
other than the Entities identified in the Company Disclosure Schedule. (The
Company and each of its Subsidiaries are referred to collectively in this
Agreement as the "Acquired Corporations".) Except as set forth in the Company
Disclosure Schedule, none of the Acquired Corporations has agreed or is
obligated to make, or is bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution to any other
Entity. Except as set forth in the Company Disclosure Schedule, none of the
Acquired Corporations has, at any time, been a general partner of any general
partnership, limited partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own, lease and use its assets in the manner in which its
assets are currently owned, leased and used; and (iii) to perform its
obligations under all Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do business
as a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification
except in jurisdictions where the failure to so qualify, individually and in the
aggregate, would not have a Material Adverse Effect.
7.
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(d) The Company has not conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the name Sequana Therapeutics, Inc., and in
the case of the Company's Subsidiaries, other than the names Nemapharm, Inc.,
Genescape, Inc. and GeneCore Biotechnologies, Inc.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has delivered to
Parent accurate and complete copies of the articles of incorporation, bylaws and
other charter and organizational documents of the respective Acquired
Corporations, including all amendments thereto.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
50,000,000 shares of Company Common Stock, $.001 par value, of which, as of
October 30, 1997, 10,258,091 shares were issued and outstanding; and (ii)
5,000,000 shares of preferred stock, $.001 par value, none of which are
outstanding. All of the outstanding shares of Company Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. As of
the date of this Agreement, there are no shares of Company Common Stock held by
any of the other Acquired Corporations. Except as set forth in the Company
Disclosure Schedule: (i) none of the outstanding shares of Company Common Stock
is entitled or subject to any preemptive right, right of participation in future
financings, right to maintain a percentage ownership position, or any similar
right; (ii) none of the outstanding shares of Company Common Stock is subject to
any right of first refusal in favor of the Company; and (iii) there is no
Acquired Corporation Contract relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise disposing
of (or granting any option or similar right with respect to), any shares of
Company Common Stock. None of the Acquired Corporations is under any obligation,
or is bound by any Contract pursuant to which it may become obligated, to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock or any other securities of any Acquired Corporation.
(b) As of the October 30, 1997: (i) 843,149 shares of Company
Common Stock are reserved for future issuance pursuant to stock options granted
and outstanding under the Company's 1994 Incentive Stock Option Plan; (ii)
125,995 shares of Company Common Stock are reserved for future issuance under
the Company's 1995 Employee Stock Purchase Plan (the "ESPP"); and (iii) 118,000
shares of Company Common Stock are reserved for future issuance pursuant to
stock options granted and outstanding under the Company's 1995 Director Option
Plan. (Stock options granted by the Company pursuant to the 1994 Incentive Stock
Option Plan and the 1995 Director Option Plan are referred to in this Agreement
as "Company Options.") The Company Disclosure Schedule sets forth the following
information with respect to each Company Option outstanding as of the date of
this Agreement: (i) the particular plan pursuant to which such Company Option
was granted; (ii) the name of the optionee; (iii) the number of shares of
Company Common Stock subject to such Company Option; (iv) the exercise
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price of such Company Option; (v) the date on which such Company Option was
granted; (vi) the applicable vesting schedules, and the extent to which such
Company Option is vested and exercisable as of October 30 1997; and (vii) the
date on which such Company Option expires. The Company has delivered to Parent
accurate and complete copies of all stock option plans and forms of option grant
pursuant to which the Company has granted any outstanding stock options. Except
as set forth in the Company Disclosure Schedule, the Company did not grant any
new Company Options between October 30, 1997 and the date hereof. The Company
Disclosure Schedule sets forth the following information with respect to each
outstanding warrant to purchase Company Common Stock: (1) the name of the holder
of such warrant; (2) the number of shares of Company Common Stock subject to
such warrant; (3) the exercise price of such warrant; (4) the date on which such
warrant was issued; (5) the conditions, if any, limiting exercise of such
warrant and (6) the date on which such warrant expires. The Company has
delivered to Parent an accurate and complete copy of each such warrant.
(c) Except as set forth in the Company Disclosure Schedule there
is no: (i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of the capital stock or other
securities of the Company or any other Acquired Corporation; (ii) outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of the capital stock or other securities of the
Company or any other Acquired Corporation; (iii) shareholder rights plan (or
similar plan commonly referred to as a "poison pill") or Contract under which
the Company or any other Acquired Corporation is or may become obligated to sell
or otherwise issue any shares of its capital stock or any other securities; or
(iv) condition or circumstance that may reasonably give rise to or provide a
basis for the assertion of a claim by any Person to the effect that such Person
is entitled to acquire or receive any shares of capital stock or other
securities of the Company or any other Acquired Corporation. There are no bonds,
debentures, notes or other indebtedness of the Company outstanding having the
right to vote (or convertible into securities having the right to vote) on any
matters on which the shareholders of the Company have the right to vote.
(d) All outstanding securities of all of the Acquired
Corporations, including shares of Company Common Stock, all outstanding Company
Options, all outstanding warrants to purchase Company Common Stock, all
outstanding rights under the ESPP and all outstanding shares of capital stock of
each subsidiary of the Company have been issued and granted in all material
respects in compliance with (i) all applicable securities laws and other
applicable Legal Requirements, and (ii) all requirements set forth in applicable
Contracts.
(e) The Company Disclosure Schedule sets forth the capitalization
and record and beneficial ownership of the outstanding securities of each
Acquired Corporation. All of the outstanding shares of capital stock of the
corporations identified in the Company Disclosure Schedule have been duly
authorized and are validly issued, are fully paid and nonassessable and are
(other than Company Common Stock) owned beneficially and of record by the
Company, free and clear of any Encumbrances.
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2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has listed in the Company Disclosure Schedule and
has made available to Parent accurate and complete copies (excluding copies of
exhibits) of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by the Company with the SEC
since June 14, 1995 (the "Company SEC Documents"). All statements, reports,
schedules, forms and other documents required to have been filed by the Company
with the SEC have been so filed. As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the Company SEC Documents complied in
all material respects with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be); and (ii) none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The financial statements (including any related notes)
contained in the Company SEC Documents: (i) complied in all material respects as
to form with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments which will not, individually or in the aggregate,
be material in amount), and (iii) fairly present the consolidated financial
position of the Company and its Subsidiaries as of the respective dates thereof
and the consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby.
(c) Since June 30, 1997, the Company and its Subsidiaries have not
incurred any liabilities of the type required under GAAP to be recorded on a
balance sheet or in the footnotes thereto except liabilities incurred in the
ordinary course of business.
2.5 ABSENCE OF CHANGES. Since December 31, 1996:
(a) there has not been any Material Adverse Change in the
business, condition, capitalization, assets, liabilities, operations or
financial performance of the Acquired Corporations taken as a whole, and no
event has occurred that could reasonably be expected to have a Material Adverse
Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance);
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(c) there has not been any transaction, commitment, or other event
or condition (financial or otherwise) which would be prohibited by Section
4.2(b)(i), (iv), (xii), (xiii), or (xiv) if it were to be effected, accepted or
were to take place, between the date hereof and the Effective Time.
2.6 TITLE TO ASSETS. Except as set forth in the Company Disclosure
Schedule, the Acquired Corporations own, and have good, valid and marketable
title to, all assets purported to be owned by them, including: all assets
reflected in the books and records of the Acquired Corporations as being owned
by the Acquired Corporations. All of said assets are owned by the Acquired
Corporations free and clear of any Encumbrances, except for (a) any lien for
current taxes not yet due and payable, (b) minor liens that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations, and (c) liens
described in the Company Disclosure Schedule.
2.7 XXXXX-XXXXX AGREEMENT. An accurate and complete copy of the
agreement (the "Xxxxx-Xxxxx Agreement") between the Company and Xxxxx-Xxxxx, a
division of the Xxxxxx-Xxxxxxx Company ("Xxxxx-Xxxxx") has been delivered to
Parent. Neither (1) the execution, delivery or performance of this Agreement or
any of the other agreements referred to herein nor (2) the consummation of the
Merger or any of the other transactions contemplated by this Agreement requires
the consent or approval of Xxxxx-Xxxxx nor does such execution, delivery,
performance or consummation contravene or conflict with or result in a violation
of any of the terms or requirements of the Xxxxx-Xxxxx Agreement. Xxxxx-Xxxxx
has been informed of this Agreement and the Merger and, to the best of knowledge
of the Company, Xxxxx-Xxxxx has no objection to this Agreement or to the Merger
or to complying with all of its obligations under the Xxxxx-Xxxxx Agreement
during the pendency or after the consummation of the Merger, subject to
Xxxxxx-Xxxxxxx'x right to terminate the agreement as set forth therein.
2.8 PAYMENTS UNDER CORPORATE PARTNERING AGREEMENTS. Except as previously
disclosed to Parent, all amounts charged to Boehringer Ingelheim GmbH, Corange
International Ltd., Glaxo Inc., Genos BioSciences, Inc. and Mount Sinai Hospital
Corporation (the "Corporate Partners") for reimbursement or payments in
accordance with the agreements between the Company and such Persons represent
amounts due to the Company under the terms of such agreements for actual work or
services performed or, in the case of advance payments, work or services to be
performed, or milestones met.
(a) Except as previously disclosed to Parent, the Company has
received all amounts that are owed and due to be paid to the Company under such
agreements prior to the date of this Agreement. For each such payment received
by the Company under any such agreement, any revenue that the Company recognized
with respect to such payment was recognized in accordance with generally
accepted accounting principles.
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(b) Except as previously disclosed to Parent, the Company's
research program with respect to the XXXXX xxxx and related genes has not been
funded by any Corporate Partner in any manner or to any extent, and no Corporate
Partner has any rights in any information, results, data or intellectual
property rights resulting from or based upon such research project.
(c) Except as previously disclosed to Parent, the Company
Disclosure Schedule identifies all facts of which the Company has knowledge that
a Corporate Partner is considering, intending or planning to terminate any of
the agreements between any such Corporate Partner and the Company, or any
research program under such agreement.
(d) The Company did not exercise its option to enter into Phase II
under the Letter Agreement dated July 16, 1996 among the Company, Cold Spring
Harbor Laboratory and Xxxx Xxxxxxx University (the "Cold Spring Letter
Agreement") and has no ongoing or future financial obligation to any other
Person under the Cold Spring Letter Agreement.
2.9 REAL PROPERTY; EQUIPMENT; LEASEHOLD.
(a) None of the Acquired Corporations owns any real property or
any interest in real property, except for the leasehold created under the real
property lease(s) set forth in the Company Disclosure Schedule. Complete and
correct copies of such lease have previously been delivered to Parent by the
Company.
(b) All material items of equipment and other tangible assets
owned by or leased to the Acquired Corporations are reasonably adequate for the
uses to which they are being put, are in good condition and repair (ordinary
wear and tear excepted) and are reasonably adequate for the conduct of the
business of the Acquired Corporations in the manner in which such business is
currently being conducted and in the manner in which such business is required
to be conducted pursuant to Contracts to which the Company is a party and which
are in effect on the date hereof.
2.10 PROPRIETARY ASSETS.
(a) The Company Disclosure Schedule sets forth, with respect to
each Proprietary Asset owned by the Acquired Corporations and registered with
any Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. The Company Disclosure Schedule identifies and provides a brief
description of, and identifies any ongoing royalty or payment obligations in
excess of $25,000 per year with respect to, each Proprietary Asset that is
licensed or otherwise made available to the Acquired Corporations by any Person
(except for any Proprietary Asset that is licensed to the Acquired Corporations
under any third party software license generally available to the public), and
identifies the Contract under which such Proprietary Asset is being licensed or
otherwise made available to such Acquired Corporation. Excluding the payments
required under the Acquired Corporation Contracts set forth in the Company
Disclosure Schedule, the
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aggregate amounts payable by the Acquired Corporations for ongoing royalty or
license payments (except payments made in connection with provision to the
Company of tissue samples) do not exceed $75,000 per year. Excluding the
payments required under Contracts set forth in the Company Disclosure Schedule,
the aggregate amounts payable by the Acquired Corporations for ongoing payments
made or to be made in connection with the provision to the Acquired Corporations
of tissue samples do not exceed $200,000. The Acquired Corporations have good,
valid and marketable title to all of the Acquired Corporation Proprietary Assets
(except for licensed assets), free and clear of all Encumbrances, except for (i)
any lien for current taxes not yet due and payable, and (ii) minor liens that
have arisen in the ordinary course of business and that do not (individually or
in the aggregate) materially detract from the value of the assets subject
thereto or materially impair the operations of any of the Acquired Corporations.
The Acquired Corporations have a valid right to use, license and otherwise
exploit all Acquired Corporation Proprietary Assets. Except as set forth in the
Company Disclosure Schedule, none of the Acquired Corporations has developed
jointly with any other Person any Acquired Corporation Proprietary Asset that is
material to the business of the Acquired Corporations with respect to which such
other Person has any rights. Except as set forth in the Company Disclosure
Schedule, there is no Acquired Corporation Contract pursuant to which any Person
has any right (whether or not currently exercisable) to use, license or
otherwise exploit any Acquired Corporation Proprietary Asset.
(b) The Acquired Corporations have taken all reasonable measures
and precautions to protect and maintain the confidentiality, secrecy and value
of all material Acquired Corporation Proprietary Assets (except Acquired
Corporation Proprietary Assets whose value would be unimpaired by disclosure).
Except where the failure to obtain such agreements would not impair the value of
any Acquired Corporation Proprietary Asset, the Acquired Corporations have
obtained, from all current and former employees of the Acquired Corporations and
from all current and former consultants and independent contractors to the
Acquired Corporations, signed agreements appropriately restricting the use and
disclosure of the Company Proprietary Assets, and providing for assignment to
the Acquired Corporations of the Company Proprietary Assets developed by such
employees and consultants.
(c) To the best of the knowledge of the Company: (i) all patents,
patent applications, trademarks, service marks and copyrights held by any of the
Acquired Corporations were filed and were and have been prosecuted in good faith
and in compliance with all applicable Legal Requirements; and (ii) there has not
been any claim, action or proceeding, and there is no pending or threatened
claim, action or proceeding related to any registration or filing of an Acquired
Corporation Proprietary Asset; (iii) none of the Acquired Corporation
Proprietary Assets infringes, misappropriates or conflicts with any Proprietary
Asset owned or used by any other Person; (iv) none of the products that are or
have been designed, created, developed, assembled, manufactured or sold by any
of the Acquired Corporations is infringing, misappropriating or making any
unlawful or unauthorized use of any Proprietary Asset owned or used by any other
Person, and none of such products has at any time infringed, misappropriated or
made any unlawful or unauthorized use of, and none of the Acquired
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Corporations has received any notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful or unauthorized use of, any Proprietary Asset owned
or used by any other Person; (v) no other Person is infringing, misappropriating
or making any unlawful or unauthorized use of, and no Proprietary Asset owned or
used by any other Person infringes or conflicts with, any material Acquired
Corporation Proprietary Asset.
(d) The Acquired Corporation Proprietary Assets constitute all the
Proprietary Assets reasonably necessary to enable the Acquired Corporations to
conduct their business in the manner in which such business has been and is
being conducted and in the manner in which such business is required to be
conducted pursuant to Contracts to which the Company is a party and which are in
effect on the date hereof. Except as set forth in the Company Disclosure
Schedule, none of the Acquired Corporations has (i) licensed any of the material
Acquired Corporation Proprietary Assets to any Person on an exclusive basis, or
(ii) entered into any covenant not to compete or Contract limiting its ability
to exploit fully any material Acquired Corporation Proprietary Assets or to
transact business in any market or geographical area or with any Person.
2.11 MATERIAL CONTRACTS.
(a) The Company Disclosure Schedule identifies each Acquired
Corporation Contract that constitutes a "Company Material Contract." For
purposes of this Agreement, each of the following shall be deemed to constitute
a "Company Material Contract":
(i) any Contract relating to the employment of, or the
performance of services by, any employee or consultant, and any Contract
pursuant to which any of the Acquired Corporations is or may become
obligated to make any severance, termination, bonus or relocation payment
or any other payment (other than payments in respect of salary and the
grant of standard benefits);
(ii) any Contract relating to the acquisition, transfer,
development, sharing or license of any Proprietary Asset (except for any
Contract pursuant to which any Proprietary Asset is licensed to the
Acquired Corporations under any third party software license generally
available to the public);
(iii) any Contract which provides for indemnification of any
officer, director, employee or agent;
(iv) any Contract imposing any restriction on the right or
ability of any Acquired Corporation (A) to compete with any other Person,
(B) to acquire any product
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or other asset or any services from any other Person, to sell any product
or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or
(C) to develop or distribute any technology;
(v) any Contract (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, (B) providing
any Person with any preemptive right, right of participation, right of
maintenance or any similar right with respect to any securities, or (C)
providing the Company with any right of first refusal with respect to, or
right to repurchase or redeem, any securities;
(vi) any Contract requiring that the Company give any notice,
obtain any consent or provide any information to any Person prior to
accepting any Acquisition Proposal;
(vii) any Contract (not otherwise identified in this Section)
that (A) has a term of more than 60 days or that may not be terminated by
an Acquired Corporation (without penalty) within 60 days after the
delivery of a termination notice by such Acquired Corporation and (B) that
contemplates or involves (I) the payment or delivery of cash or other
consideration on or after the date hereof in an amount or having a value
in excess of $50,000 in aggregate payments under such Contract, or (II)
the performance of services on or after the date hereof having a value in
excess of $50,000 in aggregate payments under such Contract;
(viii) any Contract (A) to which any Governmental Body is a
party or under which any Governmental Body has any rights or obligations,
or involving or directly or indirectly benefiting any Governmental Body
(including any subcontract or other Contract between the Company and any
contractor or subcontractor to any Governmental Body) and that (B)
contemplates or involves (I) the payment or delivery of cash or other
consideration on or after the date hereof in an amount or having a value
in excess of $50,000 in aggregate payments under such Contract, or (II)
the performance of services on or after the date hereof having a value in
excess of $50,000 in aggregate payments under such Contract;
(ix) any open purchase order placed by an Acquired
Corporation requiring future aggregate payments in excess of $25,000;
(x) any Contract (not otherwise identified in this Section)
that could reasonably be expected to have a material effect on the
business, condition, assets, liabilities, capitalization assets,
liabilities, operations, or financial performance of any of the Acquired
Corporations or to any of the transactions contemplated by this Agreement;
and
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(xi) any Contract (not otherwise identified in this Section),
if a breach of such Contract could reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
(b) Each Acquired Corporation Contract that constitutes a Company
Material Contract is valid and in full force and effect, and is enforceable in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
The aggregate amount payable by the Acquired Corporations under Contracts that
would be Company Material Contracts but for the limitations of Sections
2.10(a)(vii)(B) or 2.10(a)(viii)(B) do not exceed $500,000. The aggregate amount
payable by the Acquired Corporations under purchase orders not listed on Part
2.10 of the Company Disclosure Schedule does not exceed $500,000.
(c) Except as set forth in the Company Disclosure Schedule: (i)
none of the Acquired Corporations has materially violated or breached, or
committed any material default under, any Company Material Contract, and, to the
best of the knowledge of the Company, no other Person has materially violated or
breached, or committed any material default under, any Company Material
Contract; (ii) to the best of the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) could reasonably be expected to (A) result in a material
violation or breach of any of the provisions of any Company Material Contract,
(B) give any Person the right to declare a default or exercise any remedy under
any Company Material Contract, (C) give any Person the right to a rebate,
chargeback, penalty or change in delivery schedule under any Company Material
Contract, (D) give any Person the right to accelerate the maturity or
performance of any Company Material Contract, or (E) give any Person the right
to cancel, terminate or materially modify any Company Material Contract; (iii)
since January 1, 1996, none of the Acquired Corporations has received any
written notice or other written communication regarding any actual or possible
violation or breach of, default under, or intention to terminate, any Acquired
Corporation Contract except for communication (A) that has subsequently been
revoked; or (B) has been received from a complaining party that has not
contacted the Company or otherwise, to the knowledge of the Company, taken any
action with respect to such party's complaint for a period of more than six
months following receipt of the communication; and (iv) none of the Acquired
Corporations has waived any of its material rights under any Company Material
Contract.
(d) To the best of the knowledge of the Company, no Person is
renegotiating, or has the right to renegotiate, any material amount paid or
payable to the Acquired Corporations under any Company Material Contract, or any
other material term or provision of any Company Material Contract, including
termination provisions.
(e) The Acquired Corporation Contracts collectively constitute all
of the Contracts necessary to enable the Acquired Corporations to conduct their
respective businesses in the manner in which its business is currently being
conducted and in the manner in which
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such business is required to be conducted pursuant to Contracts to which the
Company is a party and which are in effect on the date hereof.
(f) The Company Disclosure Schedule sets forth a list of all
claims made under any Company Material Contract which are disputed or, to the
Company's knowledge, where a dispute has been threatened.
2.12 LIABILITIES. None of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles, and whether due or to become
due), except for: (a) liabilities identified as such in the financial statements
in the Company SEC Documents; (b) normal and recurring liabilities that have
been incurred by the Acquired Corporations since December 31, 1996 in the
ordinary course of business and consistent with past practices; and (c) other
liabilities which have not had and could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on Acquired
Corporations.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired
Corporations is, and has at all times since inception, been, in compliance with
all applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and could not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. Since inception, none of
the Acquired Corporations has received any notice or other communication from
any Governmental Body regarding any actual or possible violation of, or failure
to comply with, any material Legal Requirement.
2.14 CERTAIN BUSINESS PRACTICES. None of the Acquired Corporations nor
any director, officer, agent or employee of any of the Acquired Corporations has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
2.15 GOVERNMENTAL AUTHORIZATIONS. The Acquired Corporations hold all
material Governmental Authorizations necessary to enable the Acquired
Corporations to conduct their respective businesses in the manner in which such
businesses are currently being conducted. All such Governmental Authorizations
are valid and in full force and effect. Each Acquired Corporation is, and at all
times since inception has been, in substantial compliance with the terms and
requirements of such Governmental Authorizations. Since inception, none of the
Acquired Corporations has received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible
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revocation, withdrawal, suspension, cancellation, termination or modification of
any material Governmental Authorization or (c) any requirement to apply for or
hold Governmental Authorization not held by any Acquired Corporation.
2.16 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Acquired Corporation
Returns") have been or will be filed on or before the applicable due date
(including any extensions of such due date). All amounts shown on the Acquired
Corporation Returns to be due on or before the Closing Date have been or will be
paid on or before the Closing Date.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. Each
Acquired Corporation will establish, in the ordinary course of business and
consistent with its past practices, quarterly reserves adequate for the payment
of all Taxes for the applicable periods from December 31, 1996 through the
Closing Date. Since January 1, 1997, no material Tax liability has been incurred
other than in the ordinary course of business.
(c) Except as set forth in the Company Disclosure Schedule, no
Acquired Corporation Return has ever been examined or audited by any
Governmental Body. No extension or waiver of the limitation period applicable to
any of the Acquired Corporation Returns has been granted (by the Company or any
other Person), and no such extension or waiver has been requested from any
Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any Tax. There are no unsatisfied liabilities
for Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by any Acquired Corporation (other than liabilities
for Taxes asserted under any such notice of deficiency or similar document which
are being contested in good faith by the Acquired Corporations and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of any of the Acquired Corporations
except liens for current Taxes not yet due and payable. None of the Acquired
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. None of the Acquired Corporations has
been, and none of the Acquired Corporations will be, required to include any
adjustment in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code or any comparable provision under state or
foreign Tax laws as a result of transactions or events occurring, or accounting
methods employed, prior to the Closing. None
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of the Acquired Corporations is or has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code. No
Acquired Corporation has any liability for the taxes of any other Person.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has ever been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract (other than a Contract entered into in
the ordinary course of business in connection with the purchase or sale of
inventory or supplies).
2.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) The Company Disclosure Schedule identifies each salary, bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Company Plans")
sponsored, maintained, contributed to or required to be contributed to by any of
the Acquired Corporations for the benefit of any current or former employee of
any of the Acquired Corporations.
(b) Except as set forth in the Company Disclosure Schedule, none
of the Acquired Corporations maintains, sponsors or contributes to, and none of
the Acquired Corporations has at any time in the past maintained, sponsored or
contributed to a Pension Plan for the benefit of employees or former employees
of any of the Acquired Corporations.
(c) Except as set forth in the Company Disclosure Schedule, none
of the Acquired Corporations maintains, sponsors or contributes to any Welfare
Plan for the benefit of any employees or former employees of any of the Acquired
Corporations.
(d) With respect to each Company Plan, the Company has made
available to Parent: (i) an accurate and complete copy of such Company Plan
(including all amendments thereto); (ii) an accurate and complete copy of the
annual report, if required under ERISA, with respect to such Company Plan for
the last two plan years; (iii) an accurate and complete copy of the most recent
summary plan description, together with each summary of material modifications
thereto, if required under ERISA, with respect to such Company Plan, (iv) if
such Company Plan is funded through a trust or any third party funding vehicle,
an accurate and complete copy of the trust or other funding agreement (including
all amendments thereto); (v) accurate and complete copies of all Contracts
relating to such Company Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) an accurate and complete copy of the most
recent determination, opinion,
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notification or advisory letter received from the Internal Revenue Service with
respect to such Company Plan (if such Company Plan is intended to be qualified
under Section 401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been required
to be treated as a single employer with any Person under Section 4001(b)(1) of
ERISA or Section 414(b), (c), (m) or (o) of the Code other than an Acquired
Corporation. None of the Acquired Corporations has ever been a member of an
"affiliated service group" (within the meaning of Section 414(m) of the Code)
other than with another Acquired Corporation. None of the Acquired Corporations
has ever made a complete or partial withdrawal from a multiemployer plan, as
such term is defined in Section 3(37) of ERISA, resulting in "withdrawal
liability," as such term is defined in Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under either Section 4207 or
4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment
to create any Welfare Plan or any Pension Plan, or to modify or change any
existing Welfare Plan or Pension Plan (other than to comply with applicable law)
in a manner that would create any material liability for any of the Acquired
Corporations.
(g) No Company Plan provides death, medical or health benefits
coverage (whether or not insured) with respect to any current or former employee
of any of the Acquired Corporations after any such employee's termination of
service (other than (i) benefit coverage mandated by applicable law, including
coverage provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the most recent financial
statements included in the Company SEC filings, and (iii) benefits the full
costs of which are borne by current or former employees of any of the Acquired
Corporations (or the employees' beneficiaries)).
(h) With respect to any Company Plan constituting a group health
plan within the meaning of Section 4980B(g)(2) of the Code, the provisions of
Section 4980B of the Code ("COBRA") have been complied with in all material
respects. The Company Disclosure Schedule lists all qualified beneficiaries
under COBRA with respect to all such Company Plans.
(i) Each of the Company Plans has been operated and administered
in all material respects in accordance with applicable Legal Requirements,
including but not limited to ERISA and the Code.
(j) Each of the Company Plans intended to be qualified under
Section 401(a) of the Code has received a favorable determination, opinion,
notification or advisory letter from the Internal Revenue Service, and the
Company is not aware of any reason why any such letter should be revoked.
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(k) Except as set forth in the Company Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any payment (including any bonus, golden parachute or
severance payment) to any current or former employee or director of any of the
Acquired Corporations (whether or not under any Plan), or materially increase
the benefits payable under any Company Plan, or result in any acceleration of
the time of payment or vesting of any such benefits.
(l) The Company Disclosure Schedule contains a list of all
employees of each of the Acquired Corporations as of the date of this Agreement,
and correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. None of the Acquired Corporations is a party to any collective
bargaining contract or other Contract with a labor union involving any of its
employees. All of the employees of the Acquired Corporations are "at will"
employees.
(m) The Company Disclosure Schedule identifies each Employee who
is not fully available to perform work because of disability or other leave and
sets forth the basis of such leave and the anticipated date of return to full
service.
(n) Each of the Acquired Corporations is in compliance in all
material respects with all applicable Legal Requirements and Contracts relating
to employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters and the classification of
independent contractors and workers.
(o) Each of the Acquired Corporations has good labor relations,
and none of the Acquired Corporations has any knowledge indicating that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the labor relations of any of
the Acquired Corporations, or (ii) any of the employees of any of the Acquired
Corporations intends to terminate his or her employment with the Acquired
Corporation with which such employee is employed.
2.18 ENVIRONMENTAL MATTERS. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance with any Environmental Law, and, to the best of the knowledge of
the Company, there are no circumstances that may prevent or interfere with the
compliance by any of the Acquired Corporations with any Environmental Law in the
future. To the knowledge of the Company without further inquiry, no current or
prior owner of any property leased or controlled by any
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of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Government Body, citizens group, employee
or otherwise, that alleges that such current or prior owner or any of the
Acquired Corporations is not in compliance with any Environmental Law. To the
best of the knowledge of the Company, all property that is leased to, controlled
by or used by the Company, and all surface water, groundwater and soil
associated with or adjacent to such property is in clean and healthful condition
and is free of any material environmental contamination of any nature. None of
the Acquired Corporations has disposed of, emitted, discharged, handled, stored,
transported, used or released any Materials of Environmental Concern, arranged
for the disposal, discharge, storage or release of any Materials of
Environmental Concern, or exposed any employee or other individual to any
Materials of Environmental concern or condition so as to give rise to any
material liability or material corrective or remedial obligation under any
Environmental Laws. (For purposes of this Section 2.17 and 3.17: (i)
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern;
and (ii) "Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is now or hereafter regulated by any Environmental Law or
that is otherwise a danger to health, reproduction or the environment.)
2.19 INSURANCE. The Company has delivered to Parent a summary of all
material insurance policies and all material self insurance programs relating to
the business, assets and operations of the respective Acquired Corporations and
has made available to Parent copies of the policies. Each of such insurance
policies is in full force and effect. Since December 31, 1996, none of the
Acquired Corporations has received any notice or other communication regarding
any actual or possible (a) cancellation or invalidation of any insurance policy,
(b) refusal of any coverage or rejection of any material claim under any
insurance policy, or (c) material adjustment in the amount of the premiums
payable with respect to any insurance policy. Except as set forth in the Company
Disclosure Schedule, there is no pending claim (including any workers'
compensation claim) under or based upon any insurance policy of any of the
Acquired Corporations.
2.20 TRANSACTIONS WITH AFFILIATES.
(a) Except as set forth in the Company SEC Reports, since the date
of the Company's last proxy statement filed with the SEC, no event has occurred
that would be required to be reported by the Company pursuant to Item 404 of
Regulation S-K promulgated by the SEC. The Company Disclosure Schedule
identifies each Person who is an "affiliate" (as that term is used in Rule 145
under the Securities Act) of the Company as of the date of this Agreement.
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(b) The Company Disclosure Schedule contains an accurate and
complete list as of the date of this Agreement of all outstanding loans and
advances made by any of the Acquired Corporations to any employee, director,
consultant or independent contractor other than routine travel advances made to
employees in the ordinary course of business.
2.21 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Legal Proceeding, and (to the best of the
knowledge of the Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves any of the Acquired Corporations or any of the
assets owned or used by any of the Acquired Corporations; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement. To the best of the knowledge of the Company, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that could reasonably be expected to give rise to or serve as a basis
for the commencement of any such Legal Proceeding that would reasonably be
expected to have a Material Adverse Effect on any of the Acquired Corporations.
(b) There is no material order, writ, injunction, judgment or
decree to which any of the Acquired Corporations, or any of the assets owned or
used by any of the Acquired Corporations, is subject. To the best of the
knowledge of the Company, no officer or key employee of any of the Acquired
Corporations is subject to any order, writ, injunction, judgment or decree that
prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the business of any of the Acquired
Corporations.
2.22 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement. The Board of Directors of the Company (at a
meeting duly called and held) has (a) unanimously (among all directors present
at such meeting) determined that the Merger is advisable and fair and in the
best interests of the Company and its shareholders, (b) unanimously (among all
directors present) authorized and approved the execution, delivery and
performance of this Agreement by the Company and unanimously (among all
directors present) approved the Merger, and (c) unanimously (among all directors
present) recommended the approval of this Agreement and the Merger by the
holders of Company Common Stock and directed that this Agreement and the Merger
be submitted for consideration by the Company's shareholders at the Company
Shareholders' Meeting (as defined in Section 5.2). This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
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2.23 NO EXISTING DISCUSSIONS. None of the Acquired Corporations, and no
Representative of any of the Acquired Corporations, is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Proposal.
2.24 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Company Shareholders' Meeting (the "Required Company Shareholder Vote") is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement.
2.25 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the articles of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge the Merger or any
of the other transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations, or any
of the assets owned or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any of the Acquired Corporations or that otherwise relates to
the business of any of the Acquired Corporations or to any of the assets owned
or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or material
breach of, or result in a default (or an event which with notice or lapse of
time or both would become a default) under, any provision of any Company
Material Contract, or give any Person the right to (i) declare a default or
exercise any remedy under any such Company Material Contract, (ii) a rebate,
chargeback, penalty or change in delivery schedule under any such Company
Material Contract, (iii) accelerate the maturity or performance of any such
Company Material Contract, or (iv) cancel, terminate or materially modify any
term of such Company Material Contract; or
(e) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by any of the Acquired Corporations
(except for minor liens
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that will not, in any case or in the aggregate, materially detract from the
value of the assets subject thereto or materially impair the operations of any
of the Acquired Corporations).
Except as may be required by the Exchange Act, the CGCL, the HSR Act and the
NASD Bylaws (as they relate to the Form S-4 Registration Statement and the Joint
Proxy Statement) none of the Acquired Corporations was, is or will be required
to make any filing with or give any notice to, or to obtain any Consent from,
any Person in connection with (x) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, or (y)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement.
2.26 FAIRNESS OPINION. The Company's board of directors has received the
written opinion of Xxxxxx Brothers, Inc. ("Xxxxxx Brothers"), financial advisor
to the Company, dated the date of this Agreement, to the effect that the
consideration to be received by the shareholders of the Company in the Merger is
fair to the shareholders of the Company from a financial point of view. The
Company has furnished an accurate and complete copy of said written opinion to
Parent.
2.27 FINANCIAL ADVISOR. Except for Xxxxxx Brothers, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Acquired Corporations. The Company has furnished to Parent accurate
and complete copies of all agreements under which any such fees, commissions or
other amounts have been paid or may become payable and all indemnification and
other arrangements relating to the engagement of Xxxxxx Brothers.
2.28 FULL DISCLOSURE. This Agreement (including the Company Disclosure
Schedule) does not, and the certificate referred to in Section 6.6(c) will not,
(i) contain any representation, warranty or information that is false or
misleading with respect to any material fact, or (ii) omit to state any material
fact necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and information were
or will be made or provided) not false or misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that, except as
set forth in the disclosure schedule delivered by Parent to the Company prior to
the execution of this Agreement and signed by an executive officer of Parent
(the "Parent Disclosure Schedule"):
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3.1 DUE ORGANIZATION, SUBSIDIARIES, ETC.
(a) Parent has no Subsidiaries, except for the corporations
identified in the Parent Disclosure Schedule; and neither Parent nor any of the
other corporations identified in the Parent Disclosure Schedule owns any capital
stock of, or any equity interest of any nature in, any other Entity other than
the Entities identified in the Parent Disclosure Schedule. (Parent and each of
its Subsidiaries are collectively referred to as the "Parent Corporations").
None of the Parent Corporations has agreed or is obligated to make or is bound
by any Contract under which it is obligated to make, any future investment in or
capital contribution to any other Entity. None of the Parent Corporations has,
at any time, been a general partner of any general partnership, limited
partnership, or other Entity.
(b) Each of the Parent Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own, lease and use assets in the manner in which its assets
are currently owned, leased and used; and (iii) to perform its obligations under
all contracts by which it is bound.
(c) Each of the Parent Corporations is qualified to do business as
foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification
except in jurisdictions where the failure to so qualify, individually and in the
aggregate, would not have a Material Adverse Effect.
(d) Parent or Merger Sub has not conducted any business under or
otherwise used, for any purpose or in any jurisdiction , any fictitious name,
assumed name, trade name, or other name, other than the name "Arris
Pharmaceutical Corporation", and in the case of Parent's Subsidiaries, other
than the names "Arris Protease, Inc.", "Arris Pharmaceuticals Canada, Inc.", or
"Beagle Acquisition Sub, Inc.", "Khepri Pharmaceuticals, Inc." and "Khepri
Pharmaceuticals Canada, Inc.".
3.2 CERTIFICATE/ARTICLES OF INCORPORATION AND BYLAWS. Parent has
delivered to the Company complete and accurate copies of the
Certificate/Articles of Incorporation, Bylaws, and other charter and
organizational documents of the respective Parent Corporations, including all
amendments thereto.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: Thirty
Million (30,000,000) shares of Parent Common Stock, par value $0.001, of which,
as of October 30, 1997 15,164,260 shares were issued and outstanding. No shares
were held by Parent in its treasury; and Ten Million (10,000,000) shares of
preferred stock, par value $0.001, none of which are issued and outstanding or
are held by the Parent in its treasury. All of the outstanding
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shares of Parent Common Stock have been duly authorized and validly issued, and
are fully paid and nonassessable. Except as set forth in the Parent Disclosure
Schedule: (i) none of the outstanding shares of Parent Common Stock is entitled
or subject to any preemptive right, right of participation in future financings,
right to maintain a percentage ownership position, or any similar right; (ii)
none of the outstanding shares of Parent Common Stock is subject to any right of
first refusal in favor of the Parent; and (iii) there is no Parent Corporation
Contract relating to the voting or registration of, or restricting any Person
from purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any shares of Parent Common Stock.
None of the Parent Corporations is under any obligation, or is bound by any
Contract pursuant to which it may become obligated, to repurchase, redeem or
otherwise acquire any outstanding shares of Parent Common Stock or any other
securities of any Parent Corporation. The authorized capital of Merger Sub
consists of 1,000 shares of Common Stock, par value $.001 per share, 100 shares
of which are issued and outstanding and are held beneficially and of record, by
Parent.
(b) As of October 31, 1997: (i) 256,414 shares of Parent Common
Stock are reserved for future issuance pursuant to stock options granted and
outstanding under Parent's 1997 Non-Officer Equity Incentive Plan; (ii)
1,615,038 shares Parent Common Stock are reserved for future issuance pursuant
to stock options granted and outstanding under Parent's 1989 Stock Plan; (iii)
50,807 shares of Parent Common Stock are reserved for future issuance under
Parent's 1993 Employee Stock Purchase Plan (the "Parent ESPP"); (iv) 125,000
shares of Parent Common Stock are reserved for future issuance pursuant to stock
options granted and outstanding under Parent's 1994 Non-Employee Directors'
Stock Option Plan; (v) 4,350 shares of Parent Common Stock are reserved for
future issuance pursuant to stock options granted and outstanding under Parent's
1993 Employee Stock Bonus Plan; and (vi) 45,886 shares are reserved for future
issuance pursuant to stock options granted and outstanding under Parent's 1993
Khepri Stock Option Plan. (Stock options granted by Parent pursuant to the 1997
Non- Officer Equity Incentive Plan, the 1989 Stock Plan, the 1994 Non-Employee
Directors' Stock Option Plan, the 1993 Employee Stock Bonus Plan and the 1993
Khepri Stock Option Plan are referred to in this Agreement as "Parent Options.")
The Parent Disclosure Schedule sets forth the following information with respect
to each Parent Option outstanding as of the date of this Agreement: (i) the
particular plan pursuant to which such Parent Option was granted; (ii) the name
of the optionee; (iii) the number of shares of Parent Common Stock subject to
such Parent Option; (iv) the exercise price of such Parent Option; (v) the date
on which such Parent Option was granted; (vi) the applicable vesting schedules,
and the extent to which such Parent Option is vested and exercisable as of
October 30, 1997; and (vii) the date on which such Parent Option expires. Parent
has delivered to the Company accurate and complete copies of all stock option
plans and forms of option grant pursuant to which Parent has granted any
outstanding stock options. The Parent Disclosure Schedule sets forth the
following information with respect to each outstanding warrant to purchase
Parent Common Stock: (1) the name of the holder of such warrant; (2) the number
of shares of Parent Common Stock subject to such warrant; (3) the exercise price
of such warrant; (4) the date on which such warrant was issued; (5) the
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conditions, if any, limiting exercise of such warrant; and (6) the date on which
such warrant expires. Parent has delivered to the Company an accurate and
complete copy of each such warrant.
(c) Except as set forth in the Parent Disclosure Schedule there is
no: (i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of Parent or any other Parent Corporation; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of Parent or any other
Parent Corporation; (iii) stockholder rights plan (or similar plan commonly
referred to as a "poison pill") or Contract under which Parent or any other
Parent Corporation is or may become obligated to sell or otherwise issue any
shares of its capital stock or any other securities; or (iv) condition or
circumstance that may reasonably give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of Parent or
any other Parent Corporation. There are no bonds, debentures, notes or other
indebtedness of the Parent outstanding having the right to vote (or convertible
into Securities having the right to vote) on any matters on which the
shareholders of the Parent have the right to vote.
(d) All outstanding securities of all of the Parent Corporations,
including shares of Parent Common Stock, all outstanding Parent Options, all
outstanding warrants to purchase Parent Common Stock, all outstanding rights
under the Parent ESPP and all outstanding shares of capital stock of each
subsidiary of the Company have been issued and granted in all material respects
in compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of the Parent
Corporations have been duly authorized and are validly issued, are fully paid
and nonassessable and (other than the capital stock of Parent) are owned
beneficially and of record by Parent, free and clear of any Encumbrances.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has listed on the Parent Disclosure Schedule and has
made available to the Company accurate and complete copies (excluding copies of
exhibits) of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by Parent with the SEC since
January 1, 1996 (the "Parent SEC Documents"). All statements, reports,
schedules, forms and other documents required to have been filed by Parent with
the SEC have been so filed. As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each of the Parent SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted
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to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The consolidated financial statements (including any related
notes) contained in the Parent SEC Documents: (i) complied as to form in all
material respects with the published rules and regulations of the SEC applicable
thereto; (ii) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements and, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end audit adjustments which will not, individually or
in the aggregate, be material in amount); and (iii) fairly present the
consolidated financial position of Parent and its Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of Parent and its Subsidiaries for the periods covered thereby.
(c) Since June 30, 1997, Parent and its subsidiaries have not
incurred any liabilities of the type required under GAAP to be recorded on a
balance sheet or in the footnotes thereto except liabilities incurred in the
ordinary course of business.
3.5 ABSENCE OF CHANGES. Since December 31, 1996:
(a) there has not been any Material Adverse Change in the
business, condition, capitalization, assets, liabilities, operations or
financial performance of the Parent Corporations, and no event has occurred that
could reasonably be expected to have a Material Adverse Effect on the Parent
Corporations;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the assets of the Parent
Corporations (whether or not covered by insurance);
(c) there has not been any transaction, commitment, or other event
or condition (financial or otherwise) which would be prohibited by Section
4.3(b)(i), (iv), (ix), (x) or (xi) if it were to be effected, accepted or were
to take place between the date hereof and the effective time.
3.6 TITLE TO ASSETS. Except as set forth in the Parent Disclosure
Schedule, the Parent Corporations own, and have good, valid and marketable title
to, all assets purported to be owned by them, including: all assets reflected in
its books and records as being owned by the Parent Corporations. All of said
assets are owned by the Parent Corporations free and clear of any Encumbrances,
except for (a) any lien for current taxes not yet due and payable, (b) minor
liens that have arisen in the ordinary course of business and that do not (in
any case or in the aggregate) materially detract from the value of the assets
subject thereto or materially impair the
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operations of any of the Parent Corporations, and (c) liens described in the
Parent Disclosure Schedule.
3.7 PAYMENTS UNDER CORPORATE PARTNERING AGREEMENTS. All amounts charged
to Amgen, Inc., Xxxxx XX, Pharmacia & Upjohn, Inc., Merck & Co., Inc.,
SmithKline Xxxxxxx Corporation and Xxxxxx Laboratories (the "Parent Corporate
Partners") for reimbursement or payments in accordance with the agreements
between Parent and such Persons represent amounts due to Parent under the terms
of such agreements for actual work or services performed or, in the case of
advance payments, work or services to be performed, or milestones met.
(a) Parent has received all amounts that are owed and due to be
paid to Parent under such agreements prior to the date of this Agreement. For
each such payment received by Parent under any such agreement, any revenue that
Parent recognized with respect to such payment was recognized in accordance with
generally accepted accounting principles.
(b) The Parent Disclosure Schedule identifies all facts of which
Parent has knowledge that a Parent Corporate Partner is considering, intending
or planning to terminate any of the agreements between any such Parent Corporate
Partner and Parent, or any research program under such agreement.
(c) Parent has not terminated or made a decision to terminate its
research and development program with respect to APC-366 or APC 1390 (the "APC
Products"). To the knowledge of Parent, to the extent it has the ability to
terminate clinical development of the APC Products, Xxxxx XX has not terminated
or made a decision to terminate clinical development of the APC Products.
3.8 REAL PROPERTY; EQUIPMENT; LEASEHOLD.
(a) None of the Parent Corporations owns any real property or any
interest in real property, except for the leasehold created under real property
leases set forth in the Parent Disclosure Schedule. Complete and correct copies
of such leases have previously been delivered to the Company by Parent.
(b) All material items of equipment and other tangible assets
owned by or leased to the Parent Corporations are reasonably adequate for the
uses to which they are being put, are in good condition and repair (ordinary
wear and tear excepted) and are reasonably adequate for the conduct of the
business of the Parent Corporations in the manner in which such business is
currently being conducted and in the manner in which such business is required
to be conducted pursuant to Contracts to which the Company is a party and which
are in effect on the date hereof.
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3.9 PROPRIETARY ASSETS.
(a) The Parent Disclosure Schedule sets forth, with respect to
each Proprietary Asset owned by the Parent Corporations and registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. The Parent Disclosure Schedule identifies and provides a brief
description of, and identifies any ongoing royalty or payment obligations in
excess of $25,000 per year with respect to each Proprietary Asset that is
licensed or otherwise made available to the Parent Corporations by any Person
(except for any Proprietary Asset that is licensed to the Parent Corporations
under any third party software license generally available to the public), and
identifies the Contract under which such Proprietary Asset is being licensed or
otherwise made available to such Parent Corporation. Excluding the payments
required under the Parent Corporation Contracts set forth in the Parent
Disclosure Schedule, the aggregate amounts payable by the Parent Corporations
for ongoing royalty or license payments do not exceed $75,000 per year. The
Parent Corporations have good, valid and marketable title to all of the Parent
Corporation Proprietary Assets (except for licensed assets), free and clear of
all Encumbrances, except for (i) any lien for current taxes not yet due and
payable, and (ii) minor liens that have arisen in the ordinary course of
business and that do not (individually or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the operations
of any of the Parent Corporations. The Parent Corporations have a valid right to
use, license and otherwise exploit all Parent Corporation Proprietary Assets.
Except as set forth in the Parent Disclosure Schedule, none of the Parent
Corporations has developed jointly with any other Person any Parent Corporation
Proprietary Asset that is material to the business of the Parent Corporations
with respect to which such other Person has any rights. Except as set forth in
the Parent Disclosure Schedule, there is no Parent Corporation Contract pursuant
to which any Person has any right (whether or not currently exercisable) to use,
license or otherwise exploit any Parent Corporation Proprietary Asset.
(b) The Parent Corporations have taken all reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value of
all Parent Corporation Proprietary Assets (except Parent Proprietary Assets
whose value would be unimpaired by disclosure). Except where the failure to
obtain such agreements would not impair the value of any Parent Proprietary
Asset, the Parent Corporations have obtained, from all current and former
employees of the Parent Corporations and from all current and former consultants
and independent contractors to the Parent Corporations, signed agreements
appropriately restricting the use and disclosure of the Parent Proprietary
Assets, and providing for assignment to the Parent Corporations of the Parent
Proprietary Assets developed by such employees and consultants.
(c) To the best of the knowledge of Parent: (i) all patents,
patent applications, trademarks, service marks and copyrights held by any of the
Parent Corporations were filed and were and have been prosecuted in good faith
and in compliance with all applicable Legal
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Requirements; (ii) there has not been any claim, action or proceeding, and there
is no pending or threatened claim, action or proceeding relating to any
registration or filing of a Parent Proprietary Asset; (iii) none of the Parent
Corporation Proprietary Assets infringes, misappropriates or conflicts with any
Proprietary Asset owned or used by any other Person; (iv) none of the products
that are being or have been designed, created, developed, assembled,
manufactured or sold by any of the Parent Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Parent Corporations has received any notice or other communication
(in writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; (v) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Parent Corporation Proprietary Asset.
(d) The Parent Corporation Proprietary Assets constitute all of
the Proprietary Assets reasonably necessary to enable the Parent Corporations to
conduct their business in the manner in which such businesses have been and are
being conducted and in the manner in which such businesses are required to be
conducted pursuant to Contracts to which Parent is a party and which are in
effect on the date hereof. Except as set forth in the Parent Disclosure
Schedule, none of the Parent Corporations has (i) licensed any of the material
Parent Corporation Proprietary Assets to any Person on an exclusive basis, or
(ii) entered into any covenant not to compete or Contract limiting its ability
to exploit fully any material Parent Corporation Proprietary Assets or to
transact business in any market or geographical area or with any Person.
3.10 MATERIAL CONTRACTS.
(a) The Parent Disclosure Schedule identifies each Parent
Corporation Contract that constitutes a "Parent Material Contract." For purposes
of this Agreement, each of the following shall be deemed to constitute a "Parent
Material Contract":
(i) any Contract relating to the employment of, or the
performance of services by, any employee or consultant, and any Contract
pursuant to which any of the Parent Corporations is or may become
obligated to make any severance, termination, bonus or relocation payment
or any other payment (other than payments in respect of salary and the
grant of standard benefits);
(ii) any Contract relating to the acquisition, transfer,
development, sharing or license of any Proprietary Asset (except for any
Contract pursuant to which any Proprietary Asset is licensed to the Parent
Corporation under any third party software license generally available to
the public);
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(iii) any Contract which provides for indemnification of any
officer, director, employee or agent;
(iv) any Contract imposing any restriction on the right or
ability of Parent (A) to compete with any other Person, (B) to acquire any
product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or
to transact business or deal in any other manner with any other Person, or
(C) to develop or distribute any technology;
(v) any Contract (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, (B) providing
any Person with any preemptive right, right of participation, right of
maintenance or any similar right with respect to any securities, or (C)
providing the Company with any right of first refusal with respect to, or
right to repurchase or redeem, any securities;
(vi) any Contract requiring that Parent give any notice,
obtain any consent or provide any information to any Person prior to
accepting any Acquisition Proposal;
(vii) any Contract (not otherwise identified in this Section)
that (A) has a term of more than 60 days or that may not be terminated by
a Parent Corporation (without penalty) within 60 days after the delivery
of a termination notice by such Parent Corporation and (B) that
contemplates or involves (I) the payment or delivery of cash or other
consideration on or after the date hereof in an amount or having a value
in excess of $50,000 in aggregate payments under such Contract, or (II)
the performance of services on or after the date hereof having a value in
excess of $50,000 in aggregate payments under such Contract;
(viii) any Contract (A) to which any Governmental Body is a
party or under which any Governmental Body has any rights or obligations,
or involving or directly or indirectly benefiting any Governmental Body
(including any subcontract or other Contract between the Company and any
contractor or subcontractor to any Governmental Body) and (B) that
contemplates and involves (I) the payment or delivery of cash or other
consideration on or after the date hereof in an amount or having a value
in excess of $50,000 in aggregate payments under such Contract, or (B) the
performance of services on or after the date hereof having a value in
excess of $50,000 in aggregate payments under such Contract;
(ix) any open purchase order placed by a Parent Corporation
requiring future aggregate payments in excess of $25,000;
(x) any Contract (not otherwise identified in this Section)
that could reasonably be expected to have a material effect on the
business, condition, assets, liabilities, capitalization assets,
liabilities, operations, or financial performance of any of
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the Parent Corporations or to any of the transactions contemplated by this
Agreement; and
(xi) any other Contract (not otherwise identified in this
Section), if a breach of such Contract could reasonably be expected to
have a Material Adverse Effect on any of the Parent Corporations.
(b) Each Parent Contract that constitutes a Parent Material
Contract is valid and in full force and effect, and is enforceable in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
The aggregate amount payable by the Parent Corporations under Contracts that
would be Parent Material Contracts but for the limitations of Sections
3.10(a)(vii)(B) or 3.10(a)(viii)(B) do not exceed $500,000. The aggregate amount
payable by the Parent Corporations under purchase orders not listed on Part 3.10
of the Parent Disclosure Schedule does not exceed $500,000.
(c) Except as set forth in the Parent Disclosure Schedule: (i)
none of the Parent Corporations has materially violated or breached, or
committed any material default under, any Parent Material Contract, and, to the
best of the knowledge of Parent, no other Person has materially violated or
breached, or committed any material default under, any Parent Material Contract;
(ii) to the best of the knowledge of Parent, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
could reasonably be expected to (A) result in a material violation or breach of
any of the provisions of any Parent Material Contract, (B) give any Person the
right to declare a default or exercise any remedy under any Parent Material
Contract, (C) give any Person the right to a rebate, chargeback, penalty or
change in delivery schedule under any Parent Material Contract, (D) give any
Person the right to accelerate the maturity or performance of any Parent
Material Contract, or (E) give any Person the right to cancel, terminate or
materially modify any Parent Material Contract; (iii) since January 1, 1996,
none of the Parent Corporations has received any written notice or other written
communication regarding any actual or possible violation or breach of, default
under, or any intention to terminate, any Parent Corporation Contract, except
for communication (A) that has subsequently been revoked; or (B) has been
received from a complaining party that has not contacted Parent or otherwise, to
Parent's knowledge, taken any action with respect to such party's complaint for
a period of more than six months following receipt of the communication; and
(iv) none of the Parent Corporations has waived any of its material rights under
any Parent Material Contract.
(d) To the best of the knowledge of Parent, no Person is
renegotiating, or has the right to renegotiate, any material amount paid or
payable to the Parent Corporations under any Parent Material Contract, or any
other material term or provision of any Parent Material Contract, including
termination provisions.
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(e) The Parent Material Contracts and other Contracts of the
Parent Corporations collectively constitute all of the Contracts necessary to
enable the Parent Corporations to conduct their respective businesses in the
manner in which their businesses are currently being conducted and in the manner
in which such business is required to be conducted pursuant to Contracts to
which Parent is a party and which are in effect on the date hereof.
(f) The Parent Disclosure Schedule sets forth a list of all claims
made under any Parent Material Contract which are disputed or, to Parent's
knowledge, where a dispute has been threatened.
3.11 LIABILITIES. None of the Parent Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles, and whether due or to become
due), except for: (a) liabilities identified as such in the financial statements
in the Parent SEC Documents; (b) normal and recurring liabilities that have been
incurred by the Parent Corporations since December 31, 1996 in the ordinary
course of business and consistent with past practices; and (c) other liabilities
which have not had and could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on Parent
Corporations.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Parent Corporations
is, and has at all times since inception, been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and could not reasonably be expected to have, a
Material Adverse Effect on the Parent Corporations. Since inception, none of the
Parent Corporations has received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any material Legal Requirement.
3.13 CERTAIN BUSINESS PRACTICES. None of the parent corporations nor any
director, officer, agent or employee of any of the Parent Corporations has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
3.14 GOVERNMENTAL AUTHORIZATIONS. The Parent Corporations hold all
material Governmental Authorizations necessary to enable it to conduct their
respective businesses in the manner in which such businesses are currently being
conducted. All such Governmental Authorizations are valid and in full force and
effect. Each Parent Corporation is, and at all times since inception has been,
in substantial compliance with the terms and requirements of such Governmental
Authorizations. Since inception, none of the Parent Corporations has received
any notice or other communication from any Governmental Body regarding (a) any
actual or possible violation of or failure to comply with any term or
requirement of any material
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Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization or (c) any requirement to apply for or hold
a Governmental Authorization not held by any Acquired Corporation.
3.15 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
respective Parent Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "Parent Corporation
Returns") have been or will be filed on or before the applicable due date
(including any extensions of such due date). All amounts shown on the Parent
Returns to be due on or before the Closing Date have been or will be paid on or
before the Closing Date.
(b) The Parent Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. Each Parent
Corporation will establish, in the ordinary course of business and consistent
with its past practices, quarterly reserves adequate for the payment of all
Taxes for the applicable periods from December 31, 1996 through the Closing
Date. Since January 1, 1997 no material Tax liability has been incurred other
than in the ordinary course of business.
(c) Except as set forth in the Parent Disclosure Schedule, no
Parent Corporation Return has ever been examined or audited by any Governmental
Body. No extension or waiver of the limitation period applicable to any of the
Parent Corporation Returns has been granted (by Parent or any other Person), and
no such extension or waiver has been requested from Parent Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of Parent, has been threatened against or with respect to any Parent
Corporation in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by any Parent Corporation (other than liabilities for
Taxes asserted under any such notice of deficiency or similar document which are
being contested in good faith by the Parent Corporation and with respect to
which adequate reserves for payment have been established). There are no liens
for Taxes upon any of the assets of any of the Parent Corporations except liens
for current Taxes not yet due and payable. None of the Parent Corporations has
entered into or become bound by any agreement or consent pursuant to Section
341(f) of the Code. None of the Parent Corporations has been, and none of the
Parent Corporations will be required to include any adjustment in taxable income
for any tax period (or portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing. None of the Parent Corporations is nor has been a United States
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real property holding corporation within the meaning of Section 847(c)(2) of the
Code. No Parent Corporation has liabilities for the Taxes of any other Person.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Parent Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Parent Corporations is, or has ever been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract (other than a Contract entered into in
the ordinary course of business in connection with the purchase or sale of
inventory or supplies.)
3.16 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Parent has made available to the Company: accurate and
complete copies of each of its salary, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, termination pay,
hospitalization, medical, life or other insurance, supplemental unemployment
benefit, profit-sharing, pension or retirement plan, program or agreement
(including all amendments thereto) (collectively, the "Parent Plans").
(b) No Parent Corporation is or has been, required to be treated
as a single employer with any other Person under Section 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code. No Parent Corporation has at any
time been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. No Parent Corporation has at any time made a
complete or partial withdrawal from a multiemployer plan, as such term is
defined in Section 3(37) of ERISA, resulting in "withdrawal liability," as such
term is defined in Section 4201 of ERISA (without regard to subsequent reduction
or waiver of such liability under either Section 4207 or 4208 of ERISA).
(c) Parent has no plan or commitment to create any Welfare Plan or
any additional Pension Plan, or to modify or change any existing Pension Plan
(other than to comply with applicable law) in a manner that would create any
material liability for any of the Parent Corporations.
(d) No Parent Plan provides death, medical or health benefits
coverage (whether or not insured) with respect to any of its current or former
employees after any such employee's termination of service (other than (i)
benefit coverage mandated by applicable law, including coverage provided
pursuant to Section 4980B of the Code, (ii) deferred compensation benefits
accrued as liabilities on the most recent financial statements included in the
Company SEC filings, and (iii) benefits the full cost of which are borne by such
current or former employees (or the employees' beneficiaries)).
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(e) With respect to any Parent Plan constituting a group health
plan within the meaning of Section 4980B(g)(2) of the Code, the provisions of
Section 4980B of the Code ("COBRA") have been complied with in all material
respects.
(f) Each of the Parent Plans has been operated and administered in
all material respects in accordance with applicable Legal Requirements,
including but not limited to ERISA and the Code.
(g) Each of the Parent Plans intended to be qualified under
Section 401(a) of the Code has received a favorable determination, opinion,
notification or advisory letter from the Internal Revenue Service, and Parent is
not aware of any reason why any such letter should be revoked.
(h) Neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any payment (including any bonus,
golden parachute or severance payment) to any of Parent's current or former
employees or directors (whether or not under any Parent Plan), or materially
increase the benefits payable under any Parent Plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
(i) Parent is not a party to any collective bargaining contract or
other Contract with a labor union involving any of its employees. All of
Parent's employees are "at will" employees.
(j) Each Parent Corporation is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters and the classification of
independent contractors and workers.
(k) Each Parent Corporation has good labor relations and has no
knowledge indicating that the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on Parent's labor relations.
3.17 ENVIRONMENTAL MATTERS. Each of the Parent Corporations is in
compliance in all material respects with all applicable Environmental Laws (as
defined in Section 2.18 hereto), which compliance includes the possession by
each of the Parent Corporations of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. None of the Parent Corporations has received
any notice or other communication (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that any
of the Parent Corporations is not in compliance with any Environmental Law, and,
to the best of the knowledge of Parent, there are no circumstances that may
prevent or interfere with the compliance by any of the Parent Corporations with
any Environmental Law in the future. To the knowledge of Parent
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without further inquiry, no current or prior owner of any property leased or
controlled by any of the Parent Corporations has received any notice or other
communications (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or any of the Parent Corporations is not in compliance with any
Environmental Law. To the best of the knowledge of Parent, all property that is
leased to, controlled by or used by Parent, and all surface water, groundwater
and soil associated with or adjacent to such property is in clean and healthful
condition and is free of any material environmental contamination of any nature.
None of the Parent Corporations has disposed of, emitted, discharged, handled,
stored, transported, used or released any Materials of Environmental Concern,
arranged for the disposal, discharge, storage or release of any Materials of
Environmental concern, or exposed any employee or other individual to any
Materials of Environmental Concern or condition so as to give rise to any
material liability or material corrective or remedial obligation under any
Environmental Laws.
3.18 INSURANCE. Parent has delivered to the Company a summary of all
material insurance policies and all material self insurance programs relating to
the business, assets and operations of the respective Parent Corporations and
has made available to the Company copies of the polices. Each of such insurance
policies is in full force and effect. Since December 31, 1996, none of the
Parent Corporations has received any notice or other communication regarding any
actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any material claim under any insurance
policy, or (c) material adjustment in the amount of the premiums payable with
respect to any insurance policy. Except as set forth in the Parent Disclosure
Schedule, there is no pending claim (including any workers' compensation claim)
under or based upon any insurance policy of any of the Parent Corporations.
3.19 TRANSACTIONS WITH AFFILIATES.
(a) Except as set forth in the Company SEC Reports, since the date
of the Company's last proxy statement filed with the SEC, no event has occurred
that would be required to be reported by the Company pursuant to Item 404 of
Regulation S-K promulgated by the SEC. The Parent Disclosure Schedule identifies
each Person who is an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of Parent and who beneficially owns more than one percent of the
outstanding voting capital of parent as of the date of this Agreement.
(b) The Parent Disclosure Schedule contains an accurate and
complete list as of the date of this Agreement of all outstanding loans and
advances made by any of the Parent Corporations to any employee, director,
consultant or independent contractor other than routine travel advances made to
employees in the ordinary course of business.
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3.20 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Legal Proceeding, and (to the best of the
knowledge of Parent) no Person has threatened to commence any Legal Proceeding:
(i) that involves Parent or any of the assets owned or used by Parent or any of
the Parent Corporations; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the best of
the knowledge of Parent, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that could reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding
that would reasonably be expected to have a Material Adverse Effect on Parent
Corporations.
(b) There is no material order, writ, injunction, judgment or
decree to which any of the Parent Corporations, or any of the assets owned or
used by any of the Parent Corporations, is subject. To the best of the knowledge
of any of the Parent Corporations, no officer or key employee of the Parent
Corporations is subject to any order, writ, injunction, judgment or decree that
prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the business of any of the Parent
Corporations.
3.21 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to enter into and to
perform their respective obligations under this Agreement. The Board of
Directors of Parent (at a meeting duly called and held) has (a) unanimously
(among all directors present at such meeting) determined that the Merger is
advisable and fair and in the best interests of Parent and its shareholders, (b)
unanimously (among all directors present) authorized and approved the execution,
delivery and performance of this Agreement by Parent and unanimously (among all
directors present) approved the Merger as sole shareholder of Merger Sub, and
(c) unanimously (among all directors present) recommended the approval of the
issuance of Parent Common Stock in the Merger by the holders of Parent Common
Stock and directed that such issuance be submitted for consideration by Parent's
stockholders at the Parent Stockholders' Meeting (as defined in Section 5.3);
and the Board of Directors of Merger Sub has duly authorized by all necessary
action the execution, delivery and performance by Merger Sub of this Agreement.
This Agreement constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.22 NO EXISTING DISCUSSIONS. None of the Parent Corporations, and no
Representative of any of the Parent Corporations, is engaged, directly or
indirectly, in any discussions or negotiations with any other Person relating to
any Acquisition Proposal.
3.23 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of Parent Common Stock present in Person or represented by proxy at a
meeting of the Parent
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stockholders and entitled to vote approving the issuance of Parent Common Stock
in the Merger and of the holders of a majority of the outstanding shares of
Parent Common Stock approving a related increase to the number of authorized
shares of Parent Common Stock (collectively, the "Required Parent Stockholder
Vote"), is the only vote of the holders of any class or series of the Parent's
capital stock necessary to approve the issuance of Parent Common Stock in the
Merger.
3.24 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the certificate of incorporation, bylaws or other charter
or organizational documents of any of the Parent Corporations, or (ii) any
resolution adopted by the stockholders, the board of directors or any committee
of the board of directors of any of the Parent Corporations;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge the Merger or any
of the other transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Parent Corporations, or any
of the assets owned or used by any of the Parent Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Parent or that otherwise relates to Parent's business or to any
of the assets owned or used by any of the Parent Corporations;
(d) contravene, conflict with or result in a violation or material
breach of, or result in a default (or an event which with notice or lapse of
time or both would become a default) under, any provision of any Parent Contract
that is or would constitute a Parent Material Contract, or give any Person the
right to (i) declare a default or exercise any remedy under any such Parent
Material Contract, (ii) a rebate, chargeback, penalty or change in delivery
schedule under any such Parent Material Contract, (iii) accelerate the maturity
or performance of any such Parent Material Contract, or (iv) cancel, terminate
or materially modify any term of such Parent Material Contract; or
(e) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by any of the Parent Corporations
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Parent Corporations).
Except as may be required by the Exchange Act, the DGCL, the HSR Act and the
NASD Bylaws (as they relate to the Form S-4 Registration Statement and the Joint
Proxy Statement)
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none of the Parent Corporations was, is or will be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
3.25 FAIRNESS OPINION. Parent's board of directors has received the
written opinion of Xxxxxx Xxxxxxx, financial advisor to Parent, dated October
31, 1997, to the effect that the Exchange Ratio is fair to Parent from a
financial point of view. Parent has furnished an accurate and complete copy of
said written opinion to the Company.
3.26 VALID ISSUANCE. The Parent Common Stock to be issued in the Merger
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.27 FINANCIAL ADVISOR. Except for Xxxxxx Xxxxxxx, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Parent Corporations. Parent has furnished to Company accurate and complete
copies of all agreements under which any such fees, commissions, or other
amounts have been paid or may become payable and all indemnification and other
arrangements relating to the engagement of Xxxxxx Xxxxxxx.
3.28 FULL DISCLOSURE. This Agreement (including the Parent Disclosure
Schedule) does not, and the certificate referred to in Section 7.5(c) will not,
(i) contain any representation, warranty or information that is false or
misleading with respect to any material fact, or (ii) omit to state any material
fact necessary in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and information were
or will be made or provided) not false or misleading.
SECTION 4. CERTAIN COVENANTS OF THE PARTIES
4.1 ACCESS AND INVESTIGATION.
(a) During the period from the date of this Agreement through the
Effective Time (the "Pre-Closing Period"), the Company and Parent each shall,
and the Company and Parent shall cause the respective Representatives of the
Acquired Corporations and the Parent Corporations to: (a) provide each other and
their respective Representatives with reasonable access to each others' and
their Subsidiaries' respective Representatives, personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to each other and to their Subsidiaries; and (b) provide
each other and their respective Representatives with such copies of the existing
books, records, Tax Returns, work
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papers and other documents and information relating to each other and their
Subsidiaries, and with such additional financial, operating and other data and
information regarding each other and their Subsidiaries, as Parent and the
Company may reasonably request.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall ensure
that each of the Acquired Corporations conducts its business and operations (A)
in the ordinary course and in accordance with past practices or the operating
plan previously delivered by the Company to Parent and (B) in compliance with
all applicable Legal Requirements and the requirements of all Acquired Company
Contracts that constitute Material Contracts; (ii) the Company shall use all
reasonable efforts to ensure that each of the Acquired Corporations preserves
intact its current business organization, keeps available the services of its
current officers and employees and maintains its relations and goodwill with all
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with the respective Acquired
Corporations; (iii) the Company shall keep in full force all insurance policies
referred to in Section 2.18 or replace any such policies that terminate with
comparable or superior policies; (iv) the Company shall provide all notices,
assurances and support required by any Acquired Corporation Contract relating to
any Proprietary Asset in order to ensure that no condition under such Acquired
Corporation Contract occurs which could result in, or could increase the
likelihood of, any transfer or public disclosure by any Acquired Corporation of
any Proprietary Asset; and (v) the Company shall (to the extent requested by
Parent) cause its officers to report regularly to Parent concerning the status
of the Company's business.
(b) During the Pre-Closing Period, the Company shall not (without
the prior written consent of Parent), and shall not permit any of the other
Acquired Corporations to:
(i) declare, accrue, set aside or pay any dividend or make
any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities, except for repurchases at less than fair market value
pursuant to employment or consulting agreements in effect prior to the
date hereof;
(ii) hire any new employees except employees hired to fill
those positions identified on a schedule (the "New Company Employee
Schedule") previously provided to Parent or employees hired to replace
employees who terminate their employment with an Acquired Corporation
during the Pre-Closing Period (the "New Company Employees");
(iii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock or other security (except Company Common Stock upon
the valid exercise of Company Options or Company warrants outstanding on
the date of this Agreement or the Exercise of Rights under the ESPP), (B)
any option, call, warrant or right to acquire any capital stock or other
security (other than options to purchase an aggregate of up to
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30,000 shares of Company Common Stock which may be granted to New Company
Employees who are not director-level or above and to current employees in
connection with promotions made by the Company's management prior to the
date of this Agreement), or (C) any instrument convertible into or
exchangeable for any capital stock or other security; provided, however,
that notwithstanding the foregoing, (x) the Company may issue up to
$2,000,000 of its Common Stock to Xxxxxx-Xxxxxxx Company pursuant to an
agreement with Xxxxxx-Xxxxxxx Company, (y) the Company may also issue
additional shares of its Common Stock to Boehringer-Ingelheim
International GmbH pursuant to certain stock purchase rights allowing
Boehringer- Ingelheim International GmbH in this instance to purchase 5.8%
of the total number of new securities being issued to Xxxxxx-Xxxxxxx
Company and Boehringer-Ingelheim International GmbH collectively and (z)
issue additional shares of Common Stock to Corange International Ltd.
("Corange") pursuant to Section 2.2(ii) of the Collaborative Research
Agreement between the Company and Corange dated as of June 30, 1995 (the
"Corange Agreement");
(iv) except as contemplated by this Agreement, amend or waive
any of its rights under, or accelerate the vesting under, any provision of
any of the Company's stock option plans (other than acceleration of the
vesting of options in connection with employee terminations involving, in
the aggregate, options to purchase no more than 7,500 shares of Company
Common Stock), any provision of any agreement evidencing any outstanding
stock option or any restricted stock purchase agreement, or otherwise
modify any of the terms of any outstanding option, warrant or other
security or any related Contract;
(v) amend or permit the adoption of any amendment to its
articles of incorporation or bylaws or other charter or organizational
documents, or effect or become a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(vi) form any Subsidiary or acquire any equity interest or
other interest in any other Entity;
(vii) make any capital expenditure, except capital
expenditures through December 31, 1997 in an aggregate amount of no more
than the amount provided for in the capital budget previously provided to
Parent for such period, and thereafter in an aggregate amount of no more
than is provided for in a 1998 capital budget which shall be provided to
and approved by Parent (such approval not to be unreasonably withheld)
prior to January 1, 1998 provided, however, that notwithstanding the
foregoing, the Company may make capital expenditures permitted under
clause "(xix)" below;
(viii) except as set forth in the operating plan previously
provided to Parent, enter into or become bound by, or permit any of the
assets owned or used by it to become bound by, any Company Material
Contract, or amend or terminate, or waive or exercise any material right
or remedy under, any Company Material Contract;
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(ix) acquire, lease or license any right or other asset from
any other Person or sell or otherwise dispose of, or lease or license, any
right or other asset to any other Person (except in each case for (A)
assets not constituting Proprietary Assets acquired, leased, licensed or
disposed of by the Company in the ordinary course of business; (B)
consistent with past practices and except in the case of the in-licensing
of Proprietary Assets, for agreements involving the payment of less than
$25,000 per year and a royalty of less than 0.75% and (C) rights granted
to academic institutions and researchers to use the data collected
pursuant to tissue sample agreements for research purposes), or waive or
relinquish any material right;
(x) lend money to any Person, except travel advances and
loans related to relocation, education and immigration-related expenses
made in the ordinary course of business, and loans in connection with
employee stock purchases as provided for in agreements in effect on the
date hereof, or incur or guarantee any indebtedness or pledge or encumber
any material assets (except that the Company may make routine borrowings
in the ordinary course of business and in accordance with past practices
under its line of credit with Sumitomo Bank);
(xi) except as set forth in the Company Disclosure Schedule,
establish, adopt or amend any employee benefit plan, pay any bonus (except
pursuant to existing Company incentive plans and employment contracts or
understandings currently in effect) or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of
its directors, officers or employees;
(xii) change any of its methods of accounting or accounting
practices in any respect;
(xiii) make any material Tax election;
(xiv) commence or settle any Legal Proceeding;
(xv) materially amend or otherwise modify any of the terms of
its engagement of the financial advisor referenced in Section 2.26 above;
(xvi) amend or otherwise modify any of the terms of any
Company Warranty (as defined in Section 5.3 below), except to the extent
necessary to effect the provisions of Section 6.13 below;
(xvii) enter into any material transaction or take any other
material action in each case not specifically provided for in the
operating plan previously provided by the Company to Parent, or outside
the ordinary course of business or inconsistent with past practices; or
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(xviii) enter into any license or cost sharing agreement with
GC BioTechnologies, LLC or Shanghai GeneCore BioTechnologies Co. Ltd. or
permit (to the extent the Company's permission is required) GC
BioTechnologies, LLC to enter into any license agreement or cost sharing
agreement with Shanghai GeneCore BioTechnologies Co. Ltd.;
(xix) spend more than an incremental $1,000,000 (over amounts
set forth in the budget previously provided to Parent) on its
pharmacogenetics program (it being understood that such incremental
expenditures include incremental capital expenditures, the costs of new
employees hired to work on this program and expenditures related to
acquiring tissue samples for this program); or
(xx) agree or commit to take any of the actions described in
clauses "(i)" through "(xix)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if (A)
such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of the Company; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 6 or Section 7 impossible or unlikely or that has had or
could reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. No notification given to Parent pursuant to this Section 4.2(c)
shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement.
4.3 OPERATION OF PARENT'S BUSINESS.
(a) During the Pre-Closing Period: (i) Parent shall ensure that
each of the Parent Corporations conducts its business and operations (A) in the
ordinary course and in accordance with past practices or the operating plan
previously provided by Parent to the Company and (B) in compliance with all
applicable Legal Requirements and the requirements of all Parent Corporation
Contracts that constitute Material Contracts; (ii) Parent shall use all
reasonable efforts to ensure that each of the Parent Corporations preserves
intact its current business organization, keeps available the services of its
current officers and employees and maintains its relations and goodwill with all
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with the respective Parent
Corporations; and (iii) Parent shall keep in full force all insurance policies
referred to in Section 3.18 or replace such policies with comparable or superior
policies; and (iv) Parent shall
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provide all notices, assurances and support required by any Parent Corporation
Contract relating to any Proprietary Asset in order to ensure that no condition
under such Parent Corporation Contract occurs which could result in, or could
increase the likelihood of, any transfer or public disclosure by any Parent
Corporation of any Proprietary Asset.
(b) During the Pre-Closing Period, Parent shall not (without the
prior written consent of the Company), and shall not permit any of the other
Parent Corporations to:
(i) declare, accrue, set aside or pay any dividend or make
any other distribution in respect of any shares of capital stock, or
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities, except for repurchases at less than fair market value
pursuant to employment or consulting agreements in effect prior to the
date hereof;
(ii) hire an aggregate of more than forty new employees,
excluding those persons hired to replace employees who terminate their
employment with a Parent Corporation during the Pre-Closing Period;
(iii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock or other security (except Parent Common Stock upon
the valid exercise of Parent Options or Parent warrants outstanding on the
date of this Agreement or the Exercise of Rights under the Parent ESPP or
pursuant to equipment lease financings and similar transactions or
otherwise in the ordinary course of business), (B) any option, call,
warrant or right to acquire any capital stock or other security (other
than options, warrants or rights to purchase an aggregate of up to 300,000
shares of Parent Common Stock which may be granted to (i) officers,
directors, employees or consultants of Parent, or (ii) otherwise in the
ordinary course of business), (C) any instrument convertible into or
exchangeable for any capital stock or other security;
(iv) except as contemplated by this Agreement, amend or waive
any of its rights under, or accelerate the vesting under, any provision of
any of Parent's stock option plans, any provision of any agreement
evidencing any outstanding stock option or any restricted stock purchase
agreement, or otherwise modify any of the terms of any outstanding option,
warrant or other security or any related Contract (other than any such
changes to options, warrants or other securities to purchase an aggregate
of up to 25,000 shares of Parent Common Stock);
(v) amend or permit the adoption of any amendment to its
certificate of incorporation or bylaws or other charter or organizational
documents, or effect or become a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
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(vi) except as previously disclosed to the Company, form any
Subsidiary or acquire any equity interest or other interest in any other
Entity;
(vii) make any capital expenditure, except capital
expenditures in an aggregate amount of no more than $2,000,000;
(viii) establish, adopt or amend any employee benefit plan not
generally available to the Company's employees and the Company's 1998
management incentive program, or pay any bonus or make any profit sharing
or similar payment to (except pursuant to the management incentive program
and any employment contract or understanding as in effect on the date
hereof), or increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its
directors, officers or employees in an amount in excess of the higher of
20% of the amount previously paid to such Person or $20,000;
(ix) change any of its methods of accounting or accounting
practices in any respect;
(x) make any Material Tax election;
(xi) commence or settle any Legal Proceeding except in the
ordinary course of business;
(xii) materially amend or otherwise modify any of the terms of
its engagement of the financial advisor references in Section 3.27 above;
(xiii) enter into any material transaction or take any other
material action in each case either inconsistent with the operating plan
previously provided by Parent to the Company, or outside the ordinary
course of business; or
(xiv) Except as previously disclosed to the Company, sell or
otherwise dispose of, or grant an exclusive license or any other exclusive
right to utilize Parent Proprietary Assets which individually or in the
aggregate constitute core technology material to the business of Parent,
other than pursuant to a corporate collaboration similar in structure to
those previously entered into by Parent, or grant to any third party a
right of first refusal, first offer, or first negotiation with regard to
material products or such core technology unless developed pursuant to
funding supplied by such party.
(xv) agree or commit to take any of the actions described in
clause "(i)" through "(xiv)" of this Section 4.3(b).
(c) During the Pre-Closing Period, Parent shall promptly notify
the Company in writing of: (i) the discovery by Parent of any event, condition,
fact or circumstance that
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54
occurred or existed on or prior to the date of this Agreement and that caused or
constitutes a material inaccuracy in any representation or warranty made by
Parent in this Agreement; (ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause
or constitute a material inaccuracy in any representation or warranty made by
Parent in this Agreement if (A) such representation or warranty had been made as
of the time of the occurrence, existence or discovery of such event, condition,
fact or circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement; (iii) any
material breach of any covenant or obligation of Parent; and (iv) any event,
condition, fact or circumstance that would make the timely satisfaction of any
of the conditions set forth in Section 6 or Section 7 impossible or unlikely or
that has had or could reasonably be expected to have a Material Adverse Effect
on the Parent Corporations. No notification given to the Company pursuant to
this Section 4.3(c) shall limit or otherwise affect any of the representations,
warranties, covenants or obligations of Parent contained in this Agreement.
4.4 NO SOLICITATION BY COMPANY.
(a) The Company shall not directly or indirectly, and shall not
authorize or permit any of the other Acquired Corporations or any Representative
of any of the Acquired Corporations directly or indirectly to, (i) solicit,
initiate, knowingly encourage or induce the making, submission or announcement
of any Acquisition Proposal or take any similar action, (ii) furnish any
non-public information regarding any of the Acquired Corporations to any Person
in connection with or in response to an Acquisition Proposal, (iii) engage in
discussions or negotiations with any Person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Transaction. Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that any violation of any of the restrictions set forth in the preceding
sentence by any Representative of any of the Acquired Corporations, whether or
not such Representative is purporting to act on behalf of any of the Acquired
Corporations, shall be deemed to constitute a breach of this Section 4.4 by the
Company.
(b) Nothing contained in this Agreement shall prevent the Company
or its Board of Directors from (i) furnishing information regarding any of the
Acquired Corporations (including a copy of this Section 4.4) to any Person in
connection with or in response to a bona fide, unsolicited Acquisition Proposal
or engaging in discussions or negotiations with respect thereto if and only to
the extent that (A) the Board of Directors of the Company determines in good
faith, after consultation with its financial advisor that such Acquisition
Proposal is reasonably likely to result in a Superior Offer, (B) the Board of
Directors of the Company determines in good faith, after consultation with its
outside counsel, including discussions of applicable legal standards under
California law, that such action is required in order for the Board of Directors
to comply with its fiduciary duties under applicable law, (C) the Person who has
requested such information has executed and delivered to the Company a
non-disclosure
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55
agreement that is not less restrictive than the non-disclosure agreement in
effect between the Company and Parent, and (D) the Company has not breached
Section 4.4(a)(i), or (ii) complying with Rule 14e-2 and Rule 14d-9 promulgated
under the Exchange Act. In addition, nothing in paragraph 4.4(a) above shall
prevent the Board of Directors of the Company from recommending a Superior Offer
to its shareholders, if the Board determines, after consultation with its
outside counsel, including discussions of applicable legal standards under
California law, that, in light of such Superior Offer, such recommendation is
required in order for the Board of Directors to comply with its fiduciary
obligations to the Company's shareholders under applicable law (which
determination shall be made in light of a revised proposal, if any, made by the
Parent prior to the date of such determination); provided however that the
Company (i) shall provide Parent with at least 48 hours prior written notice of
its intention to hold any meeting at which the Company's Board of Directors is
reasonably expected to consider an Acquisition Proposal, or such lesser amount
of time as has been given to the Board in relation to such meeting, and (ii)
shall not recommend to its shareholders a Superior Offer for at least two
business days after the Company has provided Parent with the material terms of
such Superior Offer.
(c) The Company shall promptly advise Parent orally and in writing
of any Acquisition Proposal (including the identity of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent informed with respect to material changes to the terms of any such
Acquisition Proposal and any material modification or proposed modifications
thereto.
(d) The Company shall immediately cease and cause to be terminated
any existing discussions with any Person that relate to any Acquisition Proposal
and shall request the return or destruction of any confidential information
previously disclosed to such Person and shall use commercially reasonable
efforts to ensure that such information is destroyed or returned.
4.5 NO SOLICITATION BY PARENT
(a) Parent shall not directly or indirectly, and shall not
authorize or permit any of the other Parent Corporations or any Representative
of any of the Parent Corporations directly or indirectly to, (i) solicit,
initiate, knowingly encourage or induce the making, submission or announcement
of any Acquisition Proposal or take any similar action, (ii) furnish any
non-public information regarding any of the Parent Corporations to any Person in
connection with or in response to an Acquisition Proposal, (iii) engage in
discussions or negotiations with any Person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Transaction. Without
limiting the generality of the foregoing, Parent acknowledges and agrees that
any violation of any of the restrictions set forth in the preceding sentence by
any Representative of any of the Parent Corporations, whether or
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not such Representative is purporting to act on behalf of any of the Acquired
Corporations, shall be deemed to constitute a breach of this Section 4.5 by
Parent.
(b) Nothing contained in this Agreement shall prevent Parent or
its Board of Directors from (i) furnishing information regarding any of the
Parent Corporations (including copy of this Section 4.5) to any Person in
connection with or in response to a bona fide, unsolicited Acquisition Proposal
or engaging in discussions or negotiations with respect thereto if and only to
the extent that (A) the Board of Directors of Parent determines in good faith,
after consultation with its financial advisor that such Acquisition Proposal is
reasonably likely to result in a Superior Offer, (B) the Board of Directors of
Parent determines in good faith, after consultation with its outside counsel,
including discussions of applicable legal standards under Delaware law, that
such action is required in order for the Board of Directors to comply with its
fiduciary duties under applicable law, (C) the Person who has requested such
information has executed and delivered to Parent a non-disclosure agreement that
is not less restrictive than the non-disclosure agreement in effect between
Parent and the Company, and (D) Parent has not breached Section 4.5(a)(i), or
(ii) complying with Rule 14e-2 and Rule 14d-9 promulgated under the Exchange
Act. In addition, nothing in paragraph 4.5(a) above shall prevent the Board of
Directors of Parent from recommending a Superior Offer to its stockholders, if
the Board determines, after consultation with its outside counsel, including
discussions of applicable legal standards under Delaware law, that, in light of
such Superior Offer, such recommendation is required in order for the Board of
Directors to comply with its fiduciary obligations to Parent's stockholders
under applicable law (which determination shall be made in light of a revised
proposal, if any, made by the Company prior to the date of such determination);
provided however that Parent (i) shall provide the Company with at least 48
hours prior written notice of its intentions to hold any meeting at which
Parent's Board of Directors is reasonably expected to consider an Acquisition
Proposal, or such lesser amount of time as has been given to the Board in
relation to such meeting, and (ii) Parent shall not recommend to its
stockholders a Superior Offer for at least two business days after Parent has
provided Parent with the material terms of such Superior Offer.
(c) Parent shall promptly advise the Company orally and in writing
of any Acquisition Proposal (including the identity of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. Parent shall keep the
Company informed with respect to material changes to the terms of any such
Acquisition Proposal and any material modification or proposed modifications
thereto.
(d) Parent shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal and
shall request the return or destruction of any confidential information
previously disclosed to such Person and shall use commercially reasonable
efforts to ensure that such information is destroyed or returned.
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SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement,
Parent and the Company shall prepare and cause to be filed with the SEC the
Joint Proxy Statement and simultaneously or thereafter Parent shall prepare and
cause to be filed with the SEC the Form S-4 Registration Statement, in which the
Joint Proxy Statement will be included as a prospectus. Each of Parent and the
Company shall use all reasonable efforts to cause the Form S-4 Registration
Statement and the Joint Proxy Statement to comply with the rules and regulations
promulgated by the SEC, to respond promptly to any comments of the SEC or its
staff and to have the Form S-4 Registration Statement declared effective under
the Securities Act as promptly as practicable after it is filed with the SEC.
Parent will use all reasonable efforts to cause the Joint Proxy Statement to be
mailed to Parent's stockholders, and the Company will use all reasonable efforts
to cause the Joint Proxy Statement to be mailed to the Company's shareholders,
as promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. Each of the Company and Parent shall
promptly furnish to the other all information concerning the Acquired
Corporations and the Company's shareholders and the Parent Corporations,
respectively, that may be required or reasonably requested in connection with
any action contemplated by this Section 5.1. Each of the Company and Parent
shall notify the other promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for any amendment or
supplement to the Form S-4 Registration Statement or Joint Proxy Statement or
for any other information and shall supply the other with copies of all
correspondence between such party and the SEC or its staff or other governmental
officials with respect to the S-4 Registration Statement or Joint Proxy
Statement. The information supplied by each of Parent and the Company for
inclusion in the Form S-4 Registration Statement and the Joint Proxy Statement
shall not (i) at the time the Form S-4 Registration Statement is declared
effective, (ii) at the time the Joint Proxy Statement is first mailed to the
shareholders and shareholders of Parent and the Company, respectively, (iii) at
the time of the Company Shareholders' Meeting and at the time of the Parent
Stockholders' Meeting, and (iv) at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If Parent or the
Company becomes aware of any information, that should be disclosed in an
amendment or supplement to the Form S-4 Registration Statement or the Joint
Proxy Statement, then Parent or the Company, as the case may be, shall promptly
inform the Company or Parent thereof and shall cooperate with the other in
filing such amendment or supplement with the SEC and, if appropriate, in mailing
such amendment or supplement to the shareholders of the Company or the
stockholders of Parent.
(b) Prior to the Effective Time, Parent shall use reasonable
efforts to obtain all regulatory approvals needed to ensure that the Parent
Common Stock to be issued in the Merger (i) will be registered or qualified
under the securities law of every jurisdiction of the
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United States in which any registered holder of Company Common Stock has an
address of record on the record date for determining the shareholders entitled
to notice of and to vote at the Company Shareholders' Meeting; and (ii) will be
approved for quotation at the Effective Time on the Nasdaq National Market;
provided, however, that Parent shall not be required (i) to qualify to do
business as a foreign corporation in any jurisdiction in which it is not now
qualified or (ii) to file a general consent to service of process in any
jurisdiction.
5.2 COMPANY SHAREHOLDERS' MEETING.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Company Common Stock to consider, act upon and vote
upon the approval of this Agreement and of the Merger (the "Company
Shareholders' Meeting"). The Company Shareholders' Meeting will be held as
promptly as practicable and in any event within 45 days after the Form S-4
Registration Statement is declared effective under the Securities Act. The
Company shall ensure that the Company Shareholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited in connection with
the Company Shareholders' Meeting are solicited, in compliance with all
applicable Legal Requirements. The Company's obligation to call, give notice of,
convene and hold the Company Shareholders' Meeting in accordance with this
Section 5.2(a) shall not be limited or otherwise affected by the withdrawal,
amendment or modification of the recommendation of the board of directors of the
Company with respect to the Merger, except as is required by applicable law.
(b) Subject to Section 5.2(c): (i) the board of directors of the
Company shall unanimously recommend that the Company's shareholders vote in
favor of and approve this Agreement and the Merger at the Company Shareholders'
Meeting; (ii) the Joint Proxy Statement shall include a statement to the effect
that the board of directors of the Company has unanimously recommended that the
Company's shareholders vote in favor of and approve this Agreement and the
Merger at the Company Shareholders' Meeting; and (iii) neither the board of
directors of the Company nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify, in a manner adverse
to Parent, the unanimous recommendation of the board of directors of the Company
that the Company's shareholders vote in favor of and approve this Agreement and
the Merger. For purposes of this Agreement, said recommendation of the board of
directors of the Company shall be deemed to have been modified in a manner
adverse to Parent if said recommendation shall no longer be unanimous.
(c) Nothing in Section 5.2(b) shall prevent the board of directors
of the Company from withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger at any time prior to the approval of this
Agreement by the Required Company Shareholder Vote if (i) a Superior Offer is
made to the Company and is not withdrawn, (ii) neither the Company nor any of
its Representatives shall have violated any of the restrictions set forth in
Section 4.4, and (iii) the board of directors of the Company concludes in good
faith, after consultation with its outside counsel, including discussion of
applicable legal standards
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under California law, that, in light of such Superior Offer, the withdrawal,
amendment or modification of such recommendation is required in order for the
board of directors of the Company to comply with its fiduciary obligations to
the Company's shareholders under applicable law. Except as may be limited by
applicable law, nothing contained in this Section 5.2 shall limit the Company's
obligation to call, give notice of, convene and hold the Company Shareholders'
Meeting (regardless of whether the unanimous recommendation of the board of
directors of the Company shall have been withdrawn, amended or modified).
5.3 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action necessary under all applicable
Legal Requirements to call, give notice of, convene and hold a meeting of the
holders of Parent Common Stock to consider, act upon and vote upon the issuance
of Parent Common Stock in the Merger (the "Parent Stockholders' Meeting"). The
Parent Stockholders' Meeting will be held as promptly as practicable and in any
event within 45 days after the Form S-4 Registration Statement is declared
effective under the Securities Act. Parent shall ensure that the Parent
Stockholders' Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited in connection with the Parent Stockholders' Meeting are
solicited in compliance with all applicable Legal Requirements. Parent's
obligation to call, give notice of, convene and hold the Parent Stockholders'
Meeting in accordance with this Section 5.3(a) shall not be limited or otherwise
affected by any withdrawal, amendment or modification of the recommendation of
the board of directors of Parent with respect to the Merger, except as may be
required by applicable law.
(b) Subject to Section 5.3(c): (i) the board of directors of
Parent shall unanimously (among all directors present at the meeting duly called
and held) recommend that Parent's stockholders vote in favor of the issuance of
Parent Common Stock in the Merger at the Parent Stockholders' Meeting; (ii) the
Joint Proxy Statement shall include a statement to the effect that the board of
directors of Parent has unanimously (among all directors present) recommended
that Parent's stockholders vote in favor of the issuance of Parent Common Stock
in the Merger at the Parent Stockholders' Meeting; and (iii) neither the board
of directors of Parent nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify, in a manner adverse
to the Company, the unanimous (among all directors present) recommendation of
the board of directors of Parent that Parent's stockholders vote in favor of the
issuance of Parent Common Stock in the Merger. For purposes of this Agreement,
said recommendation of the board of directors of Parent shall be deemed to have
been modified in a manner adverse to the Company if said recommendation shall no
longer be unanimous.
(c) Nothing in Section 5.3(b) shall prevent the board of directors
of Parent from withdrawing, amending or modifying its unanimous (among all
directors present) recommendation in favor of the issuance of Parent Common
Stock in the Merger at any time prior to the approval of this Agreement by the
Required Parent Stockholder Vote if (i) neither
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Parent nor any of its Representatives shall have violated any of the
restrictions set forth in Section 4.5, and (ii) the board of directors of Parent
concludes in good faith, based upon the advice of its outside counsel, including
a discussion of applicable legal standards under Delaware law, that the
withdrawal, amendment or modification of such recommendation is required in
order for the board of directors of Parent to comply with its fiduciary
obligations to Parent's stockholders under applicable law. Except as may be
limited by applicable law, nothing contained in this Section 5.3 shall limit
Parent's obligation to call, give notice of, convene and hold the Parent
Stockholders' Meeting (regardless of whether the unanimous (among all directors
present) recommendation of the board of directors shall have been withdrawn,
amended or modified).
5.4 REGULATORY APPROVALS. The Company and Parent shall use all
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the
generality of the foregoing, the Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications required under the
HSR Act in connection with the Merger. The Company and Parent shall respond as
promptly as practicable to (i) any inquiries or requests received from the
Federal Trade Commission or the Department of Justice for additional information
or documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Parent shall (1) give the other party
prompt notice of the commencement of any Legal Proceeding by or before any
Governmental Body with respect to the Merger or any of the other transactions
contemplated by this Agreement, (2) keep the other party informed as to the
status of any such Legal Proceeding, and (3) promptly inform the other party of
any communication to or from the Federal Trade Commission, the Department of
Justice or any other Governmental Body regarding the Merger. The Company and
Parent will consult and cooperate with one another, and will consider in good
faith the views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or submitted
in connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law. In addition, except as may
be prohibited by any Governmental Body or by any Legal Requirement, in
connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
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5.5 STOCK OPTIONS; ESPP.
(a) Fifteen days prior to the Company Shareholders' Meeting, the
Administrator, as such term is defined in the Company's 1994 Incentive Stock
Plan, shall give notice to all holders of Company Options issued under such plan
that, contingent upon the closing of the Merger, (i) each such option shall be
fully exercisable during such fifteen day period and (ii) each such option will
terminate at the end of such fifteen day period.
(b) Thirty days prior to the Company Shareholders' Meeting, the
Company's Board of Directors shall give notice to all holders of options issued
under the Company's 1995 Director Option Plan that, contingent upon the closing
of the Merger, (i) each such option shall be fully exercisable during such
thirty day period and (ii) each such option shall terminate at the end of such
thirty day period.
(c) The Company's Board of Directors shall shorten the offering
periods then in progress under the ESPP by setting a New Exercise Date, as such
term is defined in the ESPP, at and as of the date of the Company Shareholders'
Meeting and shall timely provide the notice to all participants relating thereto
required under Section 18(c) of the ESPP. The Company's Board of Directors shall
not thereafter commence any offering period under the ESPP.
(d) Parent shall grant options to purchase Parent Common Stock to
employees of the Company effective upon the first meeting of Parent's Board of
Directors following the Effective Time, commensurate (including with respect to
vesting) with option grants to newly hired employees at similar grade levels.
Subject to the terms of Parent's ESPP and applicable law, Parent shall take all
reasonable actions to ensure that from and after the Effective Time all
employees of the Company shall be entitled to participate in the ESPP of Parent.
(e) The Company shall take all action that may be necessary (under
the plans pursuant to which Company Options are outstanding and otherwise) to
effectuate the provisions of this Section 5.5 and to ensure that, from and after
the Effective Time, holders of Company Options issued under the 1995 Director
Option Plan or rights under the ESPP have no rights with respect thereto.
5.6 WARRANTS. Except for the warrants held by Xxxxx Xxxxxxxx as Trustee
of the Xxxxx X. Xxxxxxxx Declaration of Trust dated November 2, 1994 and by
Novartis Pharmaceutical Corporation, which warrants shall either be exercised or
shall terminate at the Effective Time in accordance with their respective terms,
at the Effective Time, all rights with respect to Company Common Stock under
warrants to purchase Company Common Stock ("Company Warrants") that are then
outstanding shall be converted into and become rights with respect to Parent
Common Stock, and Parent shall assume each Company Warrant in accordance with
the terms (as in effect as of the date hereof) of such Company Warrants,
including the Company Warrants held by Comdisco, Inc., but only to the extent
such warrants allow assumption by
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Parent in accordance with their respective terms. From and after the Effective
Time, (a) each Company Warrant assumed by Parent may be exercised solely for
shares of parent Common Stock, (b) the number of shares of Parent Common Stock
subject to each Company Warrant shall be equal to the number of shares of
Company Common Stock subject to such Company Warrant immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounding down to the nearest
whole share (with cash, less the applicable exercise price, being payable for
any fraction of a share), (c) the per share exercise price under each such
Company Warrant shall be adjusted by dividing the per share exercise price under
such Company Warrant by the Exchange Ratio and rounding up to the nearest cent
(to the extent permitted by the terms of the Company Warrants and otherwise
rounded or without rounding as required by the terms of the particular Company
Warrant), and (d) any restriction on the exercise of any Company Warrant shall
continue in full force and effect and the term exercisability, schedule and
other provisions of such Company Warrant shall otherwise remain unchanged;
provided, however, that such Company Warrant shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transactions subsequent
to the Effective Time. The Company shall take all action that may be necessary
(under the Company Warrants and otherwise) to effectuate the provisions of this
Section 5.6 and to ensure that, from and after the Effective Time, holders of
Company Warrants have no rights with respect thereto other than those
specifically provided herein.
5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of the current
directors and officers ("Indemnified Parties") of the Company for acts and
omissions occurring prior to the Effective Time, as provided in the Company's
Bylaws (as in effect as of the date of this Agreement) and as provided in the
indemnification agreements between the Company and said officers and directors
(as in effect as of the date of this Agreement), shall survive the Merger and
shall be observed by the Surviving Corporation for a period of not less than six
years from the Effective Time.
(b) In the event that Parent (i) causes the Surviving Corporation
to consolidate with or merge into any other Person and Surviving Corporation is
not the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) causes the Surviving Corporation to transfer or convey all or
substantially all of Surviving Corporation's properties and assets to any
Person, then, and in each such case, to the extent necessary to effectuate the
purposes of this Section 5.7, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 5.7 and none of the actions described in clause (i) or
(ii) shall be taken until such provision is made.
(c) From the Effective Time until the sixth anniversary of the
date on which the Merger becomes effective, the Surviving Corporation shall
maintain in effect, for the benefit of the current directors and officers of the
Company with respect to acts or omissions occurring prior to the Effective Time,
the existing policy of directors' and officers' liability insurance maintained
by the Company as of the date of this Agreement (the "Existing Policy");
provided, however, that (i) the Surviving Corporation may substitute for the
Existing Policy a policy or
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policies of comparable coverage, and (ii) the Surviving Corporation shall not be
required to pay an annual premium for the Existing Policy (or for any substitute
policies) in excess of 175% of the annual premium currently paid by the Company
for such insurance. In the event any future annual premium for the Existing
Policy (or any substitute policies) exceeds 175% of the annual premium currently
paid by the Company for such insurance, the Surviving Corporation shall be
entitled to reduce the amount of coverage of the Existing Policy (or any
substitute policies) to the amount of coverage that can be obtained for a
premium equal to 175% of the annual premium currently paid by the Company for
such insurance.
5.8 ADDITIONAL AGREEMENTS.
(a) Subject to Section 5.6(b), Parent and the Company shall use
all reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger and make effective the other transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, but subject to
Section 5.6(b), each party to this Agreement (i) shall make all filings (if any)
and give all notices (if any) required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement, (ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use all
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. The Company shall promptly deliver to Parent a copy of each such filing
made, each such notice given and each such Consent obtained by the Company
during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent shall not have any obligation under this Agreement: (i) to
dispose or cause any of its subsidiaries to dispose of any assets, or to commit
to cause any of the Acquired Corporations to dispose of any assets; (ii) to
discontinue or cause any of its subsidiaries to discontinue offering any
product, or to commit to cause any of the Acquired Corporations to discontinue
offering any product; (iii) to license or otherwise make available, or cause any
of its subsidiaries to license or otherwise make available, to any Person, any
technology, software or other Proprietary Asset, or to commit to cause any of
the Acquired Corporations to license or otherwise make available to any Person
any technology, or other Proprietary Asset; (iv) to hold separate or cause any
of its subsidiaries to hold separate any assets or operations (either before or
after the Closing Date), or to commit to cause any of the Acquired Corporations
to hold separate any assets or operations; or (v) to make or cause any of its
subsidiaries make any commitment (to any Governmental Body or otherwise)
regarding its future operations or the future operations of any of the Acquired
Corporations.
5.9 DISCLOSURE. Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger or any of the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, neither the Company
nor Parent shall, and neither shall permit, any of its
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Representatives to, make any disclosure regarding the Merger or any of the other
transactions contemplated by this Agreement unless (a) the other Party shall
have approved such disclosure or (b) the disclosing party shall have been
advised in writing by its outside legal counsel that such disclosure is required
by applicable law and shall have given the other Party the opportunity, to the
extent practicable, to review and comment upon the disclosure.
5.10 TAX MATTERS. Each of the Parent and the Company acknowledge and
agree that (i) it intends the Merger to constitute a reorganization within the
meaning of Section 368(a) of the Code, (ii) it will report the Merger as such a
reorganization in any and all federal, state and local income tax returns filed
by it. The Company shall use all reasonable efforts to obtain and deliver to
Xxxxxx Godward LLP and to Wilson, Sonsini, Xxxxxxxx & Xxxxxx, P.C., as soon as
practicable after the date of this Agreement, Continuity of Interest
Certificates (in a form agreed to by counsel to Parent and the Company) signed
by entities controlled by the Carlyle Group and by Boehringer Ingelheim
International GmbH. At or prior to the filing of the S-4 Registration Statement
with the SEC and, to the extent necessary, at the Closing, the Company and
Parent shall execute and deliver to Xxxxxx Godward LLP and to Wilson, Sonsini,
Xxxxxxxx & Xxxxxx P.C. management tax representation letters in a form agreed to
by counsel to Parent and the Company. Parent and the Company shall use all
reasonable efforts prior to the Effective Time to cause the Merger to qualify as
a tax free reorganization under Section 368(a)(1) of the Code. In the event of
the issuance of final or temporary Treasury regulations relating to the
continuity of shareholder interest (proposed regulations on the topic were
issued in the Federal Register on December 23, 1996 (Reg-252231-96); these
regulations would, among other things, add a new section 1.368-1(a) to existing
regulations), the parties agree to use their reasonable best efforts to take
advantage of, and comply with, any provisions therein (such as an election
and/or reporting requirements) to the extent necessary to cause such regulations
to apply to the Merger.
5.11 LETTER OF ACCOUNTANTS. The Company and Parent shall use all of their
reasonable efforts to cause to be delivered to the Company and to Parent a
letter of Ernst and Young LLP, dated no more than two business days before the
date on which the Form S-4 Registration Statement becomes effective (and
reasonably satisfactory in form and substance to the Company and to Parent) and
addressed to the Board of Directors of the Company and the Board of Directors of
Parent, that is customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4 Registration Statement.
5.12 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use all
reasonable efforts to obtain and deliver to Parent prior to the Closing the
resignation of each officer and director of each of the Acquired Corporations.
5.13 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
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5.14 AFFILIATE AGREEMENTS. The Company shall, no later than twenty days
in advance of the Parent Stockholders' Meeting, deliver to Parent a list (the
"Affiliate List") of Persons who are "affiliates" (as that term is used in Rule
145 under the Securities Act). Prior to the date of the Parent Stockholders'
Meeting, the Company shall deliver to Parent an Affiliate Agreement in the form
of Exhibit C duly executed by each Person on the Affiliate List, and by each
Person who becomes an affiliate after delivery of the Affiliate List and prior
to the date of delivery of the signed Affiliate Agreements.
5.15 ELECTION OF DIRECTORS.
(a) Parent shall use all reasonable efforts to nominate and
appoint a Board of nine persons selected as set forth in Section 5.15(b) to its
Board of Directors as soon as reasonably practicable after the Effective Time,
to serve until the next annual election of directors. Parent shall use
reasonable efforts to cause each of such directors, so long as each is then
willing to serve, to be nominated for an additional one-year term as Director of
Parent and included as nominees of Parent in Parent's 1998 Proxy Statement.
(b) The nine persons who shall act as directors of Parent
following the Effective Time shall be selected as follows:
Mr. Xxxx Xxxxxx and Xx. Xxxxx Xxxxxx will meet and consult
with one another during the 30 days following the date of this agreement
to consult and discuss the appropriate make up of Parent's post-Effective
Time Board of Directors. If Messrs. Xxxxxx and Xxxxxx agree upon the
individuals to become (or remain) members of the Board of Directors of
Parent after the Effective Time, their agreed upon nominees shall make up
such Board of Directors. If Messrs. Xxxxxx and Xxxxxx are unable to agree,
then Xx. Xxxxxx shall propose five nominees, which nominees shall be
reasonably acceptable to the Company and Xx. Xxxxxx shall propose four
nominees, which nominees shall be reasonably acceptable to Parent and such
nine nominees shall make up such Board of Directors. Selection of the
post-Effective Time Board of Directors shall be completed no later than 30
days prior to the earlier of the Company Shareholder Meeting and the
Parent Shareholder Meeting.
5.16 REGISTRATION RIGHTS. Parent shall use all reasonable efforts to
cause all Persons who have the right to demand registration of shares of the
Company's Common Stock held by them or to participate in a registered offering
of shares of the Company's Common Stock (the "Company Holders") to become a
Holder, as such term is defined in the Registration Rights Agreement between
Parent and certain Persons dated as of April 16, 1993 (the "Parent Registration
Rights Agreement"), provided, however, that no Company Holders shall become a
Holder if such Company Holder would not, pursuant to Section 16(a) of the Parent
Registration Rights Agreement, have any rights to register shares pursuant to
the Parent Registration Rights Agreement, and provided further that, Parent
shall use all reasonable efforts to cause the Parent Registration Rights
Agreement to be amended to remove Sections 1, 3 and 4, and to provide that no
Holder thereunder shall request registration or participate in a
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registration of Parent Common Stock pursuant to Sections 5, 6 and 7 thereunder
until the earlier of (a) the date 90 days after the effective date of a
registration statement for the first public offering of Parent's shares
following the Effective Time, and (b) the first anniversary of the Effective
Time.
5.17 MODIFICATION OF CORANGE AGREEMENT. The Company shall use reasonable
efforts to cause the Corange Agreement to be amended to provided that Corange's
obligation to purchase equity pursuant to Section 2.2(ii) of such agreement
shall, after the Effective Time, be an obligation to purchase equity of Parent
instead of the Company, all other terms and conditions of such agreement
remaining unchanged.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS.
The representations and warranties of the Company contained in this
Agreement shall be accurate in all material respects as of the date hereof and
shall be accurate as of the Closing Date as if made on and as of the Closing
Date (except representations and warranties that refer specifically to "the date
of this Agreement" or a specific date prior to the date of this Agreement)
except that any inaccuracies in such representations and warranties shall be
disregarded if the circumstances giving rise to such inaccuracies (individually
and collectively) do not constitute a Material Adverse Effect on the Company (it
being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other materiality qualifications contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Company Disclosure Schedule made or purported to have been made after the date
of this Agreement shall be disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the Form S-4 Registration Statement.
6.4 SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common
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Stock in the Merger shall have been duly approved by the required Parent
Stockholder Vote. Fewer than 9% of the outstanding shares of Company Common
Stock shall have voted against approving this Agreement and the Merger at the
Company Shareholder Meeting.
6.5 CONSENTS. All material Consents required to be obtained in
connection with the Merger and the other transactions contemplated by this
Agreement (including the Consents identified in Part 6.5 of the Company
Disclosure Schedule) shall have been obtained and shall be in full force and
effect.
6.6 DOCUMENTS. Parent shall have received the following legal documents,
each of which shall be in full force and effect:
(a) a legal opinion of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, P.C.,
dated as of the Closing Date, in the form of Exhibit D;
(b) a legal opinion of Xxxxxx Godward LLP dated as of the Closing
Date and addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, Xxxxxx Godward LLP may rely upon the
Continuity of Interest Certificates and tax representation letters referred to
in Section 5.10 and a copy of the legal opinion described in Section 7.5(b)
hereof). The opinion described in this Section 6.6(b) and in Section 7.5(b)
shall be substantially identical in form and substance.);
(c) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections 6.1, 6.2,
6.4, 6.5 and 6.7 have been duly satisfied; and
6.7 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, financial condition, capitalization, assets,
liabilities, operations or financial performance of the Acquired Corporations
since the date of this Agreement.
6.8 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
6.9 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
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6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Body is or is threatened to become
a party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking to obtain
from Parent or any of its subsidiaries any damages that may be material to
Parent; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of the Surviving Corporation; or (d)
which would materially and adversely affect the right of Parent, the Surviving
Corporation or any subsidiary of Parent to own the assets or operate the
business of the Company.
6.12 NO OTHER LITIGATION. There shall not be pending any Legal Proceeding
in which there is a reasonable possibility of an outcome that would have a
Material Adverse Effect on the Acquired Corporations or on Parent: (a)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement; (b) relating to
the Merger and seeking to obtain from Parent or any of its subsidiaries any
damages that may be material to Parent; (c) seeking to prohibit or limit in any
material respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would affect adversely the right of Parent, the
Surviving Corporation or any subsidiary of Parent to own the assets or operate
the business of the Company.
6.13 ASSUMPTION OF WARRANTS. Except for the Company Warrants held by
Xxxxx Xxxxxxxx as Trustee of the Xxxxx X. Xxxxxxxx Declaration of Trust dated
November 2, 1994 and by Novartis Pharmaceutical Corporation, all of the other
Company Warrants (the "Assumed Warrants") outstanding at the Effective Time
(including the warrants held by Comdisco, Inc., to the extent such warrants
allow assumption in accordance with their respective terms) shall, at the
Effective Time; (a) represent an entitlement to receive upon exercise that
number of shares of Parent Common Stock which a holder of Company capital stock
deliverable upon exercise of the right to purchase such Company capital stock
under the relevant warrant would have been entitled in the Merger if the right
to purchase such Company capital stock had been exercised immediately prior to
the Merger; and (b) be subject to exercise upon payment of a per share exercise
price equal to the exercise price applicable immediately before the Effective
Time divided by the Exchange Ratio. All restrictions on the exercise of the
Assumed Warrants in effect immediately before the Effective Time shall be
continuing in full force and effect and the term, exercisability schedule and
other provisions of the Assumed Warrants shall otherwise remain unchanged. Prior
to the Closing Date, all notices and adjustments to the terms of all Company
Warrants outstanding on the Closing Date required to be given or made pursuant
to the terms of such Company Warrants shall have been duly and timely given or
made.
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SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS.
The representations and warranties of Parent and Merger Sub contained in
this Agreement shall have been accurate in all material respects as of the date
of this Agreement and shall be accurate as of the Closing Date as if made on and
as of the Closing Date except that any inaccuracies in such representations and
warranties shall be disregarded if the circumstances giving rise to such
inaccuracies (individually and collectively) do not constitute a Material
Adverse Effect on the Company (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
materiality qualifications contained in such representations and warranties
shall be disregarded and (ii) any update of or modification to the Parent
Disclosure Schedule made or purported to have been made after the date of this
Agreement shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the Form S-4 Registration Statement.
7.4 SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the Required Company Shareholder Vote, and the issuance of Parent
Common Stock in the Merger shall have been duly approved by the Required Parent
Stockholder Vote.
7.5 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing
Date, in the form of Exhibit E;
(b) a legal opinion of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, P.C.,
dated as of the Closing Date, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, WILSON, SONSINI, XXXXXXXX & XXXXXX,
P.C., may rely upon tax representation letters referred to in Section 5.10 and a
copy of the legal opinions described in Section 6.6(b). The opinions described
in this Section 7.5(b) and in Section 6.6(b) shall be substantially identical in
form and substance.); and
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(c) a certificate executed on behalf of Parent by an executive
officer of Parent, confirming that conditions set forth in Sections 7.1, 7.2,
7.4 and 7.6 have been duly satisfied.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in Parent's business, financial condition, assets, liabilities,
operations or financial performance since the date of this Agreement (it being
understood that a decline in Parent's stock price shall not constitute, in and
of itself, a Material Adverse Change).
7.7 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.8 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
7.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
the Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by the Company
illegal.
7.10 DIRECTORS. Parent shall have taken all actions necessary to cause
the Board of Directors of Parent following the Effective Time to be constituted
of individuals selected in accordance with the procedures set forth in Section
5.15.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the Effective
Time (whether before or after approval of this Agreement and the Merger by the
Required Company Shareholder Vote and whether before or after approval of the
issuance of Parent Common Stock in the Merger by the Required Parent Stockholder
Vote);
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated by March 31, 1998 (unless the failure to consummate the Merger
is attributable to a failure on the part of the party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
party at or prior to the Effective Time);
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger;
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(d) by either Parent or the Company if (i) the Company
Shareholders' Meeting shall have been held and completed and (ii) this Agreement
and the Merger shall not have been approved at such meeting by the Required
Company Shareholder Vote; provided, however, that the Company may not terminate
this Agreement pursuant to this Section 8.1(d) unless the Company shall have
paid the fee referred to in Section 8.3(b) prior to such termination, if so
required by such Section;
(e) by either Parent or the Company if (i) the Parent
Stockholders' Meeting shall have been held and completed and (ii) the issuance
of Parent Common Stock in the Merger shall not have been approved at such
meeting by the Required Parent Stockholder Vote, provided, however, that Parent
may not terminate this Agreement pursuant to this Section 8.1(e) unless Parent
shall have paid the fee referred to in Section 8.3(d) prior to such termination,
if so required by such Section.
(f) by Parent (at any time prior to the approval of this Agreement
and the Merger by the Required Company Shareholder Vote) if a Company Triggering
Event shall have occurred;
(g) by the Company (at any time prior to the approval of this
Agreement and the Merger and the issuance of Parent Common Stock in the Merger
by the Required Parent Stockholder Vote) if a Parent Triggering Event shall have
occurred;
(h) by Parent if any of the Company's representations and
warranties contained in this Agreement shall be or shall have become inaccurate,
or if any of the Company's covenants contained in this Agreement shall have been
breached, and such inaccuracy or breach would cause the condition set forth in
Sections 6.1 or 6.2, respectively, to not be satisfied; provided, however, that
if an inaccuracy in the Company's representations and warranties or a breach of
a covenant by the Company is curable by the Company and the Company is
continuing to exercise all reasonable efforts to cure such inaccuracy or breach,
then Parent may not terminate this Agreement under this Section 8.1(h) on
account of such inaccuracy or breach until 20 days after delivery of written
notice of the inaccuracy or breach to the Company by Parent, if the inaccuracy
or breach has not at that time been cured;
(i) by the Company if any of Parent's representations and
warranties contained in this Agreement shall be or shall have become inaccurate,
or if any of Parent's covenants contained in this Agreement shall have been
breached, and such inaccuracy or breach would cause the condition set forth in
Sections 7.1 or 7.2, respectively, to not be satisfied; provided, however, that
if an inaccuracy in Parent's representations and warranties or a breach of a
covenant by Parent is curable by Parent and Parent is continuing to exercise all
reasonable efforts to cure such inaccuracy or breach, then the Company may not
terminate this Agreement
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under this Section 8.1(i) on account of such inaccuracy or breach until 20 days
after delivery of written notice of the breach or inaccuracy to Parent by the
Company, if the inaccuracy or breach has not at that time been cured;
(j) by the Company if a Company Triggering Event shall have
occurred and the board of directors of the Company shall have approved, endorsed
or recommended any Acquisition Proposal; or
(k) by Parent if a Parent Triggering Event shall have occurred and
the board of directors of Parent shall have approved, endorsed or recommended
any Acquisition Proposal.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 8.2, Section 8.3 and
Section 9 shall survive the termination of this Agreement and shall remain in
full force and effect, and (ii) the termination of this Agreement shall not
relieve any party from any liability for any breach of any representation,
warranty or covenant contained in this Agreement occurring prior to the date of
such termination.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' fees, incurred
in connection with (i) the filing, printing and mailing of the Form S-4
Registration Statement and the Joint Proxy Statement and any amendments or
supplements thereto and (ii) the filing of the premerger notification and report
forms relating to the Merger under the HSR Act.
(b) If this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(d) and there shall not have been a Material Adverse
Effect on Parent, then the Company shall pay to Parent, in cash (at the time
specified in Section 8.3(c)), a nonrefundable fee in the amount of $1,000,000.
If this Agreement is terminated by Parent pursuant to Section 8.1(f), then the
Company shall pay to Parent, in cash (at the time specified in Section 8.3(c)),
a nonrefundable fee in the amount of $5,000,000. If this Agreement is terminated
by the Company pursuant to Section 8.1(j), then the Company shall pay to Parent,
in cash, a nonrefundable fee in the amount of $5,000,000 (at the time specified
in Section 8.3(c)), plus, in the event of the subsequent consummation of an
Acquisition Proposal within 12 months after the date of termination, a
nonrefundable fee in the amount set forth in Section 8.3(f) (at the time
specified in Section 8.3(f)).
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(c) In the case of termination of this Agreement by the Company
pursuant to Section 8.1(d) or 8.1(j), the fee referred to in Section 8.3(b)
shall be paid by the Company prior to such termination, and in the case of
termination of this Agreement by Parent pursuant to Section 8.1(d) or Section
8.1(f), the fee referred to in Section 8.3(b) shall be paid by the Company
within three business days after such termination.
(d) If this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(e) and there shall not have been a Material Adverse
Effect on the Company, then Parent shall pay to the Company, in cash (at the
time specified in Section 8.3(e)), a nonrefundable fee in the amount of
$1,000,000. If this Agreement is terminated by the Company pursuant to Section
8.1(g), then Parent shall pay to the Company, in cash (at the time specified in
Section 8.3(e)), a nonrefundable fee in the amount of $5,000,000. If this
Agreement is terminated by the Parent pursuant to Section 8.1(k), then Parent
shall pay to the Company, in cash, a nonrefundable fee in the amount of
$5,000,000 (at the time specified in Section 8.3(e)), plus, in the event of the
subsequent consummation of an Acquisition Proposal (within 12 months after the
date of termination), a nonrefundable fee in the amount set forth in Section
8.3(f) (at the time specified in Section 8.3(f)).
(e) In the case of termination of this Agreement by Parent
pursuant to Section 8.1(e) or 8.1(k), the fee referred to in Section 8.3(d)
shall be paid by Parent prior to such termination, and in the case of
termination of this Agreement by the Company pursuant to Section 8.1(e) or
Section 8.1(g), the fee referred to in Section 8.3(d) shall be paid by Parent
within three business days after such termination.
(f) The additional amount to be paid by the Company pursuant to
the last clause of Section 8.3(b) shall be equal to five percent (5%) of the
excess, if any, of the Value (as defined below) of the Acquisition Proposal that
is consummated over $181,000,000. The additional amount to be paid by Parent
pursuant to the last clause of Section 8.3(d) shall be equal to five percent
(5%) of the excess, if any, of the Value of the Acquisition proposal that is
consummated over $194,000,000. Any amounts payable pursuant to this Section
8.3(f) shall be paid one business day after the consummation of the acquisition.
Value, for purposes of this Section 8.3(f), shall be equal to the aggregate
consideration paid the shareholders of the Company or to the Company, or to the
stockholders of Parent or to Parent, as the case may be, with publicly-traded
securities valued at the closing price of such securities on the trading day
prior to the consummation of the acquisition and with non-publicly-traded
securities value in accordance with the valuation placed upon them by the
Company's Board of Directors when it made its decision to recommend the
Acquisition Proposal. For purposes of calculating the value of consideration
paid to shareholders of the Company or stockholders of Parent, as the case may
be, all exercisable in-the-money options, warrants and similar rights shall be
deemed to have been exercised.
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SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after approval of this Agreement and the Merger by the shareholders of
the Company; and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders) provided, however, that (i)
after any such approval of this Agreement and the Merger by the Company's
shareholders, no amendment shall be made which by law or NASD regulation
requires further approval of the shareholders of the Company without the further
approval of such shareholders, and (ii) after any such approval of the issuance
of Parent Common Stock in the Merger by Parent's stockholders, no amendment
shall be made which by law or NASD regulation requires further approval of
Parent's stockholders without the further approval of such Stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
9.4 ENTIRE AGREEMENT; COUNTERPARTS; APPLICABLE LAW. This Agreement and
the other agreements and schedules referred to herein and therein and the
Non-Disclosure Agreement dated as of July 28, 1997 between Parent and the
Company constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among or between any of the parties with
respect to the subject matter hereof and thereof. This Agreement may be executed
in several counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument, and shall be governed in all
respects by the laws
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of the State of California as applied to contracts entered into and to be
performed entirely within California provided, however that matters of corporate
governance involving Parent shall be governed by the Delaware General Corporate
Law.
9.5 JURY WAIVER. The parties hereto hereby agree to waive their
respective rights to a trial by jury of any claim or cause of action based upon
or arising out of or related to this Agreement or the transactions contemplated
thereby in any action, proceeding or other litigation of any type brought by any
party against any other party with respect to contracts, claims, tort claims or
otherwise. The scope of this waiver is intended to be as broad as permitted by
law, covering all disputes that may be filed in any court that relate to the
subject matter of this Agreement, including tort claims, contract claims, claims
under common law, statutory claims and any action, counterclaim or other
proceeding which seeks in whole or in part to challenge the validity or
enforceability of this Agreement or the transactions contemplated thereby. This
waiver is irrevocable.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule and Parent
Disclosure Schedule shall be arranged in separate parts corresponding to the
numbered and lettered sections contained in Sections 2 and 3, and the
information disclosed in any numbered or lettered part shall, together with any
other information in any other part or parts of the relevant Disclosure Schedule
which a reasonable Person would relate to such numbered or lettered part, be
deemed to relate to and to qualify the representation or warranty set forth in
the corresponding numbered or lettered section and shall otherwise not be deemed
to relate to or to qualify any other representation or warranty.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.8 ASSIGNABILITY. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of the rights hereunder may be assigned by any party without
the prior written consent of the other party, and any attempted assignment of
this Agreement or any of such rights by a party without such consent shall be
void and of no effect. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
9.9 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
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IF TO PARENT: Arris Pharmaceutical Corporation
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxxxx
WITH A COPY TO: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
IF TO MERGER SUB: Beagle Acquisition Sub, Inc.
c/o Arris Pharmaceutical Corporation
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxxxx
IF TO THE COMPANY: Sequana Therapeutics, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Attention: Xxxxx Xxxxx
WITH A COPY TO: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxxxx
9.10 COOPERATION. The Company agrees to cooperate fully with Parent and
to execute and deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably requested by
Parent to evidence or reflect the transactions contemplated by this Agreement
and to carry out the intent and purposes of this Agreement.
9.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
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(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
ARRIS PHARMACEUTICAL CORPORATION
By: _____________________________________
BEAGLE ACQUISITION SUB, INC.
By: _____________________________________
SEQUANA THERAPEUTICS, INC.
By: _____________________________________
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79
EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Form of Articles of Incorporation of Surviving Corporation
Exhibit C - Form of Affiliate Agreement
Exhibit D - Form of legal opinion of Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Exhibit E - Form of legal opinion of Xxxxxx Godward LLP
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation Proprietary
Asset" shall mean any Proprietary Asset owned by or licensed to any of the
Acquired Corporations or otherwise used by any of the Acquired Corporations.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer or
proposal (other than an offer or proposal by Parent) contemplating or otherwise
relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of related transactions involving:
(a) any merger, consolidation, share exchange, business
combination, issuance of securities, acquisition of securities, tender
offer, exchange offer or other similar transaction (i) in which Parent or
any of the Acquired Corporations is a constituent corporation, (ii) in
which a Person or "group" (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires Parent
or the Company or more than 50% of Parent's business or the Company's
business or directly or indirectly acquires beneficial or record ownership
of securities representing more than 20% of the outstanding securities of
any class of voting securities of any of Parent or the Company, or (iii)
in which any of the Company or Parent issues securities representing more
than 20% of the outstanding securities of any class of voting securities
of the Company or Parent, respectively;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 50% of the assets of the Company or Parent; or
(c) any liquidation or dissolution of the Company or Parent.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
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BEST OF KNOWLEDGE; KNOWLEDGE. Information shall be deemed to be known to
the "best of knowledge" or to the "knowledge" of a party if that information was
actually known or reasonably should have been known by an executive officer of
such party.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common Stock,
$.001 par value, of the Company.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by the Company in accordance with the
requirements of Section 9.6 and that has been delivered by the Company to Parent
on the date of this Agreement and signed by the President of the Company.
COMPANY TRIGGERING EVENT. A "Company Triggering Event" shall be deemed to
have occurred if: (i) the board of directors of the Company shall have failed to
recommend, or shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous (among all directors
present) recommendation in favor of, the Merger or approval of this Agreement;
(ii) the Company shall have failed to include in the Joint Proxy Statement the
unanimous (among all directors present) recommendation of the board of directors
of the Company in favor of approval of this Agreement and the Merger; (iii) the
board of directors of the Company fails to unanimously reaffirm its
recommendation in favor of approval of this Agreement and the Merger within five
business days after the Parent requests in writing that such recommendation be
reaffirmed; (iv) the board of directors of the Company shall have approved,
endorsed or recommended any Acquisition Proposal; (v) the Company shall have
entered into any letter of intent or similar document or any Contract relating
to any Acquisition Proposal; (vi) the Company shall have failed to hold the
Company Shareholders' Meeting as promptly as practicable and in any event within
45 days after the Form S-4 Registration Statement is declared effective under
the Securities Act; (vii) a tender or exchange offer relating to securities of
the Company shall have been commenced and the Company shall not have sent to its
security holders, within five business days after the commencement of such
tender or exchange offer, a statement disclosing that the Company recommends
rejection of such tender or exchange offer; or (viii) an Acquisition Proposal is
publicly announced, and the Company (A) fails to issue a press release
announcing its opposition to such Acquisition Proposal within five business days
after such Acquisition Proposal is announced or (B) otherwise fails to actively
oppose such Acquisition Proposal.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.
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ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared effective
by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HSR ACT. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
JOINT PROXY STATEMENT. "Joint Proxy Statement" shall mean the joint proxy
statement/prospectus to be sent to the Company's shareholders in connection with
the Company Shareholder's Meeting and to Parent's stockholders in connection
with the Parent Stockholders' Meeting.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought,
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conducted or heard by or before, or otherwise involving, any court or other
Governmental Body or any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy, circumstance or
other matter will be deemed to have a "Material Adverse Effect" on the Acquired
Corporations if such event, violation, inaccuracy, circumstance or other matter
would have a material adverse effect on (i) the business, financial condition,
capitalization, assets, liabilities, operations or financial performance of the
Acquired Corporations taken as a whole, (ii) the ability of the company to
consummate the Merger or any of the other transactions contemplated by this
Agreement or to perform obligations under this Agreement, or (iii) Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the stock of the Surviving Corporation. An
event, violation, inaccuracy, circumstance or other matter will be deemed to
have a "Material Adverse Effect" on Parent if such event, violation, inaccuracy,
circumstance or other matter would have a material adverse effect on (i) the
business, financial condition, assets, liabilities, operations or financial
performance of the Parent Corporations taken as a whole, (ii) the ability of
Parent to consummate the Merger or any of the other transactions contemplated by
this Agreement or to perform its obligations under this Agreement, or (iii) the
ability of the Company's shareholders to vote, receive dividends with respect
to, or otherwise exercise ownership rights with respect to the stock of Parent
received by them.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock,
$0.001 par value per share, of Parent.
PARENT CORPORATION PROPRIETARY ASSET. "Parent Corporation Proprietary
Asset" shall mean any Proprietary Asset owned by or licensed to any of the
Parent Corporations or otherwise used by any of the Parent Corporations.
PARENT TRIGGERING EVENT. A "Parent Triggering Event" shall be deemed to
have occurred if: (i) the board of directors of the Parent shall have failed to
recommend, or shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to the Company its unanimous (among all directors
present) recommendation in favor of, the Merger or approval of this Agreement;
(ii) Parent shall have failed to include in the Joint Proxy Statement the
unanimous (among all directors present) recommendation of the board of directors
of Parent in favor of approval of this Agreement and the Merger; (iii) the board
of directors of Parent fails to unanimously reaffirm its recommendation in favor
of approval of this Agreement and the Merger within five business days after the
Company requests in writing that such recommendation be reaffirmed; (iv) the
board of directors of Parent shall have approved, endorsed or recommended any
Acquisition Proposal; (v) the Parent shall have entered into any letter of
intent or similar document or any Contract relating to any Acquisition Proposal;
(vi)
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the Parent shall have failed to hold the Parent Shareholders' Meeting as
promptly as practicable and in any event within 45 days after the Form S-4
Registration Statement is declared effective under the Securities Act; (vii) a
tender or exchange offer relating to securities of the Parent shall have been
commenced and the Parent shall not have sent to its security holders, within
five business days after the commencement of such tender or exchange offer, a
statement disclosing that the Parent recommends rejection of such tender or
exchange offer; or (viii) an Acquisition Proposal is publicly announced, and the
Parent (A) fails to issue a press release announcing its opposition to such
Acquisition Proposal within five business days after such Acquisition Proposal
is announced or (B) otherwise fails to actively oppose such Acquisition
Proposal.
PENSION PLAN. "Pension Plan" shall mean any employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Subtitles of ERISA).
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities or other interests in such Entity that is sufficient
to enable such Person to elect at least a majority of the members of such
Entity's board of directors or other governing body.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of outstanding
Company Common Stock or Parent Common Stock, as the case may be, on terms that
the board of directors of the Company or Parent, as the case may be, determines
in its reasonable judgment, after consultation with its financial advisor, to be
more favorable to the Company's shareholders or Parent's stockholders, as the
case may be, than the terms of the Merger; provided, however, that any such
offer shall not be deemed to be a "Superior Offer" if any financing required to
consummate the transaction
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contemplated by such offer is not committed and is not reasonably capable of
being obtained by such third party.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
WELFARE PLAN. "Welfare Plan" shall mean an employee welfare benefit plan
(as defined in Section 3(1) of ERISA, whether or not excluded from coverage
under specific Titles or Subtitles of ERISA).
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EXHIBIT B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SEQUANA THERAPEUTICS, INC.
I.
The name of this corporation is SEQUANA THERAPEUTICS, INC.
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The corporation is authorized to issue only one class of stock, to be
designated Common Stock. The total number of shares of Common Stock presently
authorized is Ten Million (10,000,000) shares, each having a par value of
one-tenth of one cent ($.001).
IV.
(a) The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
87
(b) This corporation is authorized to provide indemnification of agents
as defined in Section 317 of the California Corporations Code) for breach of
duty to the corporation and its shareholders through bylaw provisions or through
agreements with the agents, or through shareholder resolutions, or otherwise, in
excess of the indemnification otherwise permitted by Section 317 of the
Corporations Code, subject to the limits on such excess indemnification set
forth in Section 204 of the Corporations Code.
(c) Any repeal or modification of this Article shall only be prospective
and shall not affect the rights under this Article in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
V.
The name and address in the State of California of this corporation's
initial agent for service of process is:
Xxxxxx Xxxxxx
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
These Amended and Restated Articles of Incorporation have been signed
on this __ day of _________, 199_.
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EXHIBIT C
AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT is being executed and delivered as of
_____________________, 1997 by ("Shareholder") in favor of and for the benefit
of Parent, Inc., a Delaware corporation ("Parent").
RECITALS
A. Shareholder is a shareholder and is an officer and director of
Beagle, Inc., a California corporation (the "Company").
B. Parent, the Company, and Beagle Acquisition Sub, Inc., a California
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), have entered
into an Agreement and Plan of Merger and Reorganization dated as of October ___,
1997 (the "Reorganization Agreement"), providing for the merger of Merger Sub
into the Company (the "Merger"). The Reorganization Agreement contemplates that,
upon consummation of the Merger, (i) holders of shares of the capital stock of
the Company will receive shares of common stock of Parent ("Parent Common
Stock") in exchange for their shares of capital stock of the Company and (ii)
the Company will become a wholly owned subsidiary of Parent. It is accordingly
contemplated that Shareholder will receive shares of Parent Common Stock in the
Merger.
C. Shareholder understands that the Parent Common Stock being issued in
the Merger will be issued pursuant to a registration statement on Form S-4, and
that Shareholder may be deemed an "affiliate" of Parent as such term is defined
for purposes of paragraphs (c) and (d) of Rule 145 of the General Rules and
Regulations of the Securities and Exchange Commission ("Rule 145") under the
Securities Act of 1933, as amended (the "Act"), and, as such, Shareholder may
only transfer, sell or dispose of such Parent Common Stock in accordance with
this Affiliate Agreement and Rule 145.
AGREEMENT
1. REPRESENTATIONS AND WARRANTIES. Shareholder represents and warrants
to Parent as follows:
a. Shareholder is the holder and "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the
number and class of shares of capital stock of the Company set forth beneath
Shareholder's signature on the signature page hereof (the "Company Shares"), and
Shareholder has good and valid title to the Company Shares, free and clear of
any liens, pledges, security interests, adverse claims, equities, options,
proxies, charges, encumbrances or restrictions of any nature.
C-1.
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b. Shareholder has carefully read this Affiliate Agreement, and
to the extent Shareholder felt necessary, has discussed with counsel the
limitations imposed on Shareholder's ability to sell, transfer or otherwise
dispose the shares of Parent Common Stock that Shareholder is to receive in the
Merger (the "Parent Shares"). Shareholder fully understands the limitations this
Affiliate Agreement places upon Shareholder's ability to sell, transfer or
otherwise dispose of the Parent Shares.
c. Shareholder understands that the representations, warranties
and covenants set forth in this Affiliate Agreement will be relied upon by
Parent and its counsel for purposes of determining whether Parent should proceed
with the Merger and for various other purposes.
2. PROHIBITIONS AGAINST TRANSFER. Shareholder agrees that Shareholder
shall not effect any sale, transfer or other disposition of any Parent Shares
unless:
a. such sale, transfer or other disposition is effected pursuant
to an effective registration statement under the Act;
b. such sale, transfer or other disposition is made in conformity
with the requirements of Rule 145 under the Act, as evidenced by a broker's
letter and a representation letter executed by Shareholder (satisfactory in form
and content to Parent) stating that such requirements have been met;
c. counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (satisfactory in form and content to Parent),
upon which Parent may rely, that such sale, transfer or other disposition will
be exempt from registration under the Act; or
d. an authorized representative of the SEC shall have rendered
written advice to Shareholder to the effect that the SEC would take no action,
or that the staff of the SEC would not recommend that the SEC take action, with
respect to such sale, transfer or other disposition, and a copy of such written
advice and all other related communications with the SEC shall have been
delivered to Parent.
3. STOP TRANSFER INSTRUCTIONS; LEGEND.
Shareholder acknowledges and agrees that (a) stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Shares, and (b) each certificate representing any of such shares shall bear a
legend identical or similar in effect to the following legend (together with any
other legend or legends required by applicable state securities laws or
otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT OF 1933
APPLIES AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE
C-2.
90
PROVISIONS OF SUCH RULE AND IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED AS OF , 1997, BETWEEN THE REGISTERED HOLDER HEREOF
AND PARENT, INC., A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF PARENT, INC."
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Shareholder set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Shareholder, on the
one hand, and the Company or Parent, on the other. The existence of any claim or
cause of action by Shareholder against the Company or Parent shall not
constitute a defense to the enforcement of any of such covenants or obligations
against Shareholder.
5. SPECIFIC PERFORMANCE. Shareholder agrees that in the event of any
breach or threatened breach by Shareholder of any covenant, obligation or other
provision contained in this Affiliate Agreement, Parent shall be entitled (in
addition to any other remedy that may be available to Parent) to: (a) a decree
or order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision; and (b) an
injunction restraining such breach or threatened breach.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to Parent, Shareholder shall hold harmless and
indemnify Parent from and against, and shall compensate and reimburse Parent
for, any loss, damage, injury, decline in value, lost opportunity, liability,
exposure, claim, demand, settlement, judgment, award, fine, penalty, tax, fee,
charge, cost or expense of any nature (whether or not relating to a third party
claim) which is directly or indirectly suffered or incurred at any time by
Parent or any of Parent's affiliates or to which Parent or any of Parent's
affiliates otherwise becomes subject and that arises from any inaccuracy in or
breach of any representation, warranty, covenant or obligation of Shareholder
contained in this Affiliate Agreement.
7. OTHER AGREEMENTS. Nothing in this Affiliate Agreement shall limit
any of the rights or remedies of Parent under the Reorganization Agreement, the
Voting Agreement dated as of October , 1997 between Shareholder and Parent or
any Continuity of Interest Certificate executed by Shareholder in favor of
Parent; and nothing in the Reorganization Agreement, said Voting Agreement or
any such Continuity of Interest Certificate shall limit any of the rights or
remedies of Parent under this Affiliate Agreement.
8. NOTICES. Any notice or other communication required or permitted to
be delivered to Shareholder or Parent under this Affiliate Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery service
or by facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
party):
C-3.
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IF TO PARENT:
IF TO SHAREHOLDER:
9. SEVERABILITY. If any provision of this Affiliate Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Affiliate Agreement.
Each provision of this Affiliate Agreement is separable from every other
provision of this Affiliate Agreement, and each part of each provision of this
Affiliate Agreement is separable from every other part of such provision.
10. GOVERNING LAW. This Affiliate Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
11. WAIVER. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Affiliate Agreement, and no delay on the
part of Parent in exercising any power, right, privilege or remedy under this
Affiliate Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. Parent shall not be deemed to have waived any
claim arising out of this Affiliate Agreement, or any power, right, privilege or
remedy under this Affiliate Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly
executed and delivered on behalf of Parent; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
12. CAPTIONS. The captions contained in this Affiliate Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Affiliate Agreement and
C-4.
92
shall not be referred to in connection with the construction or interpretation
of this Affiliate Agreement.
13. FURTHER ASSURANCES. Shareholder shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request to effectuate the intent and
purposes of this Affiliate Agreement.
14. ENTIRE AGREEMENT. This Affiliate Agreement, the Reorganization
Agreement, the Voting Agreement referred to in Section 7 of this Affiliate
Agreement and any Continuity of Interest Certificate referred to in Section 7 of
this Affiliate Agreement set forth the entire understanding of Parent and
Shareholder relating to the subject matter hereof and thereof and supersede all
other prior agreements and understandings between Parent and Shareholder
relating to the subject matter hereof and thereof.
15. NON-EXCLUSIVITY. The rights and remedies of Parent hereunder are not
exclusive of or limited by any other rights or remedies which Parent may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative).
16. AMENDMENTS. This Affiliate Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent and Shareholder.
17. ASSIGNMENT. This Affiliate Agreement and all obligations of
Shareholder hereunder are personal to Shareholder and may not be transferred or
delegated by Shareholder at any time. Parent may freely assign any or all of its
rights under this Affiliate Agreement (including its indemnification rights
under Section 6), in whole or in part, to any other person or entity without
obtaining the consent or approval of Shareholder.
18. BINDING NATURE. Subject to Section 17, this Affiliate Agreement will
inure to the benefit of Parent and its successors and assigns and will be
binding upon Shareholder and Shareholder's representatives, executors,
administrators, estate, heirs, successors and assigns.
19. ATTORNEYS' FEES AND EXPENSES. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Affiliate
Agreement is brought against Shareholder, the prevailing party shall be entitled
to recover reasonable attorneys' fees, costs and disbursements (in addition to
any other relief to which the prevailing party may be entitled).
C-5.
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20. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Affiliate Agreement shall survive the consummation
of the Merger.
Shareholder has executed this Affiliate Agreement on __________________,
1997.
Signature: _______________________________
Number of shares of capital stock of the Company
beneficially owned:
______ shares of common stock
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EXHIBIT D
FORM OF LEGAL OPINION OF WILSON, SONSINI, XXXXXXXX & XXXXXX
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
2. All corporate action, including approval by the Company's Board of
Directors and Shareholders, required to be taken on the part of the Company to
authorize the Company to execute, deliver and perform its obligations under the
Reorganization Agreement and to consummate the Merger has been duly and validly
taken.
3. The Reorganization Agreement has been duly authorized, executed and
delivered by the Company and is the valid and binding obligation of the Company
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance. [Opinion will not extend to Section 8.3.]
4. The execution and delivery of the Reorganization Agreement by the
Company, and the consummation by the Company of the transactions contemplated
thereby and compliance by the Company with the provisions thereof, do not
violate any provisions of the Company's Amended and Restated Articles of
Incorporation[, as amended,] or the Company's Bylaws, as amended and do not
violate or contravene any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company and of which
we are aware, which default or violation or contravention would have a Material
Adverse Effect on the Company.
5. No government consent, approval, authorization, registration,
declaration or filing is required for the execution and delivery of the
Reorganization Agreement on behalf of the Company or for the performance by the
Company of the Merger, except for (a) the filing of the agreement of merger with
the Secretary of State of the State of California as contemplated by Section 1.3
of the Reorganization Agreement and as required by the California General
Corporation Law and (b) such government consents, approvals, authorizations,
registrations, declarations and filings as have been obtained or made, unless
the failure to obtain or make the same would (A) not have a Material Adverse
Effect on the Company and (B) not adversely affect the ability of the Company to
consummate the transactions contemplated by the Reorganization Agreement to take
place at the Closing.
6. To the best of our knowledge, except as set forth in the Company's
SEC Filings, there is no action, proceeding or investigation pending or overtly
threatened against the Company before any court or administrative agency that
calls into question the validity or performance of the Merger or that, if
determined adversely to it, may reasonably be expected to have a Material
Adverse Effect on the Company.
[The opinion may be limited by customary qualifications and limitations.]
95
EXHIBIT E
FORM OF LEGAL OPINION OF XXXXXX GODWARD LLP
1. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
3. All corporate action, including approval by Parent's Board of
Directors and Stockholders, required to be taken on the part of Parent to
authorize Parent to execute, deliver and perform its obligations under the
Reorganization Agreement and to consummate the Merger has been duly and validly
taken. All corporate action, including approval by Merger Sub's Board of
Directors and sole shareholder, required to be taken on the part of Merger Sub
to authorize Merger Sub to execute, deliver and perform its obligations under
the Reorganization Agreement and to consummate the Merger has been duly and
validly taken.
4. The Reorganization Agreement has been duly authorized, executed and
delivered by Parent and by Merger Sub and are the valid and binding obligations
of Parent and Merger Sub enforceable in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting creditors' rights, and subject to
general equity principles and to limitations on availability of equitable
relief, including specific performance. [Opinion will not extend to Section
8.3.]
5. The execution and delivery of the Reorganization Agreement by Parent
and Merger Sub, and the consummation by Parent and Merger Sub of the
transactions contemplated thereby and compliance by Parent and Merger Sub with
the provisions thereof, do not violate any provisions of Parent's Amended and
Restated Certificate of Incorporation, as amended, Merger Sub's Articles of
Incorporation or Parent's or Merger Sub's Bylaws, and do not violate or
contravene any order, writ, judgment, injunction, decree, determination or award
which has been entered against Parent and of which we are aware, which default
or violation or contravention would have a Material Adverse Effect on Parent.
6. No government consent, approval, authorization, registration,
declaration or filing is required for the execution and delivery of the
Reorganization Agreement on behalf of Parent or Merger Sub or for the
performance by Parent or Merger Sub of the Merger, except for (a) the filing of
the agreement of merger with the Secretary of State of the State of California
as contemplated by Section 1.3 of the Reorganization Agreement and as required
by the California General Corporation Law and (b) such government consents,
approvals, authorizations, registrations, declarations and filings as have been
obtained or made, unless the failure to obtain or make the same would (A) not
have a Material Adverse Effect on Parent and (B) not adversely affect the
ability of Parent or Merger Sub to consummate the transactions contemplated by
the Reorganization Agreement to take place at the Closing.
96
7. To the best of our knowledge, except as set forth in the Parent SEC
Filings, there is no action, proceeding or investigation pending or overtly
threatened against Parent or Merger Sub before any court or administrative
agency that calls into question the validity or performance of the Merger or
that, if determined adversely to it, may reasonably be expected to have a
Material Adverse Effect on Parent.
[The opinion may be limited by customary qualifications and limitations.]
