EXHIBIT 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MYLAN LABORATORIES INC.
SUMMIT MERGER CORPORATION
AND
KING PHARMACEUTICALS, INC.
DATED AS OF JULY 23, 2004
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
ARTICLE I THE MERGER...........................................................2
SECTION 1.1 The Merger.....................................................2
SECTION 1.2 Closing........................................................2
SECTION 1.3 Effective Time.................................................2
SECTION 1.4 Effects of the Merger..........................................2
SECTION 1.5 Organizational Documents of the Surviving Corporation..........2
SECTION 1.6 Directors and Officers of the Surviving Corporation............3
ARTICLE II EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES.....................3
SECTION 2.1 Effect on Capital Stock........................................3
SECTION 2.2 Exchange of Shares and Certificates............................4
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................7
SECTION 3.1 Representations and Warranties of the Company..................7
SECTION 3.2 Representations and Warranties of Parent and Merger Sub.......36
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS..........................51
SECTION 4.1 Conduct of Business...........................................51
SECTION 4.2 No Solicitation...............................................56
ARTICLE V ADDITIONAL AGREEMENTS...............................................60
SECTION 5.1 Preparation of SEC Documents; Stockholders' Meetings..........60
SECTION 5.2 Accountant's Letters and Consents.............................62
SECTION 5.3 Access to Information; Confidentiality........................63
SECTION 5.4 Antitrust Filings; Reasonable Best Efforts....................65
SECTION 5.5 Indemnification...............................................66
SECTION 5.6 Employee Benefits.............................................69
SECTION 5.7 Fees and Expenses.............................................70
SECTION 5.8 Public Announcements..........................................70
SECTION 5.9 Listing.......................................................71
SECTION 5.10 Tax-Free Reorganization Treatment.............................71
SECTION 5.11 Conveyance Taxes..............................................71
SECTION 5.12 Equity Awards.................................................71
SECTION 5.13 Affiliates....................................................73
SECTION 5.14 Notification of Certain Matters...............................73
SECTION 5.15 Rights Plans; State Takeover Laws.............................74
SECTION 5.16 Reservation of Parent Common Stock............................74
SECTION 5.17 Stockholder Litigation........................................74
SECTION 5.18 Convertible Debentures........................................74
SECTION 5.19 Settlements...................................................75
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ARTICLE VI CONDITIONS PRECEDENT...............................................75
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger....75
SECTION 6.2 Conditions to Obligations of the Company......................76
SECTION 6.3 Conditions to Obligations of Parent and Merger Sub............77
ARTICLE VII TERMINATION.......................................................78
SECTION 7.1 Termination...................................................78
SECTION 7.2 Effect of Termination.........................................80
SECTION 7.3 Payments......................................................80
SECTION 7.4 Amendment.....................................................81
SECTION 7.5 Extension; Waiver.............................................81
ARTICLE VIII GENERAL PROVISIONS...............................................82
SECTION 8.1 Nonsurvival of Representations and Warranties.................82
SECTION 8.2 Notices.......................................................82
SECTION 8.3 Definitions...................................................83
SECTION 8.4 Terms Defined Elsewhere.......................................89
SECTION 8.5 Interpretation................................................92
SECTION 8.6 Counterparts..................................................93
SECTION 8.7 Entire Agreement; No Third-Party Beneficiaries................93
SECTION 8.8 Governing Law.................................................93
SECTION 8.9 Assignment....................................................93
SECTION 8.10 Consent to Jurisdiction.......................................93
SECTION 8.11 Headings, etc.................................................94
SECTION 8.12 Severability..................................................94
SECTION 8.13 Failure or Indulgence Not Waiver; Remedies Cumulative.........94
SECTION 8.14 Waiver of Jury Trial..........................................94
SECTION 8.15 Specific Performance..........................................94
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of July 23, 2004, by and among MYLAN LABORATORIES INC., a
Pennsylvania corporation ("Parent"), SUMMIT MERGER CORPORATION, a Tennessee
corporation and a direct wholly-owned subsidiary of Parent ("Merger Sub"), and
KING PHARMACEUTICALS, INC., a Tennessee corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have deemed it advisable and in the best interests of their
respective corporations and stockholders that the parties hereto consummate
the transactions contemplated herein; and
WHEREAS, in furtherance thereof, the Boards of Directors of each of
Parent, Merger Sub and the Company have adopted and approved this Agreement
and the merger of Merger Sub with and into the Company with the Company
continuing as the surviving corporation (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
the provisions of the Tennessee Business Corporation Act (the "TBCA"); and
WHEREAS, the Boards of Directors of each of the Company and Merger
Sub have determined to recommend to their respective stockholders the approval
and adoption of this Agreement and the Merger; and
WHEREAS, the Board of Directors of Parent has approved, and has
determined to recommend to its stockholders approval of, the issuance of
shares of Parent Common Stock (as defined in Section 2.1(a)) in connection
with the Merger (the "Stock Issuance"); and
WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved
this Agreement and the Merger; and
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement is intended to be, and is hereby, adopted as a
plan of reorganization within the meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the TBCA, at the Effective
Time (as defined in Section 1.3), Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation in the Merger (the
"Surviving Corporation").
SECTION 1.2 CLOSING. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m., New York City time, on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI (other
than delivery of items to be delivered at the Closing and other than those
conditions that by their nature are to be satisfied at the Closing, it being
understood that the occurrence of the Closing shall remain subject to the
satisfaction or waiver of such conditions at the Closing) at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another time, date or place is agreed to in writing by the
parties hereto. The date on which the Closing occurs is referred to herein as
the "Closing Date."
SECTION 1.3 EFFECTIVE TIME. Subject to the terms and conditions of
this Agreement, as soon as practicable on the Closing Date, the parties shall
cause the Merger to be consummated by filing articles of merger in such form
as required by, and executed in accordance with, the relevant provisions of
the TBCA (the "Articles of Merger") with the Secretary of State of the State
of Tennessee (the "Secretary of State") and shall make all other filings or
recordings required under the TBCA. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Secretary of State, or
at such subsequent date or time as Parent and the Company shall agree and
specify in the Articles of Merger. The time at which the Merger becomes
effective is referred to herein as the "Effective Time."
SECTION 1.4 EFFECTS OF THE MERGER. At the Effective Time, the Merger
shall have the effects set forth in this Agreement and in the applicable
provisions of the TBCA.
SECTION 1.5 ORGANIZATIONAL DOCUMENTS OF THE SURVIVING CORPORATION.
At the Effective Time, the Company Charter (as defined in Section 3.1(a)(ii))
shall be amended and restated in its entirety to be identical to the charter
of Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended in accordance with Applicable Law (as defined in Section
3.1(g)(ii)) and as provided in such charter; provided, however, that at the
Effective Time, Article I of the charter of the Surviving Corporation shall be
amended and restated in its entirety to read as follows: "The name of the
corporation is King Pharmaceuticals, Inc." At the Effective Time, the Company
Bylaws (as defined in Section 3.1(a)(ii)) shall be amended and restated in
their entirety to be identical to the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, until thereafter amended in
accordance with Applicable Law and as provided in such bylaws.
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SECTION 1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the charter and bylaws of the Surviving Corporation and
Applicable Law. The officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the charter and bylaws of the Surviving Corporation
and Applicable Law.
ARTICLE II
EFFECTS OF THE MERGER; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of Parent, Merger Sub, the Company or the
holders of any shares of common stock, no par value, of the Company (together
with any associated Company Rights (as defined in Section 3.1(b)(i)), "Company
Common Stock"):
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time,
other than any shares of Company Common Stock to be cancelled pursuant to
Section 2.1(c), shall be automatically converted into the right to receive
0.9000 (the "Exchange Ratio") fully paid and nonassessable shares of common
stock, par value $0.50 per share (together with any associated Parent Rights
(as defined in Section 3.2(b)(i),"Parent Common Stock"), of Parent (the
"Merger Consideration") upon surrender of the Certificate (as defined in
Section 2.2(b)), which immediately prior to the Effective Time represented
such share of Company Common Stock, in the manner provided in Section 2.2(b)
(or, in the case of a lost, stolen or destroyed certificate, Section 2.2(i)).
As a result of the Merger, at the Effective Time, each holder of a Certificate
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration payable in respect of the shares of Company
Common Stock represented by such Certificate immediately prior to the
Effective Time, any cash in lieu of fractional shares payable pursuant to
Section 2.1(e) and any dividends or other distributions payable pursuant to
Section 2.2(c), all to be issued or paid, without interest, in consideration
therefor upon the surrender of such Certificate in accordance with Section
2.2(b).
(b) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of common stock, no par value, of Merger Sub shall be converted into one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(c) CANCELLATION OF CERTAIN SHARES. Each share, if any, of
Company Common Stock owned by the Company or Parent shall automatically be
extinguished without any conversion, and no consideration shall be delivered
in respect thereof.
(d) COMPANY OPTIONS. All options to purchase Company Common
Stock (each, a "Company Option") issued and outstanding under each Company
Stock Plan (as defined in Section 3.1(b)(i)) shall be assumed by Parent in
accordance with Section 5.12(a).
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(e) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof Parent shall
pay to each holder of shares of Company Common Stock who would otherwise be
entitled to a fraction of a share of Parent Common Stock (after aggregating
all fractional shares of Parent Common Stock that otherwise would be received
by such holder), upon surrender of such holder's Certificate(s), an amount of
cash (rounded to the nearest whole cent), without interest, equal to the
product of: (i) such fraction, multiplied by (ii) the average closing price of
one share of Parent Common Stock on the New York Stock Exchange ("NYSE")
Composite Transactions Reporting System, as reported in The Wall Street
Journal, for the 10 most recent trading days ending on the trading day one day
prior to the Effective Time.
(f) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the appropriate effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock having a record date on
or after the date hereof and prior to the Effective Time.
SECTION 2.2 EXCHANGE OF SHARES AND CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time, Parent
shall engage a nationally-recognized institution reasonably satisfactory to
the Company to act as exchange agent in connection with the Merger (the
"Exchange Agent"). At the Effective Time, Parent shall deposit with the
Exchange Agent, in trust for the benefit of the holders of shares of Company
Common Stock immediately prior to the Effective Time, certificates
representing the shares of Parent Common Stock issuable pursuant to Section
2.1(a). In addition, Parent shall make available by depositing with the
Exchange Agent, as necessary from time to time after the Effective Time, cash
in an amount sufficient to make the payments in lieu of fractional shares
pursuant to Section 2.1(e) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 2.2(c).
All cash and Parent Common Stock deposited with the Exchange Agent shall
hereinafter be referred to as the "Exchange Fund."
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
which at the Effective Time were converted into the right to receive the
Merger Consideration pursuant to Section 2.1 hereof, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration, cash in lieu of any fractional shares pursuant to Section
2.1(e) and any dividends or other distributions payable pursuant to Section
2.2(c). Upon surrender of Certificates for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto,
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and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificates shall be entitled to receive in exchange
therefor a certificate or certificates representing that number of
whole shares of Parent Common Stock (after taking into account all
Certificates surrendered by such holder) to which such holder is entitled
pursuant to Section 2.1 (which shall be in uncertificated book entry form
unless a physical certificate is requested), payment in lieu of fractional
shares which such holder is entitled to receive pursuant to Section 2.1(e) and
any dividends or distributions payable pursuant to Section 2.2(c), and the
Certificates so surrendered shall forthwith be cancelled. 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 (as defined in
Section 8.3(jj)) other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such
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. Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the
Merger Consideration (and any amounts to be paid pursuant to Section 2.1(e) or
Section 2.2(c)) upon such surrender. No interest shall be paid or shall accrue
on any amount payable pursuant to Section 2.1(e) or Section 2.2(c).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.1(e) hereof, until such
Certificate has been surrendered in accordance with this Article II. Subject
to Applicable Law, following surrender of any such Certificate, there shall be
paid to the recordholder thereof, without interest, (i) promptly after such
surrender, the number of whole shares of Parent Common Stock issuable in
exchange therefor pursuant to this Article II, together with any cash payable
in lieu of a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.1(e) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date after the Effective Time and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock,
less the amount of any withholding Taxes (as defined in Section 3.1(k)(xii))
that may be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II and any cash paid
pursuant to Section 2.1(e) or Section 2.2(c) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares
of Company Common Stock previously represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective
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Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to Parent for payment of their claim for the Merger
Consideration, any cash in lieu of fractional shares of Parent Common Stock
pursuant to Section 2.1(e) and any dividends or distributions pursuant to
Section 2.2(c).
(f) NO LIABILITY. None of Parent, Merger Sub, the Company or
the Exchange Agent or any of their respective directors, officers, employees
and agents shall be liable to any Person in respect of any shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to five years after the Effective Time, or immediately
prior to such earlier date on which any shares of Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock issuable in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.1(c)(v)), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any Person previously entitled
thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis; provided that no such investment or loss thereon shall affect the
amounts payable to former stockholders of the Company after the Effective Time
pursuant to this Article II. Any interest and other income resulting from such
investment shall become a part of the Exchange Fund, and any amounts in excess
of the amounts payable pursuant to this Article II shall promptly be paid to
Parent.
(h) WITHHOLDING RIGHTS. Parent and the Exchange Agent shall be
entitled to deduct and withhold from any consideration payable pursuant to
this Agreement to any Person who was a holder of Company Common Stock
immediately prior to the Effective Time such amounts as Parent or the Exchange
Agent may be required to deduct and withhold with respect to the making of
such payment under the Code or any other provision of federal, state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the Person to whom such consideration
would otherwise have been paid.
(i) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock as may be required pursuant to Section 2.1(a), cash for
fractional shares pursuant to Section 2.1(e) and any dividends or distributions
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payable pursuant to Section 2.2(c); provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver an agreement of
indemnification in form reasonably satisfactory to Parent, or a bond in such sum
as Parent may reasonably direct as indemnity, against any claim that may be made
against Parent or the Exchange Agent in respect of the Certificates alleged to
have been lost, stolen or destroyed.
(j) AFFILIATES. Notwithstanding anything to the contrary
herein, to the fullest extent permitted by Applicable Law, no certificates
representing shares of Parent Common Stock shall be delivered to a Person who
may be deemed an "affiliate" of the Company in accordance with Section 5.13
hereof for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") thereunder until such Person
has executed and delivered an Affiliate Agreement (as defined in Section 5.13)
to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth in (x) the disclosure letter dated as of the date of this Agreement
and executed and delivered by the Company to Parent concurrently with or prior
to the execution and delivery by the Company of this Agreement (the "Company
Disclosure Letter") or (y) all registration statements, prospectuses, reports,
schedules, forms, statements, certifications and other documents (including
exhibits and all other information incorporated by reference therein) publicly
filed by the Company since January 1, 2001 and prior to the date hereof with
the SEC ("Company Public Filings"), the Company represents and warrants to
Parent and Merger Sub as set forth below.
(a) ORGANIZATION, STANDING AND CORPORATE POWER; CHARTER
DOCUMENTS; SUBSIDIARIES.
(i) ORGANIZATION, STANDING AND CORPORATE POWER. The
Company and each of its Subsidiaries is a corporation or other legal
entity duly organized, validly existing and in good standing (with
respect to jurisdictions which recognize such concept) under the laws of
the jurisdiction in which it is incorporated or otherwise organized, and
has the requisite corporate (or similar) power and authority and all
government approvals necessary to own, lease and operate its properties
and to carry on its business as currently conducted, except for those
jurisdictions in which the failure to have such power, authority and
government approvals and to be so organized, existing or in good standing
are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect (as defined in Section 8.3(f)). Each of
the Company and each of its Subsidiaries is duly qualified or licensed to
do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature or
conduct of its business or the ownership, leasing or operation of its
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properties makes such qualification, licensing or good standing
necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing is not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse
Effect.
(ii) CHARTER DOCUMENTS. The Company has delivered or made
available to Parent prior to the execution of this Agreement complete and
correct copies of (A) the articles of incorporation of the Company
(including any certificates of designation), as amended and currently in
effect (the "Company Charter"), and the bylaws of the Company, as amended
and currently in effect (the "Company Bylaws," and, together with the
Company Charter, the "Company Organizational Documents"), and (B) the
articles or certificate of incorporation and bylaws or like
organizational documents of each of its Subsidiaries (as amended and
currently in effect (collectively, the "Company Subsidiary Organizational
Documents")), and each such instrument is in full force and effect. The
Company is not in violation of the Company Organizational Documents, and
none of the Company's Subsidiaries is in material violation of its
Company Subsidiary Organizational Documents.
(iii) SUBSIDIARIES. Section 3.1(a)(iii) of the Company
Disclosure Letter lists all the Subsidiaries of the Company as of the
date of this Agreement. All the outstanding shares of capital stock of,
or other equity interests in, each of the Subsidiaries listed on Section
3.1(a)(iii) of the Company Disclosure Letter have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
the Company, free and clear of all pledges, claims, restrictions,
infringements, liens, charges, encumbrances and security interests and
claims of any kind or nature whatsoever (collectively, "Liens") and free
of preemptive rights.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company consists
of 300,000,000 shares of Company Common Stock, and 15,000,000 shares of
preferred stock, no par value ("Company Preferred Stock"). At the close
of business on July 22, 2004, (A) 241,439,472 shares of Company Common
Stock were issued and outstanding; (B) no shares of Company Common Stock
were held by the Company; (C) no shares of Company Preferred Stock were
issued and outstanding; (D) 6,877,990 shares of Company Common Stock were
reserved for issuance upon conversion of the Company's 2 3/4% Convertible
Debentures due November 15, 2021 (the "Convertible Debentures"); (E)
12,413,065 shares of Company Common Stock were reserved for issuance
pursuant to the 1998 Company Non-Employee Director Stock Option Plan, the
1997 Incentive and Nonqualified Stock Option Plan, the Medco Research,
Inc. 1989 Stock Option and Stock Appreciation Rights Plan, the 1989
Incentive Stock Option Plan of Xxxxx Medical Industries, Inc., the Xxxxx
Medical Industries, Inc. 1994 Incentive Stock Plan, and the Xxxxx Medical
Industries, Inc. 1999 Incentive Stock Plan (such plans, collectively, the
"Company Stock Plans"); and (F) 50,000 shares of Company Preferred Stock
were designated as Junior Participating Preferred
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Stock, Series A, no par value, and were reserved for issuance upon
the exercise of preferred share purchase rights (the "Company Rights")
issued pursuant to the Rights Agreement, dated July 23, 2004, between the
Company and American Stock Transfer & Trust Company, as rights agent (the
"Company Rights Agreement"). The Company has delivered or made available
to Parent a complete and correct copy of the Company Rights Agreement as
in effect on the date hereof. Each outstanding share of capital stock of
the Company is duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights.
(ii) As of the close of business on July 22, 2004,
6,719,115 shares of Company Common Stock were subject to issuance
pursuant to outstanding Company Options under the Company Stock Plans.
Section 3.1(b)(ii) of the Company Disclosure Letter sets forth the number
of Company Options outstanding under each Company Stock Plan as of the
close of business on July 22, 2004. There are no Company Options
outstanding other than Company Options outstanding under Company Stock
Plans. All shares of Company Common Stock that may be issued prior to the
Effective Time under the Company Stock Plans, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. There are no outstanding or
authorized stock appreciation rights, security-based performance units,
"phantom" stock, profit participation or other similar rights or other
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to receive
any payment or other value based on the revenues, earnings or financial
performance, stock price performance or other attribute of the Company or
any of its Subsidiaries or assets or calculated in accordance therewith
(other than ordinary course payments or commissions to sales
representatives of the Company). There are no contractual obligations for
the Company or any of its Subsidiaries to file a registration statement
under the Securities Act or which otherwise relate to the registration of
any securities of the Company or its Subsidiaries under the Securities
Act.
(iii) No bonds, debentures, notes or other evidences of
indebtedness having the right to vote on any matters on which
stockholders of the Company may vote ("Company Voting Debt") are issued
or outstanding as of the date hereof.
(iv) As of July 22, 2004, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock, Company
Voting Debt or other voting securities of the Company or any of its
Subsidiaries, or obligating the Company or any of its Subsidiaries to
9
issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(v) Since December 31, 2003 and through the date hereof,
other than (A) issuances of Company Common Stock pursuant to the exercise
of Company Options granted under Company Stock Plans and outstanding as
of December 31, 2003 and (B) issuances of Company Common Stock
(consisting of newly-issued shares or shares owned by the Company) as
contributions of Company Common Stock to defined contribution plans
sponsored by the Company, there has been no change in (1) the outstanding
capital stock of the Company, (2) the number of Company Options
outstanding, or (3) the number of other options, warrants or other rights
to purchase capital stock of the Company.
(vi) Neither the Company nor any of its Subsidiaries is a
party to any currently effective agreement (A) restricting the purchase
or transfer of, (B) relating to the voting of, or (C) requiring the
repurchase, redemption or disposition of, or containing any right of
first refusal with respect to, any capital stock of the Company or any of
its Subsidiaries.
(vii) Other than its Subsidiaries, as of the date hereof,
the Company does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity
except for non-controlling investments made in the ordinary course of
business consistent with past practice in entities which are not
individually or in the aggregate material to the Company and its
Subsidiaries, taken as a whole. There are no outstanding contractual
obligations of the Company or any of its Subsidiaries to make any loan
to, or any equity or other investment (in the form of a capital
contribution or otherwise) in, any Subsidiary of the Company or any other
Person, other than guarantees by the Company of any indebtedness or other
obligations of any wholly-owned Subsidiary of the Company and other than
loans made in the ordinary course consistent with past practice to
employees of the Company and its Subsidiaries.
(c) AUTHORITY; BOARD APPROVAL; VOTING REQUIREMENTS; NO
CONFLICT; REQUIRED FILINGS AND CONSENTS.
(i) AUTHORITY. The Company has all requisite corporate
power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company, and
the consummation by the Company of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the
part of the Company and no stockholder votes are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby,
other than, with respect to approval of this Agreement and the Merger,
the Company Stockholder Approval (as defined in Section 3.1(c)(iii)).
This Agreement has been duly executed and delivered by the
10
Company. Assuming the due authorization, execution and delivery of this
Agreement by Parent and Merger Sub, this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
(ii) BOARD APPROVAL. The Board of Directors of the Company
has (A) determined that this Agreement and the Merger are advisable and
fair to and in the best interests of the Company and its stockholders,
(B) duly approved and adopted this Agreement, the Merger and the other
transactions contemplated hereby, which adoption and approval has not
been rescinded or modified, (C) resolved (subject to Section 4.2(d)) to
recommend this Agreement and the Merger to its stockholders for approval
and (D) directed that this Agreement and the Merger be submitted to its
stockholders for consideration in accordance with this Agreement.
(iii) VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of outstanding shares of Company Common Stock
entitled to be cast on this Agreement and the Merger (the "Company
Stockholder Approval") is the only vote of the holders of any class or
series of capital stock of the Company necessary to approve and adopt
this Agreement, approve the Merger and consummate the Merger and the
other transactions contemplated hereby.
(iv) NO CONFLICT. The execution and delivery of this
Agreement by the Company do not, and the consummation by the Company of
the transactions contemplated hereby and compliance by the Company with
the provisions of this Agreement will not, conflict with, result in any
violation or breach of or default (with or without notice or lapse of
time, or both) under, require any consent, waiver or approval under, give
rise to any right of termination or cancellation or acceleration of any
right or obligation or loss of a benefit under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any of
its Subsidiaries or any restriction on the conduct of the Company's
business or operations under, (A) the Company Organizational Documents,
(B) the Company Subsidiary Organizational Documents, (C) any Contract or
Company Permit (as defined in Section 3.1(g)(i)), or (D) subject to the
governmental filings and other matters referred to in Section 3.1(c)(v),
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (C) and (D), any
such conflicts, violations, breaches, defaults, rights, losses,
restrictions or Liens, or failure to obtain consents, waivers or
approvals, (x) except for Key Products Contracts, which are not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect, and (y) with respect to Key Products Contracts,
which are not, individually or in the aggregate, reasonably likely to
materially and adversely affect the related Key Product (as defined in
Section 8.3(s)).
(v) REQUIRED FILINGS OR CONSENTS. No consent, approval,
order or authorization or permit of, action by or in respect of,
registration, declaration or filing
11
with, or notification to, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority (a "Governmental Entity") is required to
be made, obtained, performed or given to or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for:
(A) compliance with, and filings under, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
and any applicable filings or notifications under the
antitrust, competition or similar laws of any foreign
jurisdiction;
(B) the filing with the SEC of:
(1) a proxy statement relating to the Company Stockholder
Approval (such proxy statement, together with the proxy
statement relating to the Parent Stockholder Approval (as
defined in Section 3.2(c)(iii)), in each case as amended
or supplemented from time to time, the "Joint Proxy
Statement");
(2) such reports under Sections 13, 15(d) and 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this
Agreement and the transactions contemplated hereby;
(C) the filing of the Articles of Merger with the Secretary of
State and appropriate documents with the NYSE and the relevant
authorities of other states in which the Company is qualified
to do business and such filings as may be required under state
securities or other "blue sky" laws; and
(D) such consents, approvals, orders, authorizations, permits,
actions, registrations, declarations, filings or notifications,
the failure of which to be made, obtained, performed or given
are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS.
(i) The Company has filed with the SEC all registration
statements, prospectuses, reports, schedules, forms, statements,
certifications and other documents (including exhibits and all other
information incorporated by reference therein) required to be so filed by
the Company since January 1, 2001 (excluding the Joint Proxy Statement,
the "Company SEC Documents"). As of its respective date, each Company SEC
Document complied in all material respects with the requirements of the
12
Securities Act or the Exchange Act, as the case may be, the
Xxxxxxxx-Xxxxx Act of 2002 ("SOX") and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Document, in
each case to the extent in effect on the date of filing. Each Company SEC
Document did not, when filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the
extent corrected by a subsequently filed Company SEC Document filed with
the SEC prior to the date hereof. No Subsidiary of the Company is subject
to the periodic reporting requirements of the Exchange Act.
(ii) Each of the principal executive officer of the
Company and the principal financial officer of the Company (or each
former principal executive officer of the Company and each former
principal financial officer of the Company, as applicable) has made all
certifications required by Rule 13a-14 or 15d-14 under the Exchange Act
or Sections 302 and 906 of SOX and the rules and regulations of the SEC
promulgated thereunder with respect to the Company SEC Documents, and to
the Knowledge of the Company, the statements contained in such
certifications are true and correct. For purposes of the preceding
sentence and Section 3.2(d)(ii) hereof, "principal executive officer" and
"principal financial officer" shall have the meanings given to such terms
in SOX. Neither the Company nor any of its Subsidiaries has outstanding,
or has arranged any outstanding, "extensions of credit" to directors or
executive officers within the meaning of Section 402 of SOX.
(iii) The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as permitted by
Form 10-Q or 8-K or the applicable rules of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments which are not material). The books
and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
(iv) Except as adequately reflected or reserved against in
the balance sheet of the Company, dated December 31, 2003, included in
the Form 10-K filed by the Company with the SEC on March 15, 2004 (such
Form 10-K, the "Company 10-K" and such balance sheet, including the notes
thereto, the "Company Balance Sheet"), neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
absolute, accrued,
13
contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet or notes thereto of the Company and its
consolidated Subsidiaries, except for liabilities or obligations (A)
incurred since December 31, 2003 in the ordinary course of business
consistent with past practice which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
(B) liabilities and obligations incurred in connection with this
Agreement or the transactions contemplated hereby.
(v) Neither the Company nor any of its Subsidiaries is a
party to, or has any commitment to become a party to, any joint venture,
off-balance sheet, partnership or any similar contract or arrangement
(including any contract or arrangement relating to any transaction or
relationship between or among the Company and any of its Subsidiaries, on
the one hand, and any unconsolidated Affiliate (as defined in Section
8.3(a)), including any structured finance, special purpose or limited
purpose entity or Person, on the other hand or any "off-balance sheet
arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC),
where the result, purpose or intended effect of such contract or
arrangement is to avoid disclosure of any material transaction involving,
or material liabilities of, the Company or any of its Subsidiaries in the
Company's or such Subsidiary's published financial statements or other
Company SEC Documents.
(vi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(vii) The Company has and will have in place the
"disclosure controls and procedures" (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) required in order for the Chief Executive
Officer and Chief Financial Officer of the Company to engage in the
review and evaluation process mandated by the Exchange Act and the rules
promulgated thereunder. The Company's "disclosure controls and
procedures" are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
the rules and forms of the SEC, and that all such information is
accumulated and communicated to the Company's management as appropriate
to allow timely decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial Officer
of the Company required under the Exchange Act with respect to such
reports.
14
(viii) Since December 31, 1998, the Company has not
received any oral or written notification of a (x) "reportable condition"
or (y) "material weakness" in the Company's internal controls. For
purposes of this Agreement, the terms "reportable condition" and
"material weakness" shall have the meanings assigned to them in the
Statements of Auditing Standards 60, as in effect on the date hereof.
(e) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by or on behalf of the Company for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock in
the Merger (including any amendments or supplements, the "Form S-4") will,
when filed or at any time it is amended or supplemented or at the time the
Form S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Joint Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement and the Form S-4 will comply as to
form in all material respects with the requirements of the Securities Act and
the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to information
or statements with respect to Parent or any of its Subsidiaries made or
incorporated by reference therein supplied by or on behalf of Parent or Merger
Sub for inclusion or incorporation by reference in the Joint Proxy Statement
or the Form S-4.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS.
(i) Since March 31, 2004 through the date hereof:
(A) except as permitted under Section 4.1 of this Agreement and the
Sections of the Company Disclosure Letter relating thereto, the
Company and its Subsidiaries have conducted their business only
in the ordinary course consistent with past practice;
(B) there has not been any split, combination or reclassification
of any of the Company's capital stock or any declaration,
setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect
of, in lieu of, or in substitution for, shares of the Company's
capital stock;
(C) except as required by a change in GAAP, there has not been any
change in accounting methods, principles or practices by the
Company materially affecting the consolidated financial
position or results of operations of the Company; and
15
(D) no action has been taken by the Company or its Subsidiaries to
amend or waive any performance or vesting criteria or
accelerate vesting, exercisability or funding under any Company
Benefit Plan or Company Option.
(ii) Since March 31, 2004 through the date hereof, there have
not been any changes, circumstances or events that, individually or in
the aggregate, have had, or are reasonably likely to have, a Company
Material Adverse Effect.
(g) COMPLIANCE WITH APPLICABLE LAW; PERMITS.
(i) The Company, its Subsidiaries and their employees hold
all authorizations, permits, licenses, certificates, easements,
concessions, franchises, variances, exemptions, orders, consents,
registrations, approvals and clearances of all Governmental Entities
(including all authorizations under the Federal Food, Drug and Cosmetic
Act of 1938, as amended (the "FDCA"), and the regulations of the U.S.
Food and Drug Administration (the "FDA") promulgated thereunder) and
third Persons which are required for the Company and its Subsidiaries to
own, lease and operate its properties and other assets and to carry on
their respective businesses in the manner described in the Company SEC
Documents filed prior to the date hereof and as they are being conducted
as of the date hereof (the "Company Permits"), and all Company Permits
are valid, and in full force and effect, except where the failure to
have, or the suspension or cancellation of, or the failure to be valid or
in full force and effect of, any such Company Permits is not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(ii) The Company and its Subsidiaries are, and have been
at all times since January 1, 2001, in compliance with the terms of the
Company Permits and all laws, statutes, orders, rules and regulations,
and all applicable judgments, decisions and orders entered by any
Governmental Entity (all such laws, statutes, rules, regulations,
judgments, decisions and orders, collectively, "Applicable Law") relating
to the Company and its Subsidiaries or their respective businesses,
assets or properties, except where the failure to be in compliance with
the terms of the Company Permits or such Applicable Law is not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Since January 1, 2001, neither the Company nor
any of its Subsidiaries has received any notification from any
Governmental Entity (A) asserting that the Company or any of its
Subsidiaries is not in material compliance with, or at any time since
such date has failed to materially comply with, Applicable Law or (B)
threatening to revoke any material Company Permit. As of the date hereof,
no material investigation or review by any Governmental Entity is pending
or, to the Knowledge of the Company, has been threatened against the
Company or any of its Subsidiaries.
16
(h) LABOR AND OTHER EMPLOYMENT MATTERS.
(i) As of the date hereof, except as is not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect, (a) no work stoppage, slowdown, lockout, labor strike, material
arbitration or other material labor dispute against the Company or any of
its Subsidiaries is pending or, to the Knowledge of the Company,
threatened, (b) no unfair labor practice charges, grievances or
complaints are pending or, to the Knowledge of the Company, threatened
against the Company or any of its Subsidiaries, (c) neither the Company
nor any of its Subsidiaries is delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it or amounts required to be
reimbursed to such employees, (d) neither the Company nor any of its
Subsidiaries is liable for any payment to any trust or other fund or to
any Governmental Entity, with respect to unemployment compensation
benefits, social security or other benefits or obligations for employees
(other than routine payments to be made in the ordinary course of
business consistent with past practice), (e) no employee of the Company
or any of its Subsidiaries, at the officer level or above, has given
notice to the Company or any of its Subsidiaries that any such employee
intends to terminate his or her employment with the Company or any of its
Subsidiaries, (f) to the Knowledge of the Company, no employee of the
Company or any of its Subsidiaries is in any respect in violation of any
term of any employment contract, nondisclosure agreement, common law
nondisclosure obligations, non-competition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee
to be employed by the Company or any of its Subsidiaries because of the
nature of the business conducted or presently proposed to be conducted by
the Company or any of its Subsidiaries or to the use of trade secrets or
proprietary information of others, (g) neither the Company nor any of its
Subsidiaries is a party to, or otherwise bound by, any consent decree
with any Governmental Entity relating to employees or employment
practices; (h) the Company and each of its Subsidiaries are in compliance
with all Applicable Law respecting labor and employment, including terms
and conditions of employment, workers' compensation, occupational safety
and health requirements, immigration, plant closings and layoffs, wages
and hours, employment discrimination, disability rights or benefits,
equal opportunity, affirmative action, employee benefits, severance
payments, labor relations, employee leave issues and unemployment
insurance and related matters; and (i) there are no complaints, charges
or claims against the Company or any of its Subsidiaries pending with or,
to the Knowledge of the Company, threatened by any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment of any employees by the Company and or any of
its Subsidiaries.
(ii) The execution of this Agreement and the consummation
of the transactions contemplated by this Agreement will not result in a
material breach or other violation of any collective bargaining agreement
or
17
any other employment contract to which the Company or any of its
Subsidiaries are a party.
(iii) As of the date hereof,
(A) neither the Company nor any of its Subsidiaries
is a party to, or otherwise bound by, any collective bargaining
agreement or any other agreement with a labor union, labor
organization or works council, nor are any such agreements presently
being negotiated;
(B) none of the employees of the Company or any of
its Subsidiaries are represented by any labor union, labor
organization or works council in their capacities as employees of
the Company or any of its Subsidiaries;
(C) no labor union, labor organization or works
council or group of employees of the Company or any of its
Subsidiaries has made a pending demand for recognition or
certification to the Company or any of its Subsidiaries, and there
are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the
Knowledge of the Company, threatened in writing to be brought or
filed with the National Labor Relations Board or any other labor
relations tribunal or authority; or
(D) to the Knowledge of the Company, no labor union,
labor organization or works council is seeking to organize any
employees of the Company or any of its Subsidiaries.
(i) FDA & RELATED MATTERS.
(i) The Company and its Subsidiaries are in compliance in
all material respects with (A) all written communications, including all
Regulatory or Warning Letters, Notices of Adverse Findings and Section
305 Notices and similar letters or notices, between the Company or any of
its Subsidiaries and the FDA (or any other federal, state, local or
foreign governmental entity that is concerned with the safety, efficacy,
reliability or manufacturing of drug products (each, a "Drug Regulatory
Agency")), (B) all product recalls, notifications and safety alerts
conducted by the Company or any of its Subsidiaries, whether or not
required by the FDA, and any request from the FDA or any Drug Regulatory
Agency requesting the Company or any of its Subsidiaries to cease to
investigate, test or market any product, and (C) any criminal,
injunctive, seizure or civil penalty actions begun or threatened by the
FDA or any Drug Regulatory Agency against the Company or any of its
Subsidiaries to the Company's Knowledge and all related consent decrees
(including plea agreements) issued with respect to the Company or any of
its Subsidiaries.
18
(ii) None of the material approvals, clearances,
authorizations, registrations, certifications, permits, filings or
notifications that the Company or any of its Subsidiaries has received or
made to the FDA or any Drug Regulatory Agency that relate to the
marketing of (i) the Company's material products have been revoked, or to
the Company's Knowledge, are being revoked or (ii) to the Company's
Knowledge, any other of the Company's products have been or are being
revoked, other than, in the case of clause (ii) above, any such
revocations that are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
(iii) None of the Company or any of its Subsidiaries has
Knowledge (or has been notified by a Company Partner (as defined below))
of any pending regulatory action of any sort (other than non-material
routine or periodic inspections or reviews) against any of the Company,
its Subsidiaries or any Person which manufactures, develops or
distributes products pursuant to a development, commercialization,
manufacturing, supply or other collaboration arrangement with the Company
or any of its Subsidiaries (each, a "Company Partner") by the FDA or any
Drug Regulatory Agency or any other duly authorized governmental
authority which regulates the sale of drugs in any jurisdiction, except
for such regulatory actions as are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, or are not
reasonably likely to limit in any material way or restrict in any
material way the ability of the Company or its Subsidiaries to market
existing products. None of the Company, its Subsidiaries or, to the
Knowledge of the Company, any Company Partner, has knowingly committed or
permitted to exist any material violation of the rules and regulations of
the FDA or any Drug Regulatory Agency or any other duly authorized
governmental authority which regulates the sale of drugs which has not
been cured by the Company or, to the Knowledge of the Company, any
Company Partner, or waived by the FDA or any such regulatory authority.
To the Knowledge of the Company, the Company has remediated the issues
that were the subject of the Consent Decree with respect to the
Parkedale-Rochester facility (including the notification received on
September 27, 2000 from the FDA) and is in compliance with such consent
decree.
(iv) All preclinical studies and clinical trials being
conducted by the Company or its Subsidiaries are, or, in the case of such
studies or trials being conducted by a Company Partner, to the Knowledge
of the Company are, being conducted in material compliance with the
applicable requirements of Good Laboratory Practices (as defined in
Section 8.3(m)) or Good Clinical Practices (as defined in Section
8.3(l)), as applicable, and all applicable requirements relating to
protection of human subjects contained in 21 C.F.R. Parts 50, 54, and 56,
except for such noncompliance which is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
(v) The manufacture of products by the Company and its
Subsidiaries is, or, in the case of any products manufactured by a
Company Partner, to the Knowledge of the Company is, being conducted in
compliance with the FDA's applicable current Good Manufacturing Practices
(as defined in Section 8.3(n)) regulations for drug and biological
products, except for such noncompliance which is not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse
Effect. In addition, the Company and its Subsidiaries and, to the
Knowledge of the Company, their respective Company Partners, are in
compliance with all applicable registration and listing requirements set
forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207 and all similar
Applicable Law, except for such noncompliance which is not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect.
19
(vi) None of the Company, its Subsidiaries or, to the
Knowledge of the Company, any of their respective agents or
subcontractors, has been convicted of any crime or engaged in any conduct
which could result in debarment or disqualification by the FDA or any
Drug Regulatory Agency, and there are no proceedings pending or, to the
Knowledge of the Company, threatened in writing that reasonably might be
expected to result in criminal liability or debarment or disqualification
by the FDA or any Drug Regulatory Agency.
(j) BENEFIT PLANS.
(i) Section 3.1(j)(i) of the Company Disclosure Letter
sets forth a true and complete list of each bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option or other equity compensation, phantom stock,
stock-related or performance award, retirement, vacation, severance or
termination pay, change in control, retention, disability, death benefit,
hospitalization, medical, life insurance, loan, fringe benefit,
disability, sabbatical and other similar plan, arrangement, agreement or
understanding, including each "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or contributed to, or required to be
maintained or contributed to, by the Company or any of its Subsidiaries
or Company ERISA Affiliates (as defined in Section 3.1(j)(v)) for the
benefit of any current or former employee, officer or director of the
Company or any of its Subsidiaries or Company ERISA Affiliates (except
any plan which is a Multiemployer Plan, the "Company Benefit Plans") and
any employment agreement, consulting agreement or termination or
severance agreement between the Company or any of its Subsidiaries, on
the one hand, and any current or former employee, officer or director of
the Company or any of its Subsidiaries, on the other hand, with respect
to which the Company or any of its Subsidiaries may have obligations or
liabilities (the "Company Benefit Agreements"). With respect to the
Company Benefit Plans, no event has occurred and there exists no
condition or set of circumstances which is reasonably likely to have a
Company Material
20
Adverse Effect under ERISA, the Code or any other Applicable Law. The
Company has no commitment to modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or
termination required by ERISA or the Code. The Company has delivered or
made available to Parent true, correct and complete copies of all Company
Benefit Plans and Company Benefit Agreements (or, if not so delivered,
has delivered or made available to Parent a written summary of their
material terms) and, with respect thereto, has used reasonable best
efforts to make available to Parent all amendments, trust agreements,
insurance Contracts, and the most recent determination letters issued by
the Internal Revenue Service, the most recent annual reports (Form 5500
series) filed with the Internal Revenue Service, and the most recent
actuarial report or other financial statement relating to such Company
Benefit Plan.
(ii) Each Company Benefit Plan and Company Benefit
Agreement has been administered and operated in accordance with its
terms, the applicable provisions of ERISA, the Code and other Applicable
Law and the terms of all applicable collective bargaining agreements,
except where the failure to be so administered or operated is not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Each Company Benefit Plan that is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) and that is
intended to be qualified under Section 401(a) of the Code has obtained a
favorable determination letter from the Internal Revenue Service that the
Company Benefit Plan is so qualified and all related trusts are exempt
from U.S. federal income taxation under Section 501(a) of the Code, and,
to the Knowledge of the Company, nothing has occurred, whether by action
or by failure to act, which could reasonably be expected to cause the
loss of such qualification or exemption.
(iii) To the Knowledge of the Company, no oral or written
representation or commitment with respect to any material aspect of any
Company Benefit Plan has been made to an employee or former employee,
officer or director of the Company or any of its Subsidiaries by an
authorized Company employee that is not materially in accordance with the
written or otherwise pre-existing terms and provisions of such Company
Benefit Plans.
(iv) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, there are no
unresolved claims or disputes under the terms of, or in connection with,
any Company Benefit Plan or Company Benefit Agreement (other than routine
undisputed claims for benefits), and no action, legal or otherwise, has
been commenced or threatened with respect to any claim or otherwise in
connection with a Company Benefit Plan or Company Benefit Agreement.
(v) None of the Company Benefit Plans is subject to
Section 302 or Title IV of ERISA or Section 412 of the Code. None of the
21
Company, any of its Subsidiaries or any other Person under common control
within the meaning of Section 414(b), (c), (m) or (o) of the Code with
the Company (a "Company ERISA Affiliate") participates in, or is required
to contribute to, any Multiemployer Plan. As of the date of this
Agreement, none of the Company, any of its Subsidiaries or Company ERISA
Affiliates has, with respect to any Multiemployer Plan, (1) incurred,
during the last five years, a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Sections 4203 and 4205,
respectively, of ERISA) or (2) received any written notice or
communication from the plan administrator of such Multiemployer Plan that
could reasonably be expected to result in any liability of the Company,
any of its Subsidiaries or Company ERISA Affiliates under Title IV of
ERISA in connection with any withdrawal from such Multiemployer Plan.
(vi) No Company Benefit Plan or Company Benefit Agreement
provides health benefits (whether or not insured) with respect to
employees or former employees (or any of their beneficiaries) of the
Company or any of its Subsidiaries after retirement or other termination
of service (other than coverage or benefits (A) required to be provided
under Part 6 of Title I of ERISA or similar Applicable Law or (B) the
full cost of which is borne by the employee or former employee (or any of
their beneficiaries)).
(vii) Neither the negotiation and execution of this
Agreement, the Company Stockholder Approval, nor the consummation of the
transactions contemplated hereby will (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Company Benefit Plan or Company Benefit Agreement that will or
may result in any payment (whether of severance pay or otherwise),
acceleration of payment, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any current or former employee, officer or director of the
Company or any of its Subsidiaries. There is no contract, agreement, plan
or arrangement with any current or former employee, officer or director
of the Company to which the Company or any of its Subsidiaries is a party
as of the date of this Agreement, that, individually or collectively and
as a result of the transactions contemplated hereby (whether alone or
upon the occurrence of any additional or subsequent events) or otherwise,
is reasonably likely to give rise to the payment of any amount that would
not be deductible pursuant to Sections 280G or 162(m) of the Code or any
corresponding or similar provision of state, local or foreign income Tax
law.
(viii) All Company Benefit Plans and Company Benefit
Agreements that are subject to the laws of any jurisdiction outside the
United States (i) have been operated in accordance with their terms in
all respects, except for those failures to operate the Company Benefit
Plans and Company Benefit Agreements in accordance with their terms that
are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect, and (ii) are in compliance with all such
applicable laws, including relevant tax laws,
22
except for those failures to comply with such applicable laws that are
not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
(ix) The Company has provided to Parent true, complete and
correct copies of all indemnification agreements with its officers and
directors and the officers and directors of its Subsidiaries.
(k) TAXES.
(i) Each of the Company and its Subsidiaries has (A) duly
and timely filed (or there have been filed on its behalf) all material
Tax Returns (as defined below) required to be filed by it (taking into
account all applicable extensions) with the appropriate Tax Authority (as
defined below), (B) paid all Taxes shown as due on such Tax Returns, and
(C) complied in all material respects with all Applicable Laws relating
to the payment and withholding of Taxes.
(ii) Except for such Liens as are not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse
Effect, there are no Liens for Taxes upon any property or assets of the
Company or any of its Subsidiaries, except for liens for Taxes not yet
due and payable or for which adequate reserves have been provided in
accordance with GAAP in the most recent financial statements contained in
the Company SEC Documents filed prior to the date of this Agreement.
(iii) The most recent financial statements contained in
the Company SEC Documents reflect an adequate reserve in accordance with
GAAP for all Tax liabilities of the Company and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(iv) There is no audit, examination, deficiency, refund
litigation or proposed adjustment with respect to any Taxes other than
those which if determined adversely are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received notice in
writing of any claim made by a Governmental Entity in a jurisdiction
where the Company or any of its Subsidiaries, as applicable, does not
file a Tax Return, that the Company or such Subsidiary is or may be
subject to taxation by that jurisdiction.
(v) There are no outstanding written requests, agreements,
consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against the
Company or any of its Subsidiaries except, in each case, with respect to
Taxes or deficiencies, as the case may be, that are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse
Effect, and no power of attorney granted by
23
either the Company or any of its Subsidiaries with respect to any
material Taxes is currently in force.
(vi) Neither the Company nor any of its Subsidiaries is a
party to any agreement providing for the allocation, indemnification or
sharing of a material amount of Taxes other than such an agreement
exclusively between or among the Company and any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries (A) has been a member of
an affiliated group (or similar state, local or foreign filing group)
filing a material consolidated income Tax Return (other than a group the
common parent of which is the Company) or (B) has any material liability
for the income or franchise Taxes of any other Person (other than the
Company or any of its Subsidiaries) under Treasury Regulation ss.
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
(vii) Neither the Company nor any of its Subsidiaries has:
(A) agreed to make nor is it required to make any adjustment for a
taxable period ending after the Effective Time under Section 481(a) of
the Code by reason of a change in accounting method or otherwise, except
where such adjustments are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect; (B)
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in
a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (I) in the two years prior to the date of this Agreement
or (II) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in connection with the Merger; or (C) taken any
action or knows of any fact, agreement, plan or other circumstance that
is reasonably likely to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(viii) Neither the Company nor any of its Subsidiaries has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations.
(ix) The Company and its Subsidiaries will not be required
to include any material item of income in, or exclude any material item
of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Effective Time as a result of any "closing
agreement" as described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign income Tax law) executed
on or prior to the Effective Time.
(x) The Company and each of its Subsidiaries is in
material compliance with, and the records of each of the Company and each
of its Subsidiaries contain sufficient information and documents
necessary to comply in
24
all material respects with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax laws.
(xi) Section 3.1(k)(xi) of the Company Disclosure Letter
lists all foreign jurisdictions in which the Company or any of its
Subsidiaries files a material Tax Return.
(xii) "Taxes" means any and all federal, state, local,
foreign or other taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Entity, including taxes or other
charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers' compensation, or net
worth, and taxes or other charges in the nature of excise, withholding,
ad valorem or value added; "Tax Authority" means the Internal Revenue
Service and any other domestic or foreign Governmental Entity responsible
for the administration or collection of any Taxes; and "Tax Return" means
any return, report or similar statement (including the attached
schedules) required to be filed with respect to Taxes, including any
information return, claim for refund, amended return, or declaration of
estimated Taxes.
(l) INTERESTED PARTY TRANSACTIONS. Since December 31, 2003, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction pursuant to Statement of Financial
Accounting Standards No. 57 or Item 404 of Regulation S-K of the SEC.
(m) ENVIRONMENTAL MATTERS.
(i) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, (A) the
operations of the Company and its Subsidiaries are, and at all times
since January 1, 2001 have been, in compliance with all applicable
Environmental Laws (as defined in Section 8.3(j)), including possession
and compliance with the terms of all licenses required by Environmental
Laws and, to the Knowledge of the Company and its Subsidiaries, there are
no facts or circumstances that would materially increase the cost of
maintaining such compliance in the future, (B) there are no pending, or
to the Knowledge of the Company, threatened suits, actions,
investigations or proceedings under or pursuant to Environmental Laws by
the Environmental Protection Agency or any other Governmental Entity or
any other Person against the Company or any of its Subsidiaries or
involving any real property currently or, to the Knowledge of the
Company, formerly owned, operated or leased or other sites (except at
such other sites at which the Company disposed, or allegedly disposed, of
Hazardous Materials (as defined in Section 8.3(o)) and for which the
Company is not reasonably likely to be named a potentially responsible
party) at which Hazardous Materials were disposed of, or allegedly
disposed of, by the Company or any of its Subsidiaries, (C) the Company
and its Subsidiaries have
25
not received any written allegations of any Environmental Liabilities (as
defined in Section 8.3(k)) and, to the Knowledge of the Company, no
facts, circumstances or conditions relating to, associated with or
attributable to any real property currently or formerly owned, operated
or leased by the Company or any of its Subsidiaries or the Company's or
any Subsidiary's operations thereon has resulted in or is reasonably
likely to result in Environmental Liabilities, (D) all real property
owned or operated by the Company or any of its Subsidiaries is free of
contamination from Hazardous Materials that is reasonably likely to
create liability for clean-up or remediation under Environmental Laws,
and (E) all material environmental reports, assessments and data produced
in the last five years and in the possession or control of the Company or
its Subsidiaries have been provided to Parent.
(ii) Without in any way limiting the generality of the
foregoing, to the Knowledge of the Company, (A) there is no asbestos
contained in or forming part of any building, building component,
structure or office space currently owned or leased by the Company or its
Subsidiaries, and (B) no polychlorinated biphenyls (PCB's) are used or
stored at any property currently owned or leased by the Company or its
Subsidiaries.
(n) INTELLECTUAL PROPERTY.
(i) Set forth in Section 3.1(n)(i) to the Company
Disclosure Letter is a true and complete list of (A) patents and patent
applications, trademarks and service marks and all applications and
registrations therefor, all domain names, and all material copyrights
included in the Company Owned Intellectual Property, other than
nonmaterial copyrights and (B) all Contracts under which the Company or
any Subsidiary has licensed in or granted any rights or interests in or
to, or which by their terms expressly restrict the Company's or any of
its Subsidiaries' rights to use, any Intellectual Property (each, an "IP
Contract") related to any or all of the Key Products, other than (i)
manufacturing agreements, supply agreements, quality agreements, finished
product and packaging agreements, and other similar agreements entered
into in the ordinary course of business and (ii) standard license
agreements for commercially-available, off-the-shelf software.
(ii) The Company has or its Subsidiaries have an
unrestricted ownership interest in the Company Owned Intellectual
Property (in each case, free and clear of any Liens) and is listed in the
records of the appropriate United States, state or foreign registry as a
sole or joint current owner of record for each application and
registration included in the Company Owned Intellectual Property. The
Company Intellectual Property includes all Intellectual Property, and the
Company's and its Subsidiaries' rights in and to the Company Intellectual
Property include all Intellectual Property rights, used in or necessary
for the conduct of the business of the Company or its Subsidiaries as it
is currently conducted with respect to (A) any or all of the Key Products
and (B) any
26
other material aspect of the business of the Company or its Subsidiaries
as it is currently conducted; the Contracts under which the Company has
been granted rights in any material Intellectual Property owned or
controlled by a third Person are valid and legally enforceable, and free
and clear of all Liens.
(iii) (A) The Company and its Subsidiaries (i) have an
exclusive, unrestricted ownership interest in all Company Owned
Intellectual Property used in or necessary for the conduct of the
business of the Company or its Subsidiaries as it is currently conducted
with respect to any or all of the Key Products (in each case, free and
clear of any Liens) and (ii) have an exclusive license to all Company
Licensed Intellectual Property used in or necessary for the conduct of
the business of the Company or its Subsidiaries as it is currently
conducted with respect to any or all of the Key Products (in each case,
free and clear of any Liens), and (B) neither the Company nor any of its
Subsidiaries has granted or assigned to any Person any right or interest
in or to any Key Product.
(iv) To the Knowledge of the Company, no Person, in the
past six (6) years, with respect to any Company Intellectual Property
relating to any or all of the Key Products, or in the past three (3)
years, with respect to any other Company Intellectual Property, is
misappropriating, infringing, diluting or otherwise violating, either
directly or indirectly, any Company Intellectual Property. No Actions
have been brought or threatened against any Person during the past six
(6) years, with respect to any Company Intellectual Property relating to
any or all of the Key Products, or during the past three (3) years, with
respect to any other Company Intellectual Property, by the Company, any
of its Subsidiaries or, with respect to any or all of the Key Products,
by any of their licensors and, to the Knowledge of the Company, there is
no basis for any Action regarding any of the foregoing.
(v) (A) There has not been any Action during the past six
(6) years, with respect to any Company Intellectual Property relating to
any or all of the Key Products, or during the past three (3) years, with
respect to any other Company Intellectual Property, there is no pending
Action and, to the Knowledge of the Company, there is no threatened
Action (1) alleging misappropriation, infringement, dilution or other
violation by the Company or any of its Subsidiaries of any Intellectual
Property rights of any Person, (2) challenging the Company's or any of
its Subsidiaries' ownership or use of, or the validity, enforceability,
registrability or maintenance of, any Company Owned Intellectual
Property, or (3) alleging that the use by the Company or any of its
Subsidiaries of Company Licensed Intellectual Property is in breach of
any applicable grant, license, agreement, instrument or other arrangement
pursuant to which the Company or any Affiliate acquired the right to use
such Intellectual Property, and (B) with respect to (1) any or all of the
Key Products and (2) to the extent material, any other Company
Intellectual Property, there is no basis for any Action regarding any of
the foregoing in (A)(1), (A)(2) or (A)(3); no Company Intellectual
Property has been or is being used or enforced by the Company or its
Subsidiaries or, with respect to any or all of the Key Products, by any
27
of their licensors in a manner that, individually or in the aggregate, is
reasonably likely to result in the cancellation, invalidity or
unenforceability of such Intellectual Property.
(vi) All patents and patent applications, trademark
registrations and applications and all other applications, registrations
and filings under the Company Intellectual Property (A) meet all material
applicable requirements for obtaining a patent, trademark registration or
other Intellectual Property registration, including any applicable
disclosure requirements, (B) are subsisting, in full force and effect,
(C) with respect to (1) any or all of the Key Products and (2) to the
extent material, any other Company Intellectual Property, are valid and
enforceable, (D) have not expired, been cancelled or abandoned, and (E)
have had paid in a timely manner all registration, maintenance and
renewal fees necessary to preserve the rights of the Company in
connection with such Intellectual Property.
(vii) No patent applications under the Company
Intellectual Property stand under final rejection before the United
States Patent and Trademark Office or any equivalent foreign governmental
entity; the Company and its Subsidiaries have taken all commercially
reasonable measures to obtain patent rights worldwide, to the extent
commercially reasonable to do so, under Company Owned Intellectual
Property and Company Licensed Intellectual Property as to which they have
the necessary prosecution rights, and have not forfeited or otherwise
lost any right to file any material patent applications or obtain any
material patents in any country in North America or the European Union or
in Japan, such as by failing to meet any filing deadline or otherwise;
the Company and its Subsidiaries have no reason to believe that the scope
of any issued claims under any patents under the Company Intellectual
Property should be less than the scope reflected as of the date hereof in
such patents or that the scope of any issued claims under any patent
applications under the Company Intellectual Property will or should be
materially less than the scope reflected as of the date hereof in such
patent applications.
(viii) The Company has provided Parent with access to all
IP Contracts related to any or all of the Key Products, other than (i)
non-material manufacturing agreements, supply agreements, quality
agreements, finished product and packaging agreements, and other similar
agreements entered into in the ordinary course of business and (ii)
standard license agreements for commercially-available, off-the-shelf
software.
(ix) Neither the Company nor any of its Subsidiaries has
granted any Person any right to control the prosecution or registration
of any Company Intellectual Property relating to any or all of the Key
Products or to bring or defend any Actions with respect to Company
Intellectual Property relating to any or all of the Key Products.
28
(x) Neither the Company nor any of its Subsidiaries has
entered into any consents, judgments, orders, indemnifications,
forbearances to xxx, settlement agreements, licenses or other
arrangements in connection with the resolution of any disputes or Actions
which (A) restrict the Company's or any of its Subsidiaries' right to use
any material Intellectual Property, (B) restrict the Company's or any of
its Subsidiaries' businesses in any material manner in order to
accommodate any Person's Intellectual Property, or (C) permit any Person
to use any material Company Intellectual Property except as expressly
permitted under an IP Contract.
(xi) The Company and each of its Subsidiaries have
implemented commercially reasonable measures to maintain the
confidentiality of the trade secrets and other proprietary information
under the Company Intellectual Property. No current or former employee or
contractor of the Company or any of its Subsidiaries owns or retains any
material rights or interests in or to any of the Company Intellectual
Property. There has not been any disclosure of any material confidential
information of the Company or any of its Subsidiaries (including any such
information of any other Person disclosed in confidence to the Company or
its Subsidiaries) to any Person in a manner that has resulted or is
likely to result in the loss of trade secret or other rights in and to
such information.
(o) LITIGATION.
(i) There are no suits, claims, actions, proceedings,
hearings, notices of violation, demand letters or investigations (each,
an "Action") pending, or, to the Knowledge of the Company, threatened,
against or affecting the Company or its Subsidiaries or any executive
officer or director of the Company or its Subsidiaries or any of their
respective properties, including Intellectual Property, except as is not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Neither the Company nor its Subsidiaries are
subject to any outstanding order, writ, injunction or decree of any
Governmental Entity specifically applicable to, or having a
disproportionate effect on, the Company and its Subsidiaries except as is
not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
(ii) In connection with the manufacture, sale, marketing
or distribution of the products set forth in Section 3.1(o)(ii) of the
Company Disclosure Letter, as of the date of this Agreement and to the
Knowledge of the Company, (A) there has never been any Action against or
affecting the Company or its Subsidiaries, (B) the Company and its
Subsidiaries have never received any claim or request for compensation
for alleged personal injuries, (C) the Company and its Subsidiaries have
never paid any settlement or other monies to a claimant to have an Action
resolved, and (D) the Company and its Subsidiaries have never been
notified that a user of any of the products set forth in Section
3.1(o)(ii) of the Company Disclosure Letter intends to make a claim or
commence litigation, in each case except for any Actions, claims,
requests, payments, notices or other
29
items described under clauses (A) through (D) which are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect.
(p) INSURANCE.
(i) The Company has provided or made available to Parent
true, correct and complete copies of its director and officer and
employee and officer insurance policies and all policies of insurance
material to the Company and its Subsidiaries, taken as a whole, to which
the Company or its Subsidiaries is a party or is a beneficiary or named
insured. The Company and its Subsidiaries maintain insurance coverage
with reputable insurers in such amounts and covering such risks as are
appropriate and reasonable, considering the Company's and its
Subsidiaries' properties, business and operations.
(ii) Except for such matters as are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse
Effect, no event relating specifically to the Company or its Subsidiaries
(as opposed to events affecting the pharmaceuticals industry in general)
has occurred that is reasonably likely to result, after the date of this
Agreement, in an increase in premiums under any insurance policies they
maintain. Excluding insurance policies that have expired and been
replaced in the ordinary course of business, as of the date of this
Agreement, no excess liability or protection and indemnity insurance
policy has been cancelled by the insurer since January 1, 2001, and to
the Company's Knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such
insurance policy of the Company or any Subsidiary of the Company during
the period of one year prior to the date hereof. As of the date hereof,
to the Company's Knowledge, no event has occurred, including the failure
by the Company or any Subsidiary of the Company to give any notice or
information or by giving any inaccurate or erroneous notice or
information, which materially limits or impairs the rights of the Company
or any Subsidiary of the Company under any such excess liability or
protection and indemnity insurance policies.
(iii) As of the date of this Agreement, the Company has
provided any and all correspondence, documents, and other materials which
in any way limit or reserve the rights of the Company's insurers for
material Actions against or affecting the Company. All self-insured
retention for all product liability Actions against or affecting the
Company is limited in the aggregate sum for each policy year as specified
in Section 3.1(p)(iii) of the Company Disclosure Letter.
(q) STATE TAKEOVER STATUTES. Assuming that neither Parent nor
Merger Sub is an "interested shareholder" within the meaning of the TBCA, the
Company has taken all necessary action so that no "investor protection act,"
"business combination," "control share acquisition" or other anti-takeover
statute or regulation, in each case under the TBCA, nor any takeover provision
in the Company Organizational Documents, would (i) prohibit or restrict the
Company's ability to perform its obligations under this Agreement or the
Articles of Merger or its ability to consummate the transactions contemplated
hereby and thereby, (ii) have the effect of invalidating or voiding this
Agreement or the Articles of Merger, or any provision hereof or
30
thereof, or (iii) subject Parent to any impediment or condition in
connection with the exercise of any of its rights under this Agreement or
the Articles of Merger.
(r) BROKERS AND ADVISORS. Except for fees payable to Xxxxxxx,
Sachs & Co. ("Goldman"), no broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company has provided to Parent copies of all agreements
relating to the engagement by the Company of advisors in connection with the
transaction contemplated by this Agreement, including all agreements with
respect to the engagement of Goldman, lawyers, accountants and other advisors.
(s) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of its financial advisor, Goldman, which opinion will be delivered in
written form dated the date of this Agreement, to the effect that, as of such
date, the Exchange Ratio is fair, from a financial point of view, to the
holders of Company Common Stock. The Company will provide a copy of this
opinion to Parent solely for informational purposes promptly following the
date of this Agreement and, as of the date of this Agreement, such opinion has
not been withdrawn, revoked or otherwise modified.
(t) FOREIGN CORRUPT PRACTICES AND INTERNATIONAL TRADE
SANCTIONS. To the Company's Knowledge, neither the Company, nor any of its
Subsidiaries, nor any of their respective directors, officers, agents,
employees or any other Persons acting on their behalf has, in connection with
the operation of their respective businesses, (i) used any corporate or other
funds for unlawful contributions, payments, gifts or entertainment, or made
any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, or
established or maintained any unlawful or unrecorded funds in violation of
Section 104 of the Foreign Corrupt Practices Act of 1977, as amended (the
"FCPA"), or any other similar applicable foreign, Federal or state law, (ii)
paid, accepted or received any unlawful contributions, payments, expenditures
or gifts, or (iii) violated or operated in noncompliance with any export
restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign laws and regulations, in each case, except as
is not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(u) MATERIAL CONTRACTS.
(i) For purposes of this Agreement, "Company Material
Contract" shall mean:
(1) Any employment, severance, consulting or other
Contract with an employee or former employee, officer or director of
the Company or any Subsidiary of the Company (other than any
unwritten Contract for the employment of any such employee or former
employee implied at law) which will require the payment of amounts
by the Company or any Subsidiary of the Company, as applicable,
after the date hereof in excess of $150,000 per annum;
31
(2) Any collective bargaining Contract with any labor
union;
(3) Any Contract for capital expenditures or the
acquisition or construction of fixed assets which requires aggregate
future payments in excess of $1,000,000;
(4) Any Contract containing covenants of the Company or
any Subsidiary of the Company (A) to indemnify or hold harmless
another Person, unless such indemnification or hold harmless
obligation to such Person, or group of Persons, as the case may be,
is less than $1,000,000 or (B) not to (or otherwise restricting or
limiting the ability of the Company or any of its Subsidiaries to)
compete in any line of business or geographic area, including any
covenant not to compete with respect to the manufacture, marketing,
distribution or sale of any product or product line;
(5) Any Contract requiring aggregate future payments or
expenditures in excess of $1,000,000 and relating to cleanup,
abatement, remediation or similar actions in connection with
environmental liabilities;
(6) Any license, royalty Contract or other Contract with
respect to (i) Company Intellectual Property that grants to a third
party any exclusive rights to such Intellectual Property or (ii)
Intellectual Property which, pursuant to the terms thereof,
requires, or may require upon the occurrence of certain events,
payments by the Company or any Subsidiary of the Company in excess
of $500,000;
(7) Any Contract pursuant to which the Company or any
Subsidiary of the Company is required to, or obtains any rights to,
undertake the development or commercialization of any pharmaceutical
product;
(8) Any Contract pursuant to which the Company or any
Subsidiary of the Company has entered into a partnership or joint
venture with any other Person (other than the Company or any
Subsidiary of the Company);
(9) Any indenture, mortgage, loan or credit Contract under
which the Company or any Subsidiary of the Company has outstanding
indebtedness or any outstanding note, bond, indenture or other
evidence of Indebtedness for borrowed money or otherwise, or
guaranteed indebtedness for money borrowed by others;
(10) Any Contract under which the Company or any
Subsidiary of the Company is (A) a lessee of real property, (B) a
lessee of, or holds or uses, any machinery, equipment, vehicle or
other tangible personal property owned by a third person or entity,
(C) a lessor of real property, or (D) a lessor of any tangible
personal property owned by the Company or any Subsidiary of the
Company, in any case referred to in clauses (B) or (D) only which
requires annual payments in excess of $500,000;
32
(11) Any Contract under which the Company or any
Subsidiary of the Company is a purchaser or supplier of goods and
services which, pursuant to the terms thereof, requires payments by
the Company or any Subsidiary of the Company in excess of $1,000,000
per annum;
(12) Any material Contract (including guarantees) between
the Company and any Subsidiary of the Company;
(13) Any Contract which requires payments by the Company
or any Subsidiary of the Company in excess of $1,000,000 per annum
containing "change of control" or similar provisions;
(14) Any Contract relating to the acquisition or
disposition of any business or any assets (whether by merger, sale
of stock or assets or otherwise);
(15) Any Contract (other than Contracts of the type
described in subclauses (1) through (14) above) that involves
aggregate payments by or to the Company or any Subsidiary of the
Company in excess of $1,000,000 per annum, other than a purchase or
sales order or other Contract entered into in the ordinary course of
business consistent with past practice;
(16) Any Contract the termination or breach of which, or
the failure to obtain consent in respect of, is reasonably likely to
have a Company Material Adverse Effect; and
(17) Any Contracts relating to the Key Products (any such
contract, a "Key Products Contract").
(ii) NO BREACH. All Company Material Contracts are valid
and in full force and effect and enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
rights and remedies of creditors generally and to general principles of
equity (regardless of whether considered in a proceeding in equity or at
law), except to the extent that (x) they have previously expired in
accordance with their terms, (y) in the case of Company Material
Contracts that are not Key Products Contracts, any failures to be in full
force and effect which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect, and (z) in
the case of Company Material Contracts that are Key Products Contracts,
any failures to be in full force and effect which, individually or in the
aggregate, are not reasonably likely to materially and adversely affect
the related Key Product. Neither the Company nor any of its Subsidiaries,
nor, to the Company's Knowledge, any counterparty to any Company Material
Contract (excluding the Key Products Contracts), has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time or both, would constitute a default under
the provisions of, any Company Material Contract, except in each case for
those violations or defaults which, individually or in the
33
aggregate, are not reasonably likely to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries, nor, to the
Company's Knowledge, any counterparty to any Key Products Contract has
(A) violated any provision of, or committed or failed to perform any act
which, with or without notice, lapse of time or both, would constitute a
default under the provisions of any Key Products Contract or (B) notified
the Company, either orally or in writing, of any intent to breach, fail
to perform, terminate, or not renew any Key Products Contract, other
than, in the case of (A) and (B) above, any such violations, commissions,
failures or notifications that, individually or in the aggregate, are not
reasonably likely to materially and adversely affect the related Key
Product.
(v) REAL PROPERTY. With respect to each parcel of Material
Owned Real Property: (A) the Company or any of its Subsidiaries, as the case
may be, has good and marketable indefeasible fee simple title, free and clear
of all liens, charges, mortgages, security interests and encumbrances, except
(a) Permitted Liens; (b) easements for the erection and maintenance of public
utilities exclusively serving the properties; or (c) other easements and
encumbrances affecting the properties so long as same do not render title to
the Material Owned Real Property unmarketable or uninsurable; (B) neither the
Company nor any of its Subsidiaries, as the case may be, has leased or
otherwise granted to any Person the right to use or occupy such Material Owned
Real Property or any portion thereof; (C) other than the right of Parent and
Merger Sub pursuant to this Agreement and as set forth in Section 3.1(v)(i)(C)
of the Company Disclosure Letter, there are no outstanding options, rights of
first offer, rights of reverter or rights of first refusal to purchase such
Material Owned Real Property or any portion thereof or interest therein; and
(D) neither the Company nor any of its Subsidiaries is a party to any
agreement or option to purchase any real property or interest therein, other
than, in the case of (A), (B), (C) and (D) above, for any such case where
there is no current or reasonably likely material interference with the
operations conducted at the Material Owned Real Property as presently
conducted (or as would be conducted at full capacity).
(ii) With respect to each Material Leased Real Property,
the Company or any of its Subsidiaries, as the case may be, has delivered
or made available to Parent and Merger Sub a true and complete copy of
the Lease for such Material Leased Real Property. With respect to each of
the aforementioned Leases: (A) such Lease is legal, valid, binding,
enforceable and in full force and effect; (B) the transactions
contemplated by this Agreement do not require the consent of any other
party to such Lease, will not result in a breach of or default under such
Lease, or otherwise cause such Lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the Closing; (C) there are no disputes with respect to such
Lease; (D) neither the Company nor any of its Subsidiaries, as the case
may be, nor, to the Knowledge of the Company or any of its Subsidiaries,
as the case may be, any other party to the Lease is in breach or default
under such Lease, and no event has occurred or failed to occur or
circumstance exists which, with the delivery of notice, the passage of
time or both, would constitute such a breach or default, or permit the
termination, modification or acceleration of rent under such Lease; (E)
no security deposit or portion
34
thereof deposited with respect to such Lease has been applied in respect
of a breach or default under such Lease which has not been redeposited in
full; (F) neither the Company nor any of its Subsidiaries, as the case
may be, owes, nor will it owe in the future, any brokerage commissions or
finder's fees with respect to such Lease; (G) the other party to such
Lease is not an affiliate of, and otherwise does not have any economic
interest in, the Company or any of its Subsidiaries; (H) neither the
Company nor any of its Subsidiaries, as the case may be, has subleased,
licensed or otherwise granted any Person the right to use or occupy such
Material Leased Real Property or any portion thereof; (I) neither the
Company nor any of its Subsidiaries, as the case may be, has collaterally
assigned or granted any other security interest in such Lease or any
interest therein; and (J) there are no Liens on the estate or interest
created by such Lease, other than, in the case of (A) through (J) above,
for any such case where there is no current or reasonably likely material
interference with the operations conducted at the Material Leased Real
Property as presently conducted (or as would be conducted at full
capacity).
(iii) The present use of the land, buildings, structures
and improvements on the Material Real Property are, in all material
respects, in conformity with all material Applicable Laws, rules,
regulations and ordinances, including all material applicable zoning
laws, ordinances and regulations and with all material registered deeds
or other restrictions of record, and neither the Company nor any of its
Subsidiaries, as the case may be, has received any written notice of
violation thereof. There exists no material conflict or dispute with any
regulatory authority or other Person relating to any Material Real
Property or the activities thereon, other than where there is no current
or reasonably likely material interference with the operations at the
Material Real Property as presently conducted (or as would be conducted
at full capacity). All buildings, structures and improvements on the
Material Real Property are located within the lot lines (and within the
mandatory set-backs from such lot lines established by zoning ordinance
or otherwise) and not over areas subject to easements or rights of way,
other than where there is no current or reasonably likely material
interference with the operations conducted at the Material Real Property
as presently conducted (or as would be conducted at full capacity).
(iv) Neither the Company nor any of its Subsidiaries, as
the case may be, has received any notice from any insurance company of
any material defects or inadequacies in the Material Real Property or any
part thereof, which would materially and adversely affect the
insurability of the same or of any termination or threatened (in writing)
termination of any policy of insurance.
(w) COMPANY RIGHTS AGREEMENT. The Company has taken all action
so that the execution of this Agreement, the consummation of the Merger and
the other transactions contemplated hereby do not and will not result in the
grant of any rights to any Person under the Company Rights Agreement or
enable, require or cause the Company Rights to be exercised, distributed or
triggered thereunder.
35
(x) NO IMPAIRMENT. To the Knowledge of the Company, as of the
date of this Agreement, no event has occurred and there is no circumstance
that impairs in any material respect the ability of the Company to perform its
obligations under this Agreement or is reasonably likely to prevent or
materially delay the consummation by the Company of any of the transactions
contemplated by this Agreement.
(y) STATEMENTS IN CONNECTION WITH INVESTIGATIONS. Each
communication by the Company or its representatives to Parent or its
representatives, whether oral, written, electronic or otherwise, relating to
the Investigations did not when made, and does not, contain any untrue
statement of a material fact, or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB. Except as set forth in (x) the disclosure letter dated as of the date of
this Agreement and executed and delivered by Parent and Merger Sub to the
Company concurrently with or prior to the execution and delivery by Parent and
Merger Sub of this Agreement (the "Parent Disclosure Letter") or (y) all
registration statements, prospectuses, reports, schedules, forms, statements,
certifications and other documents (including exhibits and all other
information incorporated by reference therein) publicly filed by Parent since
January 1, 2001 and prior to the date hereof with the SEC ("Parent Public
Filings"), Parent and Merger Sub represent and warrant to the Company as set
forth below.
(a) ORGANIZATION, STANDING AND CORPORATE POWER; CHARTER
DOCUMENTS; SUBSIDIARIES.
(i) ORGANIZATION, STANDING AND CORPORATE POWER. Parent and
each of its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is incorporated or otherwise organized, and has
the requisite corporate (or similar) power and authority and all
government approvals necessary to own, lease and operate its properties
and to carry on its business as currently conducted, except for those
jurisdictions in which the failure to have such power, authority and
government approvals and to be so organized, existing or in good standing
are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect (as defined in Section 8.3(gg)). Each of
Parent and each of its Subsidiaries is duly qualified or licensed to do
business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature or
conduct of its business or the ownership, leasing or operation of its
properties makes such qualification, licensing or good standing
necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing is not, individually or
in the aggregate, reasonably likely to have a Parent Material Adverse
Effect.
36
(ii) CHARTER DOCUMENTS. Parent and Merger Sub have
delivered or made available to the Company prior to the execution of this
Agreement complete and correct copies of (A) the articles of
incorporation of Parent (including any certificates of designation), as
amended and currently in effect (the "Parent Charter"), and the bylaws of
Parent, as amended and currently in effect (the "Parent Bylaws," and,
together with the Parent Charter, the "Parent Organizational Documents"),
and (B) the charter and bylaws of Merger Sub and articles or certificate
of incorporation and bylaws or like organizational documents of each of
Parent's other Subsidiaries (as amended and currently in effect
(collectively, the "Parent Subsidiary Organizational Documents")), and
each such instrument is in full force and effect. Parent is not in
violation of the Parent Organizational Documents and none of its
Subsidiaries is in material violation of its Parent Subsidiary
Organizational Documents.
(b) CAPITAL STRUCTURE. (i) The authorized capital stock of
Parent consists of 600,000,000 shares of Parent Common Stock, and 5,000,000
shares of preferred stock, par value $0.50 per share ("Parent Preferred
Stock"). At the close of business on July 21, 2004, (A) 268,692,269 shares of
Parent Common Stock were issued and outstanding; (B) 35,129,641 shares of
Parent Common Stock were held by Parent; (C) no shares of Parent Preferred
Stock were issued and outstanding; (D) 44,490,510 shares of Parent Common
Stock were reserved for issuance pursuant to Parent's 1986 Incentive Stock
Option Plan, Parent's 1997 Incentive Stock Option Plan, Parent's 1992
Nonemployee Director Stock Option Plan, and Parent's 2003 Long-Term Incentive
Plan (such plans, collectively, the "Parent Stock Plans"); and (E) 300,000
shares of Parent Preferred Stock were designated as Junior Participating
Preferred Stock, Series A, par value $0.50 per share, and were reserved for
issuance upon the exercise of preferred share purchase rights (the "Parent
Rights") issued pursuant to the Rights Agreement, as amended to the date
hereof, between Parent and American Stock Transfer & Trust Co., as rights
agent (the "Parent Rights Agreement"). Parent has delivered or made available
to the Company a complete and correct copy of the Parent Rights Agreement as
in effect on the date hereof. Each outstanding share of capital stock of
Parent is duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights.
(ii) As of the close of business on July 21, 2004,
22,641,785 shares of Parent Common Stock were subject to issuance
pursuant to outstanding options to acquire shares of Parent Common Stock
("Parent Options") under the Parent Stock Plans. There are no Parent
Options outstanding other than Parent Options outstanding under Parent
Stock Plans. All shares of Parent Common Stock that may be issued prior
to the Effective Time under the Parent Stock Plans, upon issuance on the
terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. There are no outstanding or
authorized stock appreciation rights, security-based performance units,
"phantom" stock, profit participation or other similar rights or other
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to receive
any payment or other value based on the revenues, earnings or financial
performance, stock price performance or other attribute of Parent or any
of its Subsidiaries or assets or calculated in accordance therewith
(other than ordinary course payments or commissions to sales
representatives of Parent). There are no contractual obligations for
Parent or any of its Subsidiaries to file a registration statement under
the Securities Act or which otherwise relate to the registration of any
securities of Parent or its Subsidiaries under the Securities Act.
(iii) No bonds, debentures, notes or other evidences of
indebtedness having the right to vote on any matters on which
stockholders of Parent may vote ("Parent Voting Debt") are issued or
outstanding as of the date hereof.
(iv) There are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind
to which Parent or any of its Subsidiaries is a party or by which any of
them is bound obligating Parent or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock, Parent Voting Debt or other voting securities of
Parent or any of its Subsidiaries, or obligating Parent or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking.
(v) Since January 1, 2004 and through the date hereof,
other than (A) issuances of Parent Common Stock pursuant to the exercise
of Parent Options granted under Parent Stock Plans and outstanding as of
Xxxxx 00, 0000, (X) repurchases of Parent Common Stock from employees of
Parent following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (C) issuances of Parent
Common Stock (consisting of newly-issued shares or shares in treasury) as
contributions of Parent Common Stock to defined contribution plans
sponsored by Parent, and (D) grants of Parent Options under Parent Stock
Plans in the ordinary course of business consistent with past practice,
there has been no change in (1) the outstanding capital stock of Parent,
(2) the number of Parent Options outstanding, or (3) the number of other
options, warrants or other rights to purchase Parent capital stock.
(vi) Neither Parent nor any of its Subsidiaries is a party
to any currently effective agreement (A) restricting the purchase or
transfer of, (B) relating to the voting of, or (C) requiring the
repurchase, redemption or disposition of, or containing any right of
first refusal with respect to any capital stock of Parent or any of its
Subsidiaries.
(vii) Other than its Subsidiaries, as of the date hereof,
Parent does not directly or indirectly beneficially own any securities or
other
38
beneficial ownership interests in any other entity except for
non-controlling investments made in the ordinary course of business
consistent with past practice in entities which are not individually or
in the aggregate material to Parent and its Subsidiaries, taken as a
whole. There are no outstanding contractual obligations of Parent or any
of its Subsidiaries to make any loan to, or any equity or other
investment (in the form of a capital contribution or otherwise) in, any
Subsidiary of Parent or any other Person, other than guarantees by Parent
of any indebtedness or other obligations of any wholly-owned Subsidiary
of Parent and other than loans made in the ordinary course consistent
with past practice to employees of Parent and its Subsidiaries.
(viii) The authorized capital stock of Merger Sub consists
of 1,000 shares of common stock, no par value, all of which shares are
issued and outstanding. Parent is the legal and beneficial owner of all
of the issued and outstanding shares of Merger Sub. Merger Sub was formed
at the direction of Parent solely for the purposes of effecting the
Merger and the other transactions contemplated hereby. Except as required
by or provided for in this Agreement, Merger Sub (x) does not hold, nor
has it held, any assets, (y) does not have, nor has it incurred, any
liabilities and (z) has not carried on any business activities other than
in connection with the Merger and the transactions contemplated hereby.
All of the outstanding shares of capital stock of Merger Sub have been
duly authorized and validly issued, and are fully paid and nonassessable
and not subject to any preemptive rights.
(c) AUTHORITY; BOARD APPROVAL; VOTING REQUIREMENTS; NO
CONFLICT; REQUIRED FILINGS AND CONSENTS.
(i) AUTHORITY. Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Parent and Merger Sub, and the consummation by Parent and Merger Sub of
the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Parent and
Merger Sub, and no other corporate proceedings on the part of Parent or
Merger Sub and no stockholder votes are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other
than, with respect to approval of the Stock Issuance, the Parent
Stockholder Approval (as defined in Section 3.2(c)(iii)). This Agreement
has been duly executed and delivered by Parent and Merger Sub. Assuming
the due authorization, execution and delivery of this Agreement by the
Company, this Agreement constitutes the legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating
to or affecting the rights and remedies of creditors generally and to
general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
39
(ii) BOARD APPROVAL. The Board of Directors of Parent has
(A) determined that this Agreement, the Merger and the Stock Issuance are
advisable and fair to and in the best interests of Parent and its
stockholders, (B) duly approved and adopted this Agreement and the Stock
Issuance, which adoption and approval has not been rescinded or modified,
(C) resolved (subject to Section 4.2(e)) to recommend the Stock Issuance
to its stockholders for approval and (D) directed that the Stock Issuance
be submitted to its stockholders for consideration in accordance with
this Agreement.
(iii) VOTING REQUIREMENTS. The affirmative vote by a
majority of the votes cast by holders of outstanding shares of Parent
Common Stock at a meeting duly called and held for approval of the Stock
Issuance in favor of the Stock Issuance and pursuant to Rule 312.03 in
the Listed Company Manual of the NYSE (the "Parent Stockholder
Approval"), is the only vote of the holders of any class or series of
Parent capital stock necessary to approve the Stock Issuance, and no
other vote of the holders of any class or series of Parent capital stock
is necessary to approve and adopt this Agreement, approve the Merger and
consummate the Merger and the other transactions contemplated hereby.
(iv) NO CONFLICT. The execution and delivery of this
Agreement by Parent and Merger Sub do not, and the consummation by Parent
and Merger Sub of the transactions contemplated hereby and compliance by
Parent and Merger Sub with the provisions of this Agreement will not,
conflict with, result in any violation or breach of or default (with or
without notice or lapse of time, or both) under, require any consent,
waiver or approval under, give rise to any right of termination or
cancellation or acceleration of any right or obligation or loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Subsidiaries or any
restriction on the conduct of Parent's business or operations under (A)
the Parent Organizational Documents, (B) the Parent Subsidiary
Organizational Documents, (C) any Contract or Parent Permit (as defined
in Section 3.2(g)(i)) or (D) subject to the governmental filings and
other matters referred to in Section 3.2(c)(v), any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or their respective properties or assets,
other than, in the case of clauses (C) and (D), any such conflicts,
violations, breaches, defaults, rights, losses, restrictions or Liens, or
failure to obtain consents, waivers or approvals which are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(v) REQUIRED FILINGS OR CONSENTS. No consent, approval,
order or authorization or permit of, action by or in respect of,
registration, declaration or filing with, or notification to, any
Governmental Entity is required to be made, obtained, performed or given
to or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Merger
Sub, the approval of the Stock Issuance or the
40
consummation by Parent or Merger Sub of the transactions contemplated
hereby, except for:
(A) compliance with, and filings under, the HSR Act and any
applicable filings or notifications under the antitrust,
competition or similar laws of any foreign jurisdiction;
(B) the filing with the SEC of:
(1) the Form S-4 (including the Joint Proxy Statement); and
(2) such reports under Sections 13, 15(d) and 16 of the
Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby;
(C) the filing of the Articles of Merger with the Secretary of
State and appropriate documents with the NYSE and the relevant
authorities of other states in which Parent or Merger Sub is
qualified to do business and such filings as may be required
under state securities or other "blue sky" laws; and
(D) such consents, approvals, orders, authorizations, permits,
actions, registrations, declarations, filings or notifications,
the failure of which to be made, obtained, performed or given
are not, individually or in the aggregate, reasonably likely to
have a Parent Material Adverse Effect.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS.
(i) Parent has filed with the SEC all registration
statements, prospectuses, reports, schedules, forms, statements,
certifications and other documents (including exhibits and all other
information incorporated by reference therein) required to be so filed by
Parent since January 1, 2001 (excluding the Joint Proxy Statement, the
"Parent SEC Documents"). As of its respective date, each Parent SEC
Document complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, SOX and the rules
and regulations of the SEC promulgated thereunder applicable to such
Parent SEC Documents, in each case to the extent in effect on the date of
filing. Each Parent SEC Document did not, when filed, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except to the extent corrected by a subsequently filed Parent SEC
Document filed with the SEC prior
42
to the date hereof. No Subsidiary of Parent is subject to the periodic
reporting requirements of the Exchange Act.
(ii) Each of the principal executive officer of Parent and
the principal financial officer of Parent (or each former principal
executive officer of Parent and each former principal financial officer
of Parent, as applicable) has made all certifications required by Rule
13a-14 or 15d-14 under the Exchange Act or Sections 302 and 906 of SOX
and the rules and regulations of the SEC promulgated thereunder with
respect to the Parent SEC Documents, and to the Knowledge of Parent, the
statements contained in such certifications are true and correct.
(iii) The consolidated financial statements of Parent
included in the Parent SEC Documents comply as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q or 8-K or the applicable rules of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which are not material).
The books and records of Parent and its Subsidiaries have been, and are
being, maintained in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
(iv) Except as adequately reflected or reserved against in
the balance sheet of Parent, dated March 31, 2004, included in the Form
10-K filed by Parent with the SEC on June 14, 2004 (such balance sheet,
including the notes thereto, the "Parent Balance Sheet"), neither Parent
nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise) required by
GAAP to be set forth on a consolidated balance sheet or notes thereto of
Parent and its consolidated Subsidiaries, except for liabilities or
obligations (A) incurred since March 31, 2004 in the ordinary course of
business consistent with past practice which are not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect
or (B) liabilities and obligations incurred in connection with this
Agreement or the transactions contemplated hereby.
(v) Neither Parent nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any joint venture,
off-balance sheet, partnership or any similar contract or arrangement
(including any contract or arrangement relating to any transaction or
relationship between or among Parent and any of its Subsidiaries, on the
one hand, and any unconsolidated
42
Affiliate, including any structured finance, special purpose or limited
purpose entity or Person, on the other hand or any "off-balance sheet
arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC)),
where the result, purpose or intended effect of such contract or
arrangement is to avoid disclosure of any material transaction involving,
or material liabilities of, Parent or any of its Subsidiaries in Parent's
or such Subsidiary's published financial statements or the other Parent
SEC Documents.
(vi) Since April 1, 2001, Parent has not received any oral
or written notification of a (x) "reportable condition" or (y) "material
weakness" in Parent's internal controls.
(e) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in (i) the Form S-4 will, when filed or at any time
it is amended or supplemented or at the time the Form S-4 becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) the Joint Proxy Statement
will, at the date it is first mailed to Parent's stockholders or at the time
of the Parent Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement and the Form S-4 will comply as to form in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made
by Parent with respect to information or statements with respect to the
Company or any of its Subsidiaries made or incorporated by reference therein
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Joint Proxy Statement or the Form S-4.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS.
(i) Since March 31, 2004 through the date hereof:
(A) Parent and its Subsidiaries have conducted their business only
in the ordinary course consistent with past practice;
(B) there has not been any split, combination or reclassification
of any of Parent's capital stock or any declaration, setting
aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, in lieu of,
or in substitution for, shares of Parent's capital stock;
(C) except as required by a change in GAAP, there has not been any
change in accounting methods, principles or practices by Parent
materially affecting the consolidated financial position or
results of operations of Parent; and
43
(D) no action has been taken by Parent or its Subsidiaries to amend
or waive any performance or vesting criteria or accelerate
vesting, exercisability or funding under any Parent Benefit
Plan (as defined in Section 3.2(i)(i)) or Parent Option.
(ii) Since March 31, 2004 through the date hereof, there
have not been any changes, circumstances or events that, individually or
in the aggregate, have had, or are reasonably likely to have, a Parent
Material Adverse Effect.
(g) COMPLIANCE WITH APPLICABLE LAW; PERMITS.
(i) Parent, its Subsidiaries and their employees hold all
authorizations, permits, licenses, certificates, easements, concessions,
franchises, variances, exemptions, orders, consents, registrations,
approvals and clearances of all Governmental Entities (including all
authorizations under the FDCA and the regulations of the FDA promulgated
thereunder) and third Persons which are required for Parent and its
Subsidiaries to own, lease and operate its properties and other assets
and to carry on their respective businesses in the manner described in
the Parent SEC Documents filed prior to the date hereof and as they are
being conducted as of the date hereof (the "Parent Permits"), and all
Parent Permits are valid, and in full force and effect, except where the
failure to have, or the suspension or cancellation of, or the failure to
be valid or in full force and effect of, any such Parent Permits is not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(ii) Parent and its Subsidiaries are, and have been at all
times since January 1, 2001, in compliance with the terms of the Parent
Permits and all Applicable Law relating to Parent and its Subsidiaries or
their respective businesses, assets or properties, except where the
failure to be in compliance with the terms of the Parent Permits or such
Applicable Law is not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect. Since January 1, 2001,
neither Parent nor any of its Subsidiaries has received any notification
from any Governmental Entity (A) asserting that Parent or any of its
Subsidiaries is not in material compliance with, or at any time since
such date has failed to materially comply with, Applicable Law or (B)
threatening to revoke any material Parent Permit. As of the date hereof,
no material investigation or review by any Governmental Entity is pending
or, to the Knowledge of Parent, has been threatened against Parent or any
of its Subsidiaries.
(h) FDA & RELATED MATTERS.
(i) Parent and its Subsidiaries are in compliance in all
material respects with (A) all written communications, including all
Regulatory or Warning Letters, Notices of Adverse Findings and Section
305 Notices and similar letters or notices, between Parent or any of its
Subsidiaries and the FDA or
44
any Drug Regulatory Agency, (B) all product recalls, notifications
and safety alerts conducted by Parent or any of its Subsidiaries,
whether or not required by the FDA, and any request from the FDA or
any Drug Regulatory Agency requesting Parent or any of its
Subsidiaries to cease to investigate, test or market any product,
and (C) any criminal, injunctive, seizure or civil penalty actions
begun or threatened by the FDA or any Drug Regulatory Agency against
Parent or any of its Subsidiaries to Parent 's Knowledge and all
related consent decrees (including plea agreements) issued with
respect to Parent or any of its Subsidiaries.
(ii) None of the material approvals, clearances,
authorizations, registrations, certifications, permits, filings or
notifications that Parent or any of its Subsidiaries has received or made
to the FDA or any Drug Regulatory Agency that relate to the marketing of
Parent's material products have been or are being revoked.
(iii) None of Parent or any of its Subsidiaries has
Knowledge (or has been notified by a Parent Partner (as defined below))
of any pending regulatory action of any sort (other than non-material
routine or periodic inspections or reviews) against any of Parent, its
Subsidiaries or any Person which manufactures, develops or distributes
products pursuant to a development, commercialization, manufacturing,
supply or other collaboration arrangement with Parent or any of its
Subsidiaries (each, a "Parent Partner") by the FDA or any Drug Regulatory
Agency or any other duly authorized governmental authority which
regulates the sale of drugs in any jurisdiction, except for such
regulatory actions as are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect, or are not
reasonably likely to limit in any material way or restrict the ability of
Parent or its Subsidiaries to market existing products.
(iv) All preclinical studies and clinical trials being
conducted by Parent or its Subsidiaries are, or, in the case of such
studies or trials being conducted by a Parent Partner, to the Knowledge
of Parent are, being conducted in material compliance with the applicable
requirements of Good Laboratory Practices or Good Clinical Practices, as
applicable, and all applicable requirements relating to protection of
human subjects contained in 21 C.F.R. Parts 50, 54, and 56, except for
such noncompliance which is not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect.
(v) The manufacture of products by Parent and its
Subsidiaries is, or, in the case of any products manufactured by a Parent
Partner, to the Knowledge of Parent is, being conducted in compliance
with the FDA's applicable current Good Manufacturing Practices
regulations for drug and biological products, except for such
noncompliance which is not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect. In addition, Parent and
its Subsidiaries and, to the Knowledge of Parent, their
45
respective Parent Partners, are in compliance with all applicable
registration and listing requirements set forth in 21 U.S.C. Section 360
and 21 C.F.R. Part 207 and all similar Applicable Law, except for such
noncompliance which is not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect.
(vi) None of Parent, its Subsidiaries or, to the Knowledge
of Parent, any of their respective agents or subcontractors has been
convicted of any crime or engaged in any conduct which could result in
debarment or disqualification by the FDA or any Drug Regulatory Agency,
and there are no proceedings pending or, to the Knowledge of Parent,
threatened in writing that reasonably might be expected to result in
criminal liability or debarment or disqualification by the FDA or any
Drug Regulatory Agency.
(i) BENEFIT PLANS.
(i) Each benefit plan, arrangement, agreement and
understanding maintained or contributed to, or required to be maintained
or contributed to, by Parent or any of its Subsidiaries or any other
Person under common control within the meaning of Section 414(b), (c),
(m) or (o) of the Code with Parent (a "Parent ERISA Affiliate") for the
benefit of any current or former employee, officer or director of Parent
or any of its Subsidiaries or Parent ERISA Affiliates (except any plan
which is a Multiemployer Plan, the "Parent Benefit Plans") and each
employment agreement, consulting agreement and termination or severance
agreement between Parent or any of its Subsidiaries, on the one hand, and
any current or former employee, officer or director of Parent or any of
its Subsidiaries, on the other hand, with respect to which Parent or any
of its Subsidiaries has any obligations or liabilities (the "Parent
Benefit Agreements") has been administered and operated in accordance
with its terms, the applicable provisions of ERISA, the Code and other
Applicable Law and the terms of all applicable collective bargaining
agreements, except where the failure to be so administered or operated is
not, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect. With respect to the Parent Benefit Plans, no
event has occurred and there exists no condition or set of circumstances
which is reasonably likely to have a Parent Material Adverse Effect under
ERISA, the Code or any other Applicable Law.
(ii) None of the Parent Benefit Plans is subject to
Section 302 or Title IV of ERISA or Section 412 of the Code. None of
Parent, any of its Subsidiaries or any Parent ERISA Affiliate
participates in, or is required to contribute to, any Multiemployer Plan.
As of the date of this Agreement, none of Parent, any of its Subsidiaries
or Parent ERISA Affiliates has, with respect to any Multiemployer Plan,
(1) incurred, during the last five years, a "complete withdrawal" or a
"partial withdrawal" (as such terms are defined in Sections 4203 and
4205, respectively, of ERISA) or (2) received any written notice or
communication from the plan administrator of such Multiemployer Plan that
46
could reasonably be expected to result in any liability of Parent, any of
its Subsidiaries or Parent ERISA Affiliates under Title IV of ERISA in
connection with any withdrawal from such Multiemployer Plan.
(iii) Neither the negotiation and execution of this
Agreement, the Parent Stockholder Approval, nor the consummation of the
transactions contemplated hereby will (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Parent Benefit Plan or Parent Benefit Agreement that will or
may result in any payment (whether of severance pay or otherwise),
acceleration of payment, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any current or former employee, officer or director of Parent
or any of its Subsidiaries.
(j) TAXES.
(i) Each of Parent and its Subsidiaries has (A) duly and
timely filed (or there have been filed on its behalf) all material Tax
Returns required to be filed by it (taking into account all applicable
extensions) with the appropriate Tax Authority, (B) paid all Taxes shown
as due on such Tax Returns, and (C) complied in all material respects
with all Applicable Laws relating to the payment and withholding of
Taxes.
(ii) Except for such Liens as are not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse
Effect, there are no Liens for Taxes upon any property or assets of
Parent or any of its Subsidiaries, except for liens for Taxes not yet due
and payable or for which adequate reserves have been provided in
accordance with GAAP in the most recent financial statements contained in
the Parent SEC Documents filed prior to the date of this Agreement.
(iii) The most recent financial statements contained in
the Parent SEC Documents reflect an adequate reserve in accordance with
GAAP for all Tax liabilities of Parent and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(iv) Neither Parent nor any of its Subsidiaries is a party
to any agreement providing for the allocation, indemnification or sharing
of material amount of Taxes other than such an agreement exclusively
between or among Parent and its Subsidiaries, and neither Parent nor any
of its Subsidiaries (A) has been a member of an affiliated group (or
similar state, local or foreign filing group) filing a material
consolidated income Tax Return (other than a group the common parent of
which is Parent) or (B) has any material liability for the income or
franchise Taxes of any Person (other than Parent or any of its
Subsidiaries) under Treasury Regulation ss. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor,
by contract, or otherwise.
47
(v) Neither Parent nor any of its Subsidiaries has: (A)
agreed to make nor is required to make any material adjustment for a
taxable period ending after the Effective Time under Section 481(a) of
the Code by reason of a change in method of accounting or otherwise
except where any such adjustments are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect;
(B) constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in
a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (I) in the two years prior to the date of this Agreement
or (II) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in connection with the Merger; or (C) taken any
action or knows of any fact, agreement, plan or other circumstance that
is reasonably likely to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(vi) Neither Parent nor any of its Subsidiaries has filed
a consent under Section 341(f) of the Code concerning collapsible
corporations.
(k) ENVIRONMENTAL MATTERS.
(i) Except as is not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect, (A) the
operations of Parent and its Subsidiaries are, and at all times since
January 1, 2002 have been, in compliance with all applicable
Environmental Laws, including possession and compliance with the terms of
all licenses required by Environmental Laws, and Parent and its
Subsidiaries have not received written notice from any Governmental
Entity of any facts or circumstances that would materially increase the
cost of maintaining such compliance in the future, (B) there are no
pending or, to the Knowledge of Parent, threatened suits, actions,
investigations or proceedings under or pursuant to Environmental Laws by
any Governmental Entity or any other Person against Parent or any of its
Subsidiaries or, to the Knowledge of Parent, involving any real property
currently or formerly owned, operated or leased by Parent or any of its
Subsidiaries, (C) Parent and its Subsidiaries have received no written
allegations of any Environmental Liabilities and, to the Knowledge of
Parent, no facts, circumstances or conditions relating to, associated
with or attributable to any real property currently or formerly owned,
operated or leased by Parent or any of its Subsidiaries or Parent's or
Subsidiary's operations thereon has resulted in or is reasonably likely
to result in Environmental Liabilities, and (D) all material
environmental reports, assessments and data produced in the last five
years and in the possession or control of Parent or its Subsidiaries have
been provided to the Company.
(ii) Without in any way limiting the generality of the
foregoing, to the Knowledge of Parent, (A) there is no asbestos contained
in or forming part of any building, building component, structure or
office space
48
currently owned or leased by Parent or its Subsidiaries and (B) no PCB's
are used or stored at any property currently owned or leased by Parent or
its Subsidiaries.
(l) INTELLECTUAL PROPERTY. Except as is not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect,
(i) Parent has or its Subsidiaries have (A) an ownership
interest in the Parent Owned Intellectual Property (in each case, free
and clear of any Liens) and is listed in the records of the appropriate
United States, state or foreign registry as a sole or joint current owner
of record for each application and registration included in the Parent
Owned Intellectual Property and (B) to the Knowledge of Parent, the
Contracts under which Parent has been granted rights in any Parent
Licensed Intellectual Property owned or controlled by a third Person are
valid and legally enforceable;
(ii) (A) Parent has or its Subsidiaries have an exclusive
license to all Parent Licensed Intellectual Property used in or necessary
for the conduct of the business of Parent or its Subsidiaries as it is
currently conducted with respect to any or all of the Parent Key Products
(in each case, free and clear of any Liens), (B) neither Parent nor any
of its Subsidiaries has granted or assigned to any Person any right or
interest in or to any Parent Key Product; and (C) Parent or its
Subsidiaries, under and subject to the applicable license agreements,
have the exclusive right to manufacture and sell each Parent Key Product,
and there is no actual or, to the knowledge of Parent, threatened, claim
that any party has the ability to cause, or intends to cause, such right
of exclusivity to terminate.
(iii) to the Knowledge of Parent, no Person is
misappropriating, infringing, diluting or otherwise violating, either
directly or indirectly, any Parent Intellectual Property;
(iv) there is no pending Action and, to the Knowledge of
Parent, there is no threatened Action (A) alleging misappropriation,
infringement, dilution or other violation by Parent or any of its
Subsidiaries of any Intellectual Property rights of any Person or (B)
challenging Parent's or any of its Subsidiaries' ownership or use of, or
the validity, enforceability, registrability or maintenance of, any
Parent Owned Intellectual Property; to the Knowledge of Parent, no Parent
Intellectual Property has been or is being used or enforced by Parent or
its Subsidiaries or by any of their licensors in a manner that,
individually or in the aggregate, is reasonably likely to result in the
unenforceability of such Intellectual Property;
(v) to the Knowledge of Parent, all patents and patent
applications, trademark registrations and applications and all other
applications, registrations and filings under the Parent Intellectual
Property (A) are subsisting, in full force and effect, (B) are valid and
enforceable, (C) have not expired, been
49
cancelled or abandoned, and (D) have had paid in a timely manner all
registration, maintenance and renewal fees necessary to preserve the
rights of Parent in connection with such Intellectual Property;
(vi) Parent and its Subsidiaries have no reason to believe
that the scope of any issued claims under any patents under the Parent
Intellectual Property should be less than the scope reflected as of the
date hereof in such patents; and
(vii) Parent and each of its Subsidiaries has implemented
commercially reasonable measures to maintain the confidentiality of the
trade secrets and other proprietary information under the Parent
Intellectual Property.
(m) LITIGATION. There is no Action pending, or, to the
Knowledge of Parent, threatened, against or affecting Parent or its
Subsidiaries or any executive officer or director of Parent or its
Subsidiaries or any of their respective properties, including Intellectual
Property, except as is not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect. Neither Parent nor its
Subsidiaries are subject to any outstanding order, writ, injunction or decree
of any Governmental Entity specifically applicable to, or having a
disproportionate effect on, Parent and its Subsidiaries except as is not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect.
(n) BROKERS AND ADVISORS. Except for fees payable to Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Merrill"), no broker, investment
banker, financial advisor or other Person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent.
(o) OPINION OF FINANCIAL ADVISOR. Parent has received the
written opinion of its financial advisor, Merrill, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to Parent. Parent has provided a copy of this
opinion to the Company solely for informational purposes and, as of the date
of this Agreement, such opinion has not been withdrawn, revoked or otherwise
modified.
(p) MATERIAL CONTRACTS. Each of the agreements filed as an
exhibit to the Form 10-K filed by Parent with the SEC on June 14, 2004 (the
"Parent 10-K") which remain in full force and effect and all of the agreements
that would have been required to be filed as an exhibit to the Parent 10-K if
any such agreements have been entered into as of the date of filing of such
Parent 10-K (collectively, "Parent Material Contracts") are valid and in full
force and effect as of the date hereof except to the extent they have
previously expired in accordance with their terms, and neither Parent nor any
of its Subsidiaries has (or has any Knowledge that any party thereto has)
violated any provision of, or committed or failed to perform any act which
with or without notice, lapse of time or both would constitute a default under
the provisions of, any Parent Material Contract, except defaults which are
not, individually or in the aggregate, reasonably expected to have a Parent
Material Adverse Effect. No Parent Material Contract has been amended or
modified, except for such amendments or modifications which have been filed
50
as an exhibit to a subsequently dated Parent SEC Document or are not required
to be filed with the SEC.
(q) No Impairment. To the Knowledge of Parent, as of the date
of this Agreement, no event has occurred and there is no circumstance that
impairs in any material respect the ability of Parent to perform its
obligations under this Agreement or is reasonably likely to prevent or
materially delay the consummation by Parent of any of the transactions
contemplated by this Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 CONDUCT OF BUSINESS.
(a) The Company agrees that, between the date of this Agreement
and the Effective Time, except as set forth in Section 4.1(a) of the Company
Disclosure Letter or as specifically permitted by any other provision of this
Agreement, or unless Parent shall otherwise provide prior written consent
(which consent shall not be unreasonably withheld or delayed), the Company
shall, and shall cause each of its Subsidiaries to, (i) use its reasonable
best efforts to maintain its existence in good standing under Applicable Law,
(ii) subject to the restrictions set forth in this Section 4.1(a) and Section
5.4, and other than in connection with this Agreement and the transactions
contemplated hereby, conduct its operations only in the ordinary and usual
course of business consistent with past practice, (iii) use its reasonable
best efforts to keep available the services of the current officers, employees
and consultants of the Company and each of its Subsidiaries, (iv) use its
reasonable best efforts to maintain and enforce all Intellectual Property of
the Company and each of its Subsidiaries, (v) use its reasonable best efforts
to maintain its rights and franchises and preserve its current relationships
with its customers, suppliers and others having business dealings with it to
the end that its ongoing businesses shall not be impaired in any material
respect at the Effective Time, (vi) use its reasonable best efforts to
maintain the Real Property and other material assets of the Company and each
of its Subsidiaries in good repair, order and condition (subject to normal
wear and tear) consistent with current needs, use its reasonable best efforts
to replace in accordance with prudent practices the Company and each of its
Subsidiaries' inoperable, worn out or obsolete assets with assets of good
quality consistent with past practices and current needs and, in the event of
a casualty, loss or damage to any of such assets or properties prior to the
Effective Time, whether or not the Company or any of its Subsidiaries is
insured, use its reasonable best efforts to either repair or replace such
damaged property to the condition it was in immediately prior to such
casualty, loss or damages, and (vii) pay all applicable material Taxes when
due and payable. The Company also shall, and shall cause each of its
Subsidiaries, as appropriate, to take the actions set forth in Section
4.1(a)(ii) of the Company Disclosure Letter.
(b) In addition, without limiting the foregoing, except as set
forth in Section 4.1(a) of the Company Disclosure Letter or as specifically
permitted by any other provision of this Agreement, the Company shall not and
shall not permit any of its Subsidiaries
51
to (unless required by Applicable Law), between the date of this Agreement and
the Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Parent (which consent shall not
be unreasonably withheld or delayed):
(i) amend or otherwise change its charter, articles or
certificate of incorporation or bylaws or equivalent organizational
documents;
(ii) (A) enter into any new material line of business or
(B) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith, other than (I) individual items of
capital expenditure which have been committed to by the Company with
third parties prior to the date of this Agreement, (II) capital
expenditures and obligations and liabilities in connection therewith
contemplated by the Company's current capital expenditure budget set
forth in Section 4.1(b)(ii)(B) of the Company Disclosure Letter, (III)
capital expenditures and obligations and liabilities in connection
therewith reasonably required in order to deal with emergency situations
(in which case the Company shall promptly notify Parent), and (IV) other
capital expenditures and obligations or liabilities in connection
therewith incurred or committed to in the ordinary course of business
consistent with past practice and which are not individually in excess of
$1,000,000; (C) to the extent permitted by Applicable Law, enter into any
licensing agreement, except for licensing agreements entered into in the
ordinary course of business; or (D) enter into an agreement to provide
rebates or discounts to public, governmental, or private entities outside
the ordinary course of business;
(iii) except as set forth in Section 4.1(b)(iii) of the
Company Disclosure Letter, issue, sell, pledge, dispose of, grant,
transfer, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer or encumbrance of any shares of capital stock of, or
other equity interests in, the Company or any of its Subsidiaries of any
class, or securities convertible or exchangeable or exercisable for any
shares of such capital stock or other equity interests, or any options,
warrants or other rights of any kind to acquire any shares of such
capital stock or other equity interests or such convertible or
exchangeable securities, or any other ownership interest, of the Company
or any of its Subsidiaries, other than the issuance of capital stock of
the Company upon the exercise, in accordance with the terms of the
applicable Company Stock Plan, of Company Options outstanding on the date
hereof;
(iv) (A) sell, pledge, dispose of, transfer, lease,
license, or encumber, or authorize the sale, pledge, disposition,
transfer, lease, license, or encumbrance of, any material property or
assets (other than Intellectual Property) of the Company or any of its
Subsidiaries, except (x) sales, pledges, dispositions, transfers, leases,
licenses or encumbrances required to be effected prior to the Effective
Time pursuant to existing Contracts, (y) sales, pledges, dispositions,
transfers, leases, licenses or encumbrances of property or assets by the
Company or any of its Subsidiaries in the ordinary course of business and
which sales,
52
pledges, dispositions, transfers, leases, licenses or encumbrances are
not individually in excess of $1,000,000 or which have been committed to
by the Company with a third party prior to the date of this Agreement, or
(z) sales or dispositions of inventory and other tangible current assets
or (B) enter into any material commitment or transaction outside the
ordinary course of business consistent with past practice other than
transactions between a wholly-owned Subsidiary of the Company, on the one
hand, and the Company or another wholly-owned Subsidiary of the Company,
on the other hand;
(v) declare, set aside, make or pay any dividend or other
distribution (whether payable in cash, stock, property or a combination
thereof) with respect to any of the capital stock of the Company (other
than dividends or distributions paid by wholly-owned Subsidiaries of the
Company to the Company or to other wholly-owned Subsidiaries of the
Company) or enter into any agreement with respect to the voting of the
capital stock of the Company;
(vi) (A) reclassify, combine, split or subdivide any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of
its capital stock or (B) redeem, purchase or otherwise acquire, directly
or indirectly, any of its capital stock, other equity interests or other
securities;
(vii) (A) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person
(other than a wholly-owned Subsidiary of the Company) for borrowed money,
(B) terminate, cancel, or agree to any material and adverse change in,
any Company Material Contract other than, solely with respect to the
Company Material Contracts that are not Key Products Contracts, in the
ordinary course of business consistent with past practice, or (C) make or
authorize any material loan to any Person (other than a Subsidiary of the
Company) outside the ordinary course of business;
(viii) except as set forth in Section 4.1(b)(viii) of the
Company Disclosure Letter and except as required by the terms of this
Agreement, the terms of any Company Benefit Plan or Company Benefit
Agreement in effect on the date hereof or as required under Applicable
Law: (A) increase the compensation or benefits payable or to become
payable to its directors or officers, (B) increase the compensation or
benefits payable or to become payable to its other employees (except for
regularly scheduled increases in the ordinary course of business in
accordance with past practices and methodologies), (C) grant any rights
to severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the
Company or any of its Subsidiaries (other than with respect to newly
hired employees in the ordinary course of business in accordance with
past practices of the Company or any of its Subsidiaries, provided that
any such agreements shall not provide for the payment of any severance or
termination pay
53
solely as a result of the execution of this Agreement or the consummation
of the transactions contemplated hereby), (D) establish, adopt, enter
into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer, consultant or employee, (E) take any action to amend
or waive any performance or vesting criteria or accelerate vesting,
exercisability or funding under any Company Benefit Plan or Company
Option, or (F) enter into, or amend, any indemnification agreements
between the Company and its directors and officers;
(ix) make any change in accounting policies or procedures,
other than as required by GAAP or by a Governmental Entity and as
concurred with by its independent auditors;
(x) except in the ordinary course of business consistent
with past practice, make any material Tax election or settle or
compromise any material liability for Taxes, change any annual Tax
accounting period, change any method of Tax accounting, file any material
amendment to any material Tax Return, enter into any closing agreement
relating to any material Tax, surrender any right to claim a material Tax
refund, or consent to any extension or waiver of the statute of
limitations period applicable to any material Tax claim or assessment;
(xi) take any action which is reasonably likely to cause
the Merger not to constitute a reorganization under Section 368 of the
Code;
(xii) settle any material Action, except (A) settlements
in the ordinary course of business consistent with past practice or (B)
settlements to the extent subject to reserves existing as of the date
hereof in accordance with GAAP; provided, that any settlements made in
reliance upon clause (A) or (B) above are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect;
and provided, further, that this Section 4.1(b)(xii) shall not apply to
any matters set forth on Section 4.1(b)(xii) of the Company Disclosure
Letter or to the matters covered by Section 5.19 of this Agreement;
(xiii) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to any confidentiality
agreement (other than with respect to any "standstill" or similar
obligation contained therein) to which the Company is a party and which
relates to a business combination involving the Company;
(xiv) write up, write down or write off the book value of
any assets that are, individually or in the aggregate, material to the
Company and
54
its Subsidiaries, taken as a whole, other than in the ordinary course of
business or as required by Applicable Law or by GAAP;
(xv) acquire, or agree to acquire, from any Person any
assets (not including Intellectual Property), operations, business or
securities or engage in, or agree to engage in, any merger, consolidation
or other business combination with any Person, except in connection with
capital expenditures permitted hereunder and except for acquisitions of
inventory and other assets (not including Intellectual Property) in the
ordinary course of business consistent with past practice;
(xvi) enter into any agreements or arrangements that limit
or otherwise restrict the Company or any of its Subsidiaries or any of
their respective Affiliates or any successor thereto or that could, after
the Effective Time, limit or restrict Parent or any of its Affiliates
(including the Surviving Corporation) or any successor thereto, from
engaging or competing in any line of business or product line or in any
geographic area;
(xvii) take any action that is intended or is reasonably
likely to result in any of the conditions to the Merger set forth in
Article VI not being satisfied;
(xviii) acquire, or agree to acquire, from any Person, any
Intellectual Property, except in the ordinary course of business
consistent with past practice (including in size and nature); or
(xix) authorize or enter into any agreement or otherwise
make any commitment to do any of the foregoing.
(c) Parent agrees that, between the date of this Agreement and
the Effective Time, except as specifically permitted by any other provision of
this Agreement, or unless the Company shall otherwise provide prior written
consent (which consent shall not be unreasonably withheld or delayed), Parent
shall, and shall cause each of its Subsidiaries to, use its reasonable best
efforts to maintain its existence in good standing under Applicable Law, and
subject to the restrictions set forth in this Section 4.1(c) and Section 5.4,
and other than in connection with this Agreement and the transactions
contemplated hereby, conduct its operations only in the ordinary and usual
course of business consistent with past practice. In addition, without
limiting the foregoing, except as specifically permitted by any other
provision of this Agreement, Parent shall not and shall not permit any of its
Subsidiaries to (unless required by Applicable Law applicable to Parent and
its Subsidiaries), between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of the Company (which consent shall not be unreasonably
withheld or delayed):
(i) amend or otherwise change the Parent Charter in a
manner that would adversely affect holders of Parent Common Stock
55
(including holders of the Parent Common Stock issuable in the Merger),
except to increase the authorized number of shares of Parent capital
stock (including Parent Common Stock);
(ii) issue any shares of Parent Common Stock if, following
such issuance, there would be an insufficient number of shares of Parent
Common Stock to pay the Merger Consideration and to be reserved for
issuance in connection with the transactions contemplated hereby;
(iii) except in the ordinary course of business consistent
with past practice (including with respect to the timing of record
dates), declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock property or otherwise, with respect
to any of Parent's capital stock;
(iv) take any action (including any acquisition or
entering into any business combination) that is intended or is reasonably
likely to result in any of the conditions to the Merger set forth in
Article VI not being satisfied;
(v) repurchase, redeem or otherwise acquire, or permit its
Subsidiaries to purchase or otherwise acquire any shares of its capital
stock or any securities convertible into or exchangeable for any shares
of its capital stock;
(vi) take any action which would or could reasonably be
expected to cause the Merger not to constitute a reorganization under
Section 368 of the Code; or
(vii) authorize or enter into any agreement or otherwise
make any commitment to do any of the foregoing.
(d) OTHER ACTIONS. Except as required by Applicable Law,
Parent, the Company and Merger Sub shall not, and shall not permit any of
their respective Subsidiaries to, voluntarily take any action that is
reasonably likely to result in (i) any of the representations and warranties
of such party set forth in this Agreement that are qualified as to
"materiality" or "Company Material Adverse Effect" or "Parent Material Adverse
Effect", as the case may be, becoming untrue as of the Closing, (ii) any of
such representations and warranties that are not so qualified becoming untrue
in any material respect as of the Closing, or (iii) any of the conditions to
the Merger set forth in Article VI not being satisfied.
SECTION 4.2 NO SOLICITATION.
(a) The Company shall not, nor permit any of its Subsidiaries
to, nor authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly, or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
any information to any Person), or take any other action to, or which is
designed or intended to, facilitate, induce or encourage, any inquiries with
respect to, or the making, submission or
56
announcement of, any Alternative Transaction Proposal (as defined in Section
8.3(c)), (ii) participate in any discussions or negotiations regarding,
furnish to any Person any information with respect to, otherwise cooperate in
any way with or knowingly facilitate any effort or attempt to make or
implement any Alternative Transaction Proposal (except to disclose the
existence of the provisions of this Section 4.2), (iii) approve, endorse or
recommend any Alternative Transaction (except to the extent specifically
permitted pursuant to Section 4.2(d)), or (iv) enter into any letter of intent
or similar document or any contract, agreement or commitment (whether binding
or not) contemplating or otherwise relating to any possible or proposed
Alternative Transaction Proposal. The Company and its Subsidiaries will
immediately cease, and will cause their respective officers, directors and
employees and any investment banker, financial adviser, attorney, accountant
or other representative retained by them to cease, any and all existing
activities, discussions or negotiations with any third parties conducted
heretofore with respect to any possible or proposed Alternative Transaction.
(b) NOTIFICATION OF ALTERNATIVE TRANSACTIONS. As promptly as
reasonably practicable (and in any event within 48 hours) after receipt of any
Alternative Transaction Proposal or any request for nonpublic information or
any inquiry relating in any way to any Alternative Transaction Proposal, the
Company shall provide Parent with oral and written notice of the material
terms and conditions of such Alternative Transaction Proposal, request or
inquiry, and the identity of the Person or group of Persons making any such
Alternative Transaction Proposal, request or inquiry. In addition, the Company
shall keep Parent informed in all material respects of the status and details
(including amendments or proposed amendments) of any such Alternative
Transaction Proposal, request or inquiry, and the Company and Parent shall
cause their respective outside legal counsel to establish a regular schedule
as reasonably agreed by Parent and the Company for telephonic conversations
between the Company's outside legal counsel and Parent's outside legal counsel
for the purpose of providing updates of such status and details. In addition,
the Company shall cause its outside legal counsel to endeavor to provide
reasonable advance notice to Parent's outside legal counsel of any meeting of
the Company's Board of Directors at which it is reasonably likely that the
Company's Board of Directors will consider or otherwise discuss any
Alternative Transaction Proposal or Alternative Transaction.
(c) COMPANY SUPERIOR PROPOSALS. Notwithstanding anything to the
contrary contained in this Agreement, in the event that the Company receives
an unsolicited, bona fide written Alternative Transaction Proposal at any time
prior to obtaining the Company Stockholder Approval and it is determined in
good faith by the Company's Board of Directors (after receipt of advice from
its outside legal counsel and its independent financial advisors) that such
Alternative Transaction Proposal constitutes or is reasonably likely to lead
to a Company Superior Proposal (as defined in Section 8.3(h)), it may then
take the following actions (but only if the Company has given Parent at least
24 hours prior written notice of its intention to take any of the following
actions and of the identity of the Person or group of Persons making such
Alternative Transaction Proposal and the terms and conditions of such
Alternative Transaction Proposal and if the Company shall not have breached
any of the provisions of this Section 4.2 in any material respect):
57
(i) furnish information (including nonpublic information)
to the Person or group of Persons (and its or their advisors and
representatives) making such Alternative Transaction Proposal, provided
that (A) prior to furnishing any such nonpublic information, it receives
from such Person or group of Persons an executed confidentiality
agreement containing terms at least as restrictive as the terms contained
in the Confidentiality Agreement, dated as of March 17, 2004, between
Parent and the Company (the "CDA") and (B) contemporaneously with
furnishing any such nonpublic information to such Person or group of
Persons, it furnishes such nonpublic information to Parent (or, with
respect to any such nonpublic information that has previously been
furnished to Parent or its advisors or representatives, a list
identifying such nonpublic information delivered to such Persons and its
or their advisors and representatives); and
(ii) engage in discussions or negotiations with such
Person or group of Persons with respect to such Alternative Transaction
Proposal.
(d) Company Change of Recommendation.
(i) The Board of Directors of the Company may withhold,
withdraw, amend or modify its recommendation in favor of this Agreement
and the Merger if (A) the Company has complied in all material respects
with the procedures set forth in Sections 4.2(d)(ii) and 4.2(d)(iii)
below and (B) the Board of Directors of the Company reasonably determines
in good faith after consultation with outside counsel and independent
financial advisors that a Parent Material Adverse Effect has occurred and
that as a result thereof such action is consistent with their fiduciary
duties under Applicable Law (a "Company Change of Recommendation").
(ii) The Company shall cause its outside counsel to
endeavor to provide Parent's outside counsel with reasonable advance
telephonic notice (which notice may be delivered to Parent's outside
counsel's voicemail mailbox) of any meeting of the Company Board of
Directors at which the Company's Board of Directors is reasonably likely
to consider (x) whether any change, event, violation, circumstance or
effect would constitute a Parent Material Adverse Effect or (y) a Company
Change of Recommendation. The Company shall cause its outside counsel to
keep Parent's outside counsel informed in all material respects of the
status and details of the Company's Board of Directors' consideration of
such Company Change of Recommendation or such change, event, violation,
circumstance or effect, including a reasonably detailed summary of
material facts and circumstances being considered by the Company in such
connection, and the Company shall cause its outside counsel to establish
a regular schedule reasonably agreed by Parent and the Company for
telephonic conversations with Parent's outside counsel to provide updates
of such status and details.
58
(iii) The Company shall notify Parent in writing no less
than four business days prior to any meeting at which the Company's Board
of Directors determines (x) that any change, event, violation,
circumstance or effect constitutes a Parent Material Adverse Effect or
(y) to make a Company Change of Recommendation, attaching to such notice
a current description of summaries of the material facts and information
which the Company's executive officers, outside counsel, and independent
financial advisors expect the Company's Board of Directors to consider as
the basis for or in connection with making any such determination. After
receipt of such notice, and prior to the meeting of the Company's Board
of Directors, Parent shall be entitled to (i) submit written information,
opinions and analyses, including those of Parent's outside counsel and
independent financial advisors, to the Company's executive officers for
their good faith review and consideration and (ii) meet with the
Company's executive officers and the Company's outside counsel and
independent financial advisors who have advised the Company's Board of
Directors on the relevant matters, who shall engage in good faith
discussions with Parent and its outside counsel and independent financial
advisors regarding the consideration by the Company Board of Directors of
such determination; provided, however, that nothing in this Section
4.2(d) shall require the Company to disclose any information, opinions or
analyses that would result in the loss of attorney-client privilege.
(e) PARENT CHANGE OF RECOMMENDATION.
(i) The Board of Directors of Parent may withhold,
withdraw, amend or modify its recommendation in favor of the Stock
Issuance if (A) Parent has complied in all material respects with the
procedures set forth in Sections 4.2(e)(ii) and 4.2(e)(iii) below and (B)
the Board of Directors of Parent reasonably determines in good faith
after consultation with outside counsel and independent financial
advisors that a Company Material Adverse Effect has occurred and that as
a result thereof such action is consistent with their fiduciary duties
under Applicable Law (a "Parent Change of Recommendation").
(ii) Parent shall cause its outside counsel to endeavor to
provide the Company's outside counsel with reasonable advance telephonic
notice (which notice may be delivered to Company's outside counsel's
voicemail mailbox) of any meeting of the Parent Board of Directors at
which the Parent Board of Directors is reasonably likely to consider (x)
whether any change, event, violation, circumstance or effect would
constitute a Company Material Adverse Effect or (y) a Parent Change of
Recommendation. Parent shall cause its outside counsel to keep the
Company's outside counsel informed in all material respects of the status
and details of the Parent Board of Directors' consideration of such
Parent Change of Recommendation or such change, event, violation,
circumstance or effect, including a reasonably detailed summary of
material facts and circumstances being considered by Parent in such
connection, and Parent shall cause its outside counsel to establish a
regular schedule reasonably agreed by
59
Parent and the Company for telephonic conversations with the
Company's outside counsel to provide updates of such status and
details.
(iii) Parent shall notify the Company in writing no less
than four business days prior to any meeting at which Parent's Board of
Directors determines (x) that any change, event, violation, circumstance
or effect constitutes a Company Material Adverse Effect or (y) to make a
Parent Change of Recommendation, attaching to such notice a current
description of summaries of the material facts and information which
Parent's executive officers, outside counsel, and independent financial
advisors expect the Parent Board of Directors to consider as the basis
for or in connection with making any such determination. After receipt of
such notice, and prior to the meeting of Parent's Board of Directors, the
Company shall be entitled to (i) submit written information, opinions and
analyses, including those of the Company's outside counsel and
independent financial advisors, to Parent's executive officers for their
good faith review and consideration and (ii) meet with Parent's executive
officers and Parent's outside counsel and independent financial advisors
who have advised the Parent Board of Directors on the relevant matters,
who shall engage in good faith discussions with the Company and its
outside counsel and independent financial advisors regarding the
consideration by the Parent Board of Directors of such determination;
provided, however, that nothing in this Section 4.2(e) shall require
Parent to disclose any information, opinions or analyses that would
result in the loss of attorney-client privilege.
(f) COMPLIANCE WITH TENDER OFFER RULES. Nothing contained in
this Agreement shall prohibit the Company or Parent or their respective Boards
of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act to
the extent applicable; provided that the Company shall not effect, or disclose
pursuant to such Rules or otherwise take a position which constitutes, a
Company Change of Recommendation unless specifically permitted pursuant to the
terms of Section 4.2(d) and provided further that Parent shall not effect, or
disclose pursuant to such Rules or otherwise take a position which
constitutes, a Parent Change of Recommendation unless specifically permitted
pursuant to the terms of Section 4.2(e).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 PREPARATION OF SEC DOCUMENTS; STOCKHOLDERS' MEETINGS.
(a) As soon as practicable following the date of this
Agreement, Parent and the Company shall prepare and file with the SEC the
Joint Proxy Statement, and Parent shall prepare and file with the SEC the Form
S-4, in which the Joint Proxy Statement will be included as a prospectus. Each
of Parent and the Company shall use its reasonable best efforts to have the
Form S-4 declared effective under the Securities Act as promptly as
60
practicable after such filing. Parent will use its reasonable best efforts to
cause the Joint Proxy Statement to be mailed to Parent's stockholders, and the
Company will use its reasonable best efforts to cause the Joint Proxy
Statement to be mailed to the Company's stockholders, in each case as promptly
as practicable after the Form S-4 is declared effective under the Securities
Act. Parent shall also take any action (other than qualifying to do business
in any jurisdiction in which it is not now so qualified or to file a general
consent to service of process) required to be taken under any applicable state
securities laws in connection with the issuance of shares of Parent Common
Stock in the Merger and the conversion of Company Options into options to
acquire Parent Common Stock, and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Joint Proxy Statement will be
made by Parent or the Company without the other party's prior consent (which
shall not be unreasonably withheld or delayed) and without providing the other
party the opportunity to review and comment thereon. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, or the suspension of the qualification of the
Parent Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, and each party will advise the other promptly of any
request by the SEC for amendment of the Joint Proxy Statement or the Form S-4
or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information (including any Company Change of Recommendation or Parent Change
of Recommendation) relating to Parent or the Company, or any of their
respective Affiliates, officers or directors, should become known to Parent or
the Company which should be set forth in an amendment or supplement to any of
the Form S-4 or the Joint Proxy Statement, so that any of such documents would
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law, disseminated to the
stockholders of Parent and the Company.
(b) Each of the Company and Parent shall, as promptly as
practicable after the Form S-4 is declared effective under the Securities Act,
take all action necessary in accordance with Applicable Law and the Company
Organizational Documents, in the case of the Company, and the Parent
Organizational Documents, in the case of Parent, to duly give notice of,
convene and hold a meeting of its stockholders as promptly as practicable to
consider, in the case of Parent, the Stock Issuance (the "Parent Stockholders'
Meeting") and, in the case of the Company, the adoption and approval of this
Agreement and the Merger (the "Company Stockholders' Meeting"). Unless there
has been a Company Change of Recommendation (in the case of the Company) or
Parent Change of Recommendation (in the case of Parent), as the case may be,
each of the Company and Parent will use its reasonable best efforts to solicit
from its stockholders proxies in favor of, in the case of Parent, the Stock
Issuance, and, in the case of the Company, the adoption and approval of this
Agreement and the Merger, and will take all other action necessary or
advisable to secure the vote or consent of its stockholders required by the
rules of the NYSE or Applicable Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, the Company or Parent
may adjourn or postpone
61
the Company Stockholders' Meeting or Parent Stockholders' Meeting, as the case
may be, to the extent necessary to ensure that any necessary supplement or
amendment to the Joint Proxy Statement is provided to its respective
stockholders in advance of a vote on, in the case of Parent, the Stock
Issuance, and, in the case of the Company, the approval and adoption of this
Agreement and the Merger, or, if, as of the time for which the Company
Stockholders' Meeting or Parent Stockholders' Meeting, as the case may be, is
originally scheduled, there are insufficient shares of Company Common Stock or
Parent Common Stock, as the case may be, represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of such
meeting. Unless there has been a Company Change of Recommendation (in the case
of the Company) or a Parent Change of Recommendation (in the case of Parent),
each of the Company and Parent shall ensure that the Company Stockholders'
Meeting and the Parent Stockholders' Meeting, respectively, is called,
noticed, convened, held and conducted, and that all proxies solicited in
connection with the Company Stockholders' Meeting or Parent Stockholders'
Meeting, as the case may be, are solicited in compliance with Applicable Law,
the rules of the NYSE and, in the case of the Company, the Company
Organizational Documents, and, in the case of Parent, the Parent
Organizational Documents. Without the prior written consent of Parent,
approval and adoption of this Agreement and the Merger is the only matter
which the Company shall propose to be acted on by the Company's stockholders
at the Company Stockholders' Meeting. Without the prior written consent of the
Company (not to be unreasonably withheld or delayed), approval of the Stock
Issuance is the only matter which Parent shall propose to be acted on by
Parent's stockholders at the Parent Stockholders' Meeting.
(c) Unless there has been a Company Change of Recommendation
(in the case of the Company) or a Parent Change of Recommendation (in the case
of Parent), each of the Company and Parent will use its reasonable best
efforts to hold the Company Stockholders' Meeting and Parent Stockholders'
Meeting, respectively, on the same date as the other party and as soon as
reasonably practicable after the date of this Agreement.
(d) Unless there has been a Company Change of Recommendation
(in the case of the Company) or a Parent Change of Recommendation (in the case
of Parent): (i) the Board of Directors of each of the Company and Parent shall
recommend that its stockholders vote in favor of, in the case of the Company,
the approval and adoption of this Agreement and the Merger at the Company
Stockholders' Meeting, and, in the case of Parent, the Stock Issuance at the
Parent Stockholders' Meeting, (ii) the Joint Proxy Statement shall include a
statement to the effect that the Board of Directors of (A) Parent has
recommended that Parent's stockholders vote in favor of the Stock Issuance at
the Parents' Stockholder Meeting and (B) the Company has recommended that the
Company's stockholders vote in favor of approval and adoption of this
Agreement and the Merger at the Company Stockholders' Meeting and (iii)
neither the Board of Directors of the Company or 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 other party, the recommendation of
its respective Board of Directors that the respective stockholders of the
Company or Parent vote in favor of, in the case of the Company, the approval
and adoption of this Agreement and the Merger, and, in the case of Parent, the
Stock Issuance.
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SECTION 5.2 ACCOUNTANT'S LETTERS AND CONSENTS.
(a) Each of the Company and Parent shall use its reasonable
best efforts to cause to be delivered to the other party two letters from
their respective independent accountants, one dated approximately as of the
date the Form S-4 is declared effective and one dated approximately as of the
Closing Date, each addressed to the other party, in form and substance
reasonably satisfactory to the other party and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Parent and the Company will each use its reasonable best
efforts to cause to be delivered to each other consents from their respective
independent auditors, dated the date on which the Form S-4 shall become
effective or a date not more than two days prior to such date, in form
reasonably satisfactory to the recipient and customary in scope and substance
for consents delivered by independent public accountants in connection with
registration statements on Form S-4 under the Securities Act.
SECTION 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to the
CDA and Applicable Law, the Company shall, and shall cause each of its
Subsidiaries to, afford to Parent and its officers, employees, accountants,
counsel, financial advisors and other representatives, full access at all
reasonable times on reasonable notice during the period prior to the Effective
Time to all their properties, books, contracts, commitments, personnel and
records (provided, that such access shall not unreasonably interfere with the
business or operations of the Company) and, during such period, the Company
shall, and shall cause each of its Subsidiaries to, furnish promptly to Parent
(i) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of federal or
state securities laws, and (ii) all other information concerning its business,
properties, litigation matters and personnel as Parent may reasonably request
provided, that nothing in Section 5.3(a), (b)or (c) shall require the Company
to provide any access, or to disclose any information, if permitting such
access or disclosing such information would (a) violate Applicable Law, (b)
violate any of its obligations with respect to confidentiality (provided that
the Company shall, upon the request of Parent, use its reasonable best efforts
to obtain the required consent of any third party to such access or
disclosure), or (c) result in the loss of attorney-client privilege (provided
that the Company shall use its reasonable best efforts to allow for such
access or disclosure in a manner that does not result in a loss of
attorney-client privilege). The Company also will consult with Parent
regarding its business in a prompt manner and on a regular basis. In addition,
the Company and its officers and employees shall reasonably cooperate with
Parent in Parent's efforts to comply with the rules and regulations affecting
public companies, including SOX. No review pursuant to this Section 5.3 shall
affect or be deemed to modify any representation or warranty contained herein,
the covenants or agreements of the parties hereto or the conditions to the
obligations of the parties hereto under this Agreement.
(b) In addition, without limiting the foregoing, prior to the first
date on which both the Company Stockholder Approval and the Parent Stockholder
Approval have been obtained, the Company shall use its reasonable best efforts
(x) to provide Parent with sufficient advance notice of intended written or
electronic communications with the Investigating Entities, plaintiff's counsel
in the Shareholder and Derivative Actions and the Company's insurers regarding
coverage of any claims or potential claims related either to the
Investigations or the
63
Shareholder and Derivative Actions ("Intended Communications") to allow Parent
to review and comment upon such communications, and (y) to permit one outside
lawyer for Parent (who shall be reasonably acceptable to the Company) to
attend, solely in a monitoring capacity, proposed in-person or telephonic
communications ("Proposed Meetings") with the Investigating Entities and/or
plaintiff's counsel in the Shareholder and Derivative Actions, unless in
either case the Company reasonably believes that such advance notice or such
attendance would adversely affect its ability to resolve such matters on
favorable terms. From and after the first date on which both the Company
Stockholder Approval and the Parent Stockholder Approval have been obtained,
(x) the Company shall be required to provide Parent with sufficient advance
notice of Intended Communications to allow Parent to review and comment upon
such communications (provided that the Company shall not be required to delay
any Intended Communication pending comment from Parent in the event that the
Company reasonably believes that such delay would significantly impact its
ability to resolve the relevant matter), and (y) the Company shall use its
reasonable best efforts to give Parent advance notice of any Proposed Meetings
and to permit Parent and its representatives approved in advance by the
Company to attend and participate in a reasonable manner in such meetings
(provided that Parent shall not insist on attendance at Proposed Meetings if
the Investigating Entities have requested in writing that Parent not
participate). The Company shall consider in good faith the views and comments
of Parent and its Representatives with respect to all Intended Communications
and Proposed Meetings. To the extent that the Company shall not have been
required by this Section 5.3(b) to have afforded Parent advance notice of any
Intended Communication or an opportunity to attend any Proposed Meeting, the
Company shall without unreasonable delay inform Parent of all communications
(whether oral, in writing, electronic, or otherwise) with (1) the
Investigating Entities in connection with the Investigations of the Company;
(2) plaintiffs' counsel in the Shareholder and Derivative Actions; and (3) the
Company's insurers regarding coverage of any claims or potential claims
related either to the investigations by the Investigating Entities or the
Shareholder and Derivative Actions. Notwithstanding the foregoing or anything
else in this Agreement to the contrary, the Company shall not be required to
take any action that would violate any Applicable Law or to make any
disclosure to Parent or any other Person that would result in a loss of the
protection of the attorney client and work product privileges. In connection
with this Section 5.3(b), Parent represents that, based upon all information
made available to it as of the date of this Agreement, it currently expects to
cooperate with the Investigating Entities in a manner substantially consistent
with the cooperation afforded the Investigating Entities by the Company, but
nothing in this sentence shall in any way limit Parent's discretion with
respect to the Investigating Entities after the Closing Date.
(c) Upon reasonable request and notice, Parent will provide the
Company reasonable access to its properties, books, contracts, commitments,
personnel and records, and Parent will respond to reasonable inquiries from
the Company regarding its business operations on a regular basis; provided,
that the foregoing shall not require Parent to respond, or to disclose any
information if responding or disclosing such information would (a) violate
Applicable Law, (b) violate any of its obligations with respect to
confidentiality (provided that Parent shall, upon the request of the Company,
use its reasonable best efforts to obtain the required consent of any third
party to such access or disclosure), or (c) result in the loss of
attorney-client privilege (provided that Parent shall, upon the request of the
Company, allow for such access or disclosure in a manner that does not result
in a loss of attorney-client privilege).
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(d) Each of Parent and the Company will hold, and will cause its
respective officers, employees, accountants, counsel, financial advisors and
other representatives and Affiliates to hold, any nonpublic information in
accordance with the terms of the CDA.
SECTION 5.4 ANTITRUST FILINGS; REASONABLE BEST EFFORTS.
(a) Each party shall make or cause to be made, in cooperation
with the other parties and to the extent applicable and as promptly as
practicable, (i) an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby
and (ii) all other necessary filings, forms, declarations, notifications,
registrations and notices with other Governmental Entities under Competition
Laws relating to the transactions contemplated hereby. "Competition Laws" mean
the HSR Act, the Xxxxxxx Antitrust Act of 1890, as amended, the Xxxxxxx Act of
1914, as amended, the Federal Trade Commission Act, as amended, and any other
United States federal or state or foreign statutes, rules, regulations,
orders, decrees, administrative or judicial doctrines or other laws that are
designed to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade. Each party shall use its
reasonable best efforts to respond at the earliest practicable date to any
requests for additional information made by the Federal Trade Commission (the
"FTC"), the United States Department of Justice (the "DOJ") or any other
Governmental Entities, and act in good faith and reasonably cooperate with the
other party in connection with any investigation of any Governmental Entity.
Each party shall use its reasonable best efforts to furnish to each other all
information required for any filing, form, declaration, notification,
registration and notice. Each party shall give the other party reasonable
prior notice of any communication with, and any proposed understanding or
agreement with, any Governmental Entity regarding any filings, forms,
declarations, notifications, registrations or notices, and permit the other to
review and discuss in advance, and consider in good faith the views of the
other in connection with, any proposed communication, understanding or
agreement with any Governmental Entity with respect to the transactions
contemplated by the Agreement. None of the parties shall independently
participate in any meeting, or engage in any substantive conversation, with
any governmental authority in respect of any filings or inquiry without giving
the other party prior notice of the meeting and, unless prohibited by such
Governmental Entity, the opportunity to attend and/or participate. The parties
will consult and cooperate with one another in connection with any information
or proposals submitted in connection with proceedings under or relating to any
Competition Law. Without limiting the foregoing, the Company and Parent shall
each use its reasonable best efforts: (i) to avoid the entry of any judgment
that would restrain, prevent or delay the Closing; (ii) to eliminate every
impediment under any Competition Law that may be asserted by any Governmental
Entity so as to enable the Closing to occur as soon as reasonably possible
(and in any event no later than the Outside Date); and (iii) vigorously to
contest and resist any such action or proceeding, including any administrative
or judicial action.
(b) Subject to Section 5.4(c), each of the parties to this
Agreement agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties to this Agreement in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this
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Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents, licenses, permits, authorizations, orders and
approvals from Governmental Entities and the making of all other necessary
registrations and filings (including filings with Governmental Entities, if
any), (ii) the obtaining of all consents, approvals or waivers from third
parties related to or required in connection with the Merger that are
necessary to consummate the Merger and the transactions contemplated by this
Agreement, (iii) the preparation of the Joint Proxy Statement and the Form
S-4, (iv) the execution and delivery of any additional instruments reasonably
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement, and (v) the providing of all such
information concerning such party, its subsidiaries, its Affiliates and its
subsidiaries' and Affiliates' officers, directors, employees and partners as
may be reasonably requested in connection with any of the matters set forth in
Section 5.4(a) or this Section 5.4(b). Each of Parent and the Company agrees
that it will use its reasonable best efforts to obtain prior to the Effective
Time each of the consents that are listed in Section 5.4(b) of the Company
Disclosure Letter.
(c) Notwithstanding anything to the contrary in this Section
5.4, neither Parent nor the Company shall be required in order to resolve any
objections asserted under Competition Laws by any Governmental Entity with
respect to the transactions contemplated by this Agreement to divest any of
its businesses, product lines or assets, or take or agree to take any other
action or agree to any limitation or restriction, that is reasonably likely to
result in a Parent Material Adverse Effect (determined, for purposes of this
clause, after giving effect to the Merger) or a Company Material Adverse
Effect.
(d) The Company and Parent shall not, and shall not permit any
of their respective subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets if the entering into of a
definitive agreement relating to or the consummation of such acquisition,
purchase, merger or consolidation is reasonably expected to (i) impose any
delay (other than an immaterial delay) in the obtaining of, or increase the
risk (other than an insignificant increase) of not obtaining, any
authorizations, consents, orders, declarations or approvals of any
Governmental Entity necessary to consummate the transactions contemplated by
this Agreement or the expiration or termination of any applicable waiting
period, (ii) increase the risk (other than an insignificant increase) of any
Governmental Entity entering an order prohibiting the consummation of the
transactions contemplated by this Agreement or commencing litigation seeking
such an order, (iii) increase the risk (other than an insignificant increase)
of not being able to remove any such order on appeal or otherwise, (iv) delay
(other than an immaterial delay) or prevent the consummation of the
transactions contemplated by this Agreement, or (v) increase the risk (other
than an insignificant increase) of any of the conditions to the Merger set
forth in VI not being satisfied.
SECTION 5.5 INDEMNIFICATION. (i) From and after the Effective
Time, Parent shall cause the Surviving Corporation to indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, a director or officer
of the Company or any of its Subsidiaries (the "Indemnified Parties") against
all losses, claims, damages, costs and expenses (including reasonable
attorneys'
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fees), liabilities, judgments and, subject to the proviso of this
sentence, settlement amounts that are paid or incurred in connection with any
pending, threatened or completed claim, action, suit, proceeding or
investigation (whether civil, criminal, administrative or investigative and
whether asserted or claimed prior to, at or after the Effective Time) that is
(i) based on, or arises out of, the fact that such Indemnified Party is or was
a director or officer of the Company or any of its Subsidiaries, or (ii) based
on, or arising out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the fullest extent a corporation is
permitted under Applicable Law to indemnify its own directors or officers, as
the case may be ("Indemnified Liabilities"). Without limiting the foregoing,
in the event that any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising prior to or after the
Effective Time), (x) the Surviving Corporation shall have the right to assume
the defense thereof with legal counsel of Parent's choosing and neither Parent
nor the Surviving Corporation shall be liable to such Indemnified Party for
any legal expenses of other counsel or any expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof; provided,
however that such Indemnified Party may employ counsel of its own choosing,
and Parent shall cause the Surviving Corporation to pay such Indemnified Party
for reasonable legal expenses of such counsel, if under applicable standards
of professional conduct the counsel selected by Parent would have a conflict
representing the Surviving Corporation and the Indemnified Party in the
conduct of the defense of an action; (y) the Indemnified Party shall cooperate
with the Surviving Corporation in the defense of any such matter; and (z) the
Surviving Corporation shall not be liable for any settlement of any claim
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). Any Indemnified Party wishing to obtain indemnification
under this Section 5.5(a), upon learning of any claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof; provided,
however, the failure of any Indemnified Party to give such notice shall not
waive any rights of the Indemnified Party under this Section 5.5 except to the
extent that the rights of the Surviving Corporation or Parent are actually
materially prejudiced thereby). In the event the Surviving Corporation does
not assume the defense of an action in accordance with this Section 5.5(a),
(A) the Indemnified Parties as a group seeking indemnification with respect to
the same or a substantially related matter may retain only one law firm with
respect to such matter except to the extent that under applicable standards of
professional conduct, such counsel would have a conflict representing such
Indemnified Party and any other Indemnified Party or Indemnified Parties; (B)
Parent shall cause the Surviving Corporation to pay all expenses of the
disposition of any such claim, action, suit, proceeding or investigation to
each Indemnified Party to the full extent permitted by Applicable Law promptly
after statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses reasonably
incurred, in either case to the extent not prohibited by the TBCA; provided,
however, that the person to whom expenses are advanced provides an undertaking
required by Applicable Law to repay such advance if it is ultimately
determined that such person is not entitled to indemnification; (C) the
Indemnified Parties shall retain counsel reasonably satisfactory to the
Surviving Corporation; (D) Parent shall cause the Surviving Corporation to pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
and all costs and expenses of the Indemnified Parties in connection with
seeking and obtaining indemnification from the Surviving Corporation, in each
case promptly as statements therefor are received; and (E) Parent shall cause
the Surviving Corporation to use reasonable best efforts to assist in the
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defense of any such matter. In the event of any dispute as to whether an
Indemnified Party's conduct complies with the standards set forth under the
TBCA and the Company Charter or Company Bylaws, a determination shall be made
by independent counsel mutually acceptable to the Company following the
Effective Time and the Indemnified Party (the "Independent Counsel");
provided, however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed). Without limiting the foregoing, to the
extent that any Indemnified Party is, by reason of the fact that such
Indemnified Party is or was a director or officer of the Company or any of its
Subsidiaries, a witness in any claim, action, suit, proceeding or
investigation to which such Indemnified Party is not a party, such Indemnified
Party shall be indemnified and held harmless against all costs and expenses in
connection therewith.
(ii) The Surviving Corporation shall not enter into any
settlement of any claim in which the Surviving Corporation is jointly
liable with an Indemnified Party (or would be if joined in such claim)
unless such settlement provides for a full and final release of all
claims asserted against such Indemnified Party.
(b) Except to the extent required by Applicable Law, neither
Parent nor the Surviving Corporation shall take any action so as to amend,
modify, limit or repeal the provisions for indemnification of Indemnified
Parties contained in the certificates or articles of incorporation or bylaws
(or other comparable charter documents) of the Surviving Corporation and its
Subsidiaries (which as of the Effective Time shall be no more favorable to
such individuals than those maintained by the Company and its Subsidiaries on
the date hereof) in such a manner as would adversely affect the rights of any
Indemnified Party to be indemnified by such corporations in respect of their
serving in such capacities prior to the Effective Time. The Surviving
Corporation shall honor all of its indemnification obligations existing as of
the Effective Time.
(c) For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by the Company as of the date of this
Agreement; provided, however, that Parent may substitute therefor policies of
at least the same coverage containing terms that are no less advantageous with
respect to matters occurring prior to or at the Effective Time, or Parent may
expand its own directors' and officers' liability insurance policy to provide
the same coverage as maintained by the Company as of the date of this
Agreement and on terms that are no less advantageous with respect to matters
occurring prior to or at the Effective Time, in each case to the extent such
liability insurance or additional coverage can be maintained annually at a
cost to the Surviving Corporation not greater than 300% for annual premiums
for such directors' and officers' liability insurance, which existing premium
costs are set forth in Section 5.5(c) of the Company Disclosure Letter;
provided, further, that if such insurance or additional coverage cannot be so
maintained or obtained at such cost, the Company shall maintain or obtain as
much of such insurance as can be so maintained or obtained at a cost equal to
300% of the current annual premiums of the Company for its directors' and
officers' liability insurance.
(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each party
entitled to insurance
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coverage under Section 5.5(c), respectively, and his or her heirs and legal
representatives, and shall be in addition to, and shall not impair, any other
rights an Indemnified Party may have under the Company Charter, the Company
Bylaws or the comparable organization documents of the Surviving Corporation
or any of its Subsidiaries, under the TBCA or otherwise. Parent shall ensure
that the Surviving Corporation complies with all of its obligations under this
Section 5.5.
SECTION 5.6 EMPLOYEE BENEFITS.
(a) Immediately following the Effective Time and until December
31, 2005, Parent will provide, or will cause to be provided, to each person
who is employed by the Company or any of its Subsidiaries immediately prior to
the Effective Time and who continues to be employed by Parent, the Surviving
Corporation, or any of their Subsidiaries (the "Continuing Employees") (i)
compensation and benefits which in the aggregate are no less favorable than
those provided by the Company and its Subsidiaries to such Continuing Employee
immediately prior to the Effective Time under the applicable Company Benefit
Plans, Company Benefit Agreements and compensation practices of the Company
and its Subsidiaries and (ii) eligibility for periodic increases in
compensation and/or promotions generally consistent with then current policies
of Parent and its Subsidiaries for employees of Parent and its Subsidiaries
who are employed in comparable positions.
(b) For a period of two years following the Effective Time,
Parent will provide, or will cause to be provided, severance benefits (based
on the change in control that will occur at the Effective Time in accordance
with the terms of the Company's severance policy) to Continuing Employees
which are no less favorable than those provided under the Company's severance
policy attached to Section 5.6(b) of the Company Disclosure Letter (the
"Company Severance Policy"); provided, however, that notwithstanding anything
in the Company Severance Policy to the contrary, equity awards granted to any
Continuing Employee following the Effective Time shall be governed by the
terms and conditions of the award agreement(s) issued under the applicable
Parent equity plans. Parent will comply, and will cause the Surviving
Corporation to comply, with the obligations set forth in Section 5.6(b) of the
Company Disclosure Letter.
(c) From and after the Effective Time, each Continuing Employee
shall be eligible to participate in Parent's vacation policies; provided,
however, that the amount of vacation days per year for each Continuing
Employee shall be no less than the amount of vacation days such Continuing
Employee would have been entitled to as of Effective Time under the applicable
Company Benefit Plans or Company Benefit Agreements.
(d) For a period of two years following the Effective Time, the
Continuing Employees will be eligible to participate in all stock option,
bonus, profit-sharing and similar plans of Parent and/or its Subsidiaries to
the same extent as employees of Parent and/or its Subsidiaries who are
employed in comparable positions.
(e) With respect to each benefit plan of Parent or any of its
Subsidiaries in which Continuing Employees are eligible to participate
following the Effective
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Time, for purposes of determining vesting and entitlement to benefits,
including for severance benefits and vacation entitlement (but not for
purposes of defined benefit pension accruals), service with the Company and
its Subsidiaries (or predecessor employers to the extent the Company and its
Subsidiaries recognize such past service) shall be treated as service with
Parent and its Subsidiaries; provided, however, that such service shall not be
recognized to the extent that such recognition would result in a duplication
of benefits or to the extent that such service was not recognized under the
applicable Company Benefit Plan or Company Benefit Agreement.
(f) Following the Effective Time, Parent shall, or shall cause
its Subsidiaries to (i) waive any pre-existing conditions, exclusions,
actively-at-work requirements and waiting periods under any benefit plan
maintained by Parent or any of its Subsidiaries for each Continuing Employee
and his or her eligible dependents (except to the extent that such
pre-existing conditions, exclusions, actively-at-work requirements and waiting
periods would have been applicable under the comparable benefit plans of the
Company and its Subsidiaries immediately prior to the Effective Time) and (ii)
provide each Continuing Employee and his or her eligible dependents with full
credit for any co-payments and deductibles incurred prior to the Effective
Time (or any later transition date to new welfare benefit plans) for the
calendar year in which the Effective Time (or such later transition date)
occurs, in satisfying any applicable deductible or out-of-pocket requirements
under any welfare benefit plans that such persons participate in after the
Effective Time.
(g) Parent will, and will cause its Subsidiaries to, honor, in
accordance with their respective terms, the Company Benefit Plans and Company
Benefit Agreements, including any rights or benefits arising as a result of
the transactions contemplated by this Agreement (either alone or in
combination with any other event); provided, however, that, subject to
compliance with their obligations in this Section 5.6, Parent, the Surviving
Corporation and their Subsidiaries may amend or terminate the Company Benefit
Plans and Company Benefit Agreements in accordance with their terms as in
effect immediately prior to the Effective Time.
(h) Parent agrees that certain employee matters shall be
governed in accordance with the provisions of Section 5.6(h) of the Company
Disclosure Letter.
SECTION 5.7 FEES AND EXPENSES. Except as set forth in this Section
5.7 and in Section 7.3, all fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that each of the Company and Parent shall bear
and pay one-half of the costs and expenses incurred by Parent, Merger Sub or
the Company (other than attorneys' fees, accountants' fees and related
expenses) in connection with (i) the filing, printing and mailing of the Form
S-4 (including financial statements and exhibits), the Joint Proxy Statement
(including SEC filing fees) and any preliminary materials related thereto and
(ii) the filings of the premerger notification and report forms under the
Antitrust Laws (including filing fees).
SECTION 5.8 PUBLIC ANNOUNCEMENTS. The Company and Parent will
consult with each other before issuing, and will provide each other the
opportunity to review,
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comment upon and concur with, and use reasonable best efforts to agree on, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as either party may determine is required by Applicable
Law, court process or by obligations pursuant to any listing agreement with
any national securities exchange or stock market. The parties agree that the
initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by
the parties.
SECTION 5.9 LISTING. Parent shall use its reasonable best efforts to
cause the Parent Common Stock issuable under Article II, and those shares of
Parent Common Stock required to be reserved for issuance in connection with
the Merger (including under the Company Stock Plans), to be authorized for
listing on the NYSE, upon official notice of issuance.
SECTION 5.10 TAX-FREE REORGANIZATION TREATMENT. Parent and the
Company hereby adopt this Agreement as a plan of reorganization within the
meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a). Parent and
the Company intend that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code, and each shall, and shall cause its
respective Subsidiaries to, use its reasonable best efforts to cause the
Merger to so qualify and to obtain the opinions of counsel referred to in
Section 6.1(g), including the execution of the certificates referred to
therein. Neither Parent nor the Company shall take any action, or fail to take
any action, that is reasonably likely to cause the Merger to fail to qualify
as a reorganization within the meaning of Section 368(a) of the Code.
SECTION 5.11 CONVEYANCE TAXES. The Company and Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time. The Company shall pay on behalf of its stockholders any such
Taxes or fees which become payable in connection with the transactions
contemplated by this Agreement for which such stockholders are primarily
liable and in no event shall Parent pay such amounts.
SECTION 5.12 EQUITY AWARDS.
(a) At the Effective Time, each Company Option outstanding
immediately prior to the Effective Time, whether or not exercisable at the
Effective Time, will be assumed by Parent. Each Company Option so assumed by
Parent under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable Company Option (including any
applicable stock option agreement or other document evidencing such Company
Option) immediately prior to the Effective Time (including any repurchase
rights or vesting provisions), except that (i) each Company Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent Common Stock equal to the product of the
number of shares of Company Common Stock
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that were issuable upon exercise of such Company Option immediately prior to
the Effective Time (disregarding any vesting schedule applicable to such
option) multiplied by the Exchange Ratio, rounded down to the nearest whole
number of shares of Parent Common Stock and (ii) the per share exercise price
for the shares of Parent Common Stock issuable upon exercise of such assumed
Company Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock of such Company Option by the
Exchange Ratio, rounded up to the nearest whole cent. The Company shall take
all corporate action necessary, including amending any Company Option or
Company Benefit Plan, to effectuate the foregoing. Each assumed Company Option
shall be exercisable immediately following the Effective Time as to the same
percentage of the total number of shares as to which it was exercisable
immediately prior to the Effective Time, except to the extent such Company
Option (either by its terms or by the terms of another agreement) provides for
automatic acceleration of vesting. Prior to the Effective Time, Parent shall
take all corporate action necessary to reserve for issuance a sufficient
number of shares of Parent Common Stock for delivery in connection with the
exercise of the converted Company Options.
(b) The parties shall use their reasonable best efforts to
ensure that the conversion of any Company Options which are intended to be
"incentive stock options" (as defined in Section 422 of the Code) as provided
for in this Section 5.12 shall be effected in a manner consistent with Section
424(a) of the Code.
(c) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Company Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Company Options shall continue in
effect on the same terms and conditions (subject to the adjustments required
by this Section 5.12 after giving effect to the Merger).
(d) At or prior to the Effective Time, Parent shall file a
registration statement on an appropriate form with respect to the shares of
Parent Common Stock subject to such Company Options and shall use reasonable
best efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Company Options remain outstanding.
(e) Parent and the Company agree that, in order to most
effectively compensate and retain Company Insiders (as defined below) in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that the conversion of Company Common Stock and Company Options into
shares of Parent Common Stock and Parent Options in connection with the Merger
be exempted from risk of liability under Section 16(b) of the Exchange Act to
the fullest extent permitted by Applicable Law, and for that compensatory and
retentive purpose Parent and the Company agree to the provisions of this
Section 5.12(e). Assuming that the Company delivers to Parent the Section 16
Information (as defined below) in a timely fashion, the Board of Directors of
Parent, or a committee of Non-Employee Directors thereof (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange Act), shall adopt a
resolution providing that the receipt by Company Insiders of Parent Common
Stock in exchange for Company Common Stock, and of Parent Options upon
conversion of Company Options, in each case pursuant to the transactions
contemplated by this Agreement and to the
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extent such securities are listed in the Section 16 Information, are intended
to be exempt from liability pursuant to Section 16(b) under the Exchange Act
in accordance with the procedures set forth in Rule 16b-3 promulgated under
the Exchange Act and the Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP SEC
No-Action Letter (January 12, 1999). "Section 16 Information" shall mean
information accurate in all material respects regarding Company Insiders, the
number of shares of Company Common Stock held by each such Company Insider and
expected to be exchanged for Parent Common Stock in the Merger, and the number
and description of the Company Options held by each such Company Insider and
expected to be converted into Parent Options in connection with the Merger;
provided that a description of any Company Options shall not be required if
copies of all Company Stock Plans under which such Company Options have been
granted, and forms of agreements evidencing grants thereunder, have been made
available to Parent. "Company Insiders" shall mean those officers and
directors of Company who may be subject to the reporting requirements of
Section 16(a) of the Exchange Act on or following the Effective Time and who
are listed in the Section 16 Information.
SECTION 5.13 AFFILIATES. Not less than 45 days prior to the
Effective Time, the Company shall deliver to Parent a letter identifying all
Persons who, in the judgment of the Company, may be deemed at the time this
Agreement is submitted for adoption by the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
and applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date thereof. The Company shall use its
reasonable best efforts to cause each Person identified on such list to
deliver to Parent not less than 30 days prior to the Effective Time, a written
agreement substantially in the form attached as Exhibit 5.13 hereto (an
"Affiliate Agreement").
SECTION 5.14 NOTIFICATION OF CERTAIN MATTERS. Parent shall give
prompt notice to the Company and the Company shall give prompt notice to
Parent, as the case may be, of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur is reasonably likely to cause
(a)(i) any representation or warranty of such party contained in this
Agreement that is qualified as to "materiality" or "Company Material Adverse
Effect" or "Parent Material Adverse Effect", as the case may be, to be untrue
or inaccurate in any respect or (ii) any other representation or warranty of
such party contained in this Agreement to be untrue or inaccurate in any
material respect, in each case at any time from and after the date of this
Agreement until the Effective Time or (b) any material failure of Parent and
Merger Sub or the Company, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement. In addition, Parent shall give prompt notice to the Company
and the Company shall give prompt notice to Parent, as the case may be, of any
change or event having, or which is reasonably likely to have, a Parent
Material Adverse Effect or Company Material Adverse Effect, as the case may
be, on such party and its Subsidiaries, taken as a whole, or which would be
reasonably likely to result in the failure of any of the conditions set forth
in Article VI to be satisfied. Notwithstanding the above, the delivery of any
notice pursuant to this Section 5.14 will not limit or otherwise affect the
representations, warranties, covenants or agreements of the parties, the
remedies available hereunder to the party receiving such notice or the
conditions to such party's obligation to consummate the Merger.
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SECTION 5.15 RIGHTS PLANS; STATE TAKEOVER LAWS.
(a) Prior to the Effective Time, the Company shall not redeem
the Company Rights or amend, modify (other than to delay any "distribution
date" as defined in the Company Rights Agreement or to render the Company
Rights inapplicable to the Merger or any action set forth in this Agreement)
or terminate the Company Rights Agreement unless required to do so by order of
a court of competent jurisdiction.
(b) Prior to the Effective Time, the Company shall not take any
action to render inapplicable or to exempt any third Person (other than Parent
or any of its Subsidiaries) from, any state takeover law or state law that
purports to limit or restrict business combinations or the ability to acquire
or vote shares of capital stock unless required to do so by order of a court
of competent jurisdiction.
SECTION 5.16 RESERVATION OF PARENT COMMON STOCK. Effective at or
prior to the Effective Time, Parent shall reserve (free from preemptive
rights) out of its reserved but unissued shares of Parent Common Stock, for
the purposes of effecting the conversion of the issued and outstanding shares
of Company Common Stock pursuant to this Agreement, sufficient shares of
Parent Common Stock to provide for such conversion as well as the issuance of
Parent Common Stock upon the exercise of Company Options assumed by Parent
under Section 5.12.
SECTION 5.17 STOCKHOLDER LITIGATION. The Company shall provide
Parent with the opportunity to participate to the extent reasonably possible
in the defense or settlement of any stockholder Action against the Company and
its directors relating to the Merger or the other transactions contemplated by
this Agreement; provided, however, that no such settlement shall be agreed to
without Parent's prior written consent, which consent will not be unreasonably
withheld or delayed.
SECTION 5.18 CONVERTIBLE DEBENTURES.
(a) The Company shall deliver, or shall cause to be provided,
in accordance with the terms of the Indenture dated as of November 1, 2001
(the "Indenture"), between the Company and The Bank of New York, as trustee
(the "Trustee"), relating to the Convertible Debentures, to the Trustee and to
each Holder (as defined in the Indenture) as promptly as possible after the
date hereof but in no event less than 15 days immediately prior to the
Effective Time, the notice required by Section 11.16 of the Indenture.
(b) The Company shall, on the Closing Date, execute a
supplemental indenture to the Indenture, that shall give effect to the
provisions of Section 11.17 of the Indenture.
(c) The Company shall take all such further actions, including
the delivery of the officers' certificate and opinion of counsel required by
Section 6.01(a)(4) of the Indenture, as may be necessary to comply with all of
the terms and conditions of the Indenture.
(d) On or before the 30th day immediately after the Effective
Time, Parent shall deliver to all Holders the notice required by Section
4.02(b) of the Indenture (with
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respect to the right of the Holders to require repurchase of the Convertible
Debentures upon the occurrence of a Change of Control (as defined in the
Indenture)).
SECTION 5.19 SETTLEMENTS. The Company will not settle any matter
arising out of the Investigations, and the Company will not settle the
Shareholder and Derivative Actions, in each case without Parent's prior
written consent, which consent shall not be unreasonably withheld or delayed.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Closing of the following conditions:
(a) STOCKHOLDER APPROVALS. Each of the Parent Stockholder
Approval and the Company Stockholder Approval shall have been obtained.
(b) ANTITRUST WAITING PERIODS. The waiting periods (and any
extensions thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired. The waiting periods (and any extensions
thereof) applicable to the Merger under any applicable foreign antitrust laws,
rules or regulations shall have been terminated or shall have expired, other
than any such waiting periods the failure of which to terminate or expire are
not reasonably likely to have a Parent Material Adverse Effect (determined,
for purposes of this clause, after giving effect to the Merger) or a Company
Material Adverse Effect.
(c) GOVERNMENTAL CONSENTS AND APPROVALS. Other than as required
by Section 6.1(b), all filings with, and all consents, approvals and
authorizations of, any Governmental Entity required to be made or obtained by
Parent, the Company or any of their Subsidiaries to consummate the Merger,
except for those the failure of which to be made or obtained are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect (determined, for purposes of this clause, after giving effect
to the Merger), shall have been made or obtained.
(d) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
statute, law, ordinance, rule or regulation, or other legal restraint or
prohibition, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction (collectively,
"Restraints"), shall be in effect which prohibits, makes illegal or enjoins
the consummation of the transactions contemplated by this Agreement.
(e) FORM S-4. The Form S-4 shall have become effective under
the Securities Act prior to the mailing of the Joint Proxy Statement by each
of Parent and the Company to their respective stockholders, and no stop order
or proceeding seeking a stop order
75
shall be threatened by the SEC or shall have been initiated or, to the
Knowledge of Parent or the Company, threatened by the SEC.
(f) LISTING. The shares of Parent Common Stock issuable to the
stockholders of the Company as provided for in Article II and under the
Company Stock Plans shall have been authorized for listing on the NYSE upon
official notice of issuance.
(g) TAX OPINIONS. The Company and Parent shall have received a
written opinion of its respective legal counsel, Cravath, Swaine & Xxxxx LLP
in the case of the Company, and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP in
the case of Parent ("Tax Counsel"), in a form reasonably satisfactory to the
Company and Parent (each such opinion, a "Tax Opinion"), respectively, dated
as of the Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated as a reorganization within the meaning of Section 368 of the
Code. In rendering such Tax Opinion, Tax Counsel may require and rely upon
customary representations and covenants, including those contained in
certificates of the Company, Parent, Merger Sub and others, reasonably
satisfactory in form and substance to such Tax Counsel.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is further subject to satisfaction or
waiver at or prior to the Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement and in any
certificate or other writing delivered by Parent and Merger Sub pursuant
hereto, in each case made as if none of such representations or warranties
contained any qualification or limitation as to "materiality" or "Parent
Material Adverse Effect" or "Parent Material Adverse Change," shall be true
and correct as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent expressly
given as of a specified earlier date (in which case, as of such specified
earlier date), except where the failure of such representations and warranties
to be true and correct as so made does not have and is not, individually or in
the aggregate, reasonably likely to have, a Parent Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Each
of Parent and Merger Sub shall have performed, or complied with, in all
material respects the obligations required to be performed or complied with by
it under this Agreement at or prior to the Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, no Parent Material Adverse Change shall have occurred or is
reasonably likely to occur.
(d) OFFICERS' CERTIFICATE. The Company shall have received an
officers' certificate duly executed by each of the Chief Executive Officer and
Chief Financial Officer of Parent to the effect that the conditions set forth
in Sections 6.2(a) and (b) have been satisfied.
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(e) NO PENDING LITIGATION. There shall not be pending any
Action by any Governmental Entity seeking to prohibit or impose any material
limitations on Parent's ownership of the Company or the operation of all or a
material portion of Parent's or the Company's businesses or assets (whether
held directly or through Subsidiaries), or to compel Parent or the Company or
any of their respective Subsidiaries to dispose of or hold separate any
material portion of the business or assets of Parent or the Company (whether
held directly or through Subsidiaries) in any such case which is reasonably
likely to have a Parent Material Adverse Effect (determined, for purposes of
this clause, after giving effect to the Merger).
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are further subject
to satisfaction or waiver at or prior to the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement and in any certificate
or other writing delivered by the Company pursuant hereto, in each case made
as if none of such representations or warranties contained any qualification
or limitation as to "materiality" or "Company Material Adverse Effect" or
"Company Material Adverse Change," shall be true and correct as of the Closing
Date, as though made on and as of the Closing Date, except to the extent
expressly given as of a specified earlier date (in which case, as of such
specified earlier date), except where the failure of such representations and
warranties to be true and correct as so made does not have and is not,
individually or in the aggregate, reasonably likely to have, a Company
Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed, or complied with, in all material respects the
obligations required to be performed or complied with by it under this
Agreement at or prior to the Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, no Company Material Adverse Change shall have occurred or is
reasonably likely to occur.
(d) NO PENDING LITIGATION. There shall not be pending any
Action by any Governmental Entity seeking to prohibit or impose any material
limitations on Parent's ownership of the Company or the operation of all or a
material portion of Parent's or the Company's businesses or assets (whether
held directly or through Subsidiaries), or to compel Parent or the Company or
any of their respective Subsidiaries to dispose of or hold separate any
material portion of the business or assets of Parent or the Company (whether
held directly or through Subsidiaries) in any such case which is reasonably
likely to have a Parent Material Adverse Effect (determined, for purposes of
this clause, after giving effect to the Merger) or a Company Material Adverse
Effect.
(e) OFFICERS' CERTIFICATE. Parent shall have received an
officers' certificate duly executed by each of the Chief Executive Officer and
Chief Financial Officer of the Company to the effect that the conditions set
forth in Sections 6.3(a) and (b), have been satisfied.
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(f) CRIMINAL CHARGES. Neither the Company nor any of its
current or former persons who are or were required to file Forms 3, 4 or 5
pursuant to Section 16 of the Exchange Act shall have been charged criminally
with a violation of law by any Governmental Entity in connection with any of
the issues relating to the Company that are being investigated by the
Investigating Entities.
(g) NO SUSPENSION OR DEBARMENT. Except as set forth in Section
6.3(g) of the Company Disclosure Letter, Parent shall not have received any
indication that any Governmental Entity has placed or is reasonably likely to
place any prohibitions on the Company's sales to Medicaid or any related
federal or state program.
(h) RESTATEMENT. No restatement of any of the Company's
financial statements shall have occurred, and no restatement of any of the
Company's financial statements shall be reasonably likely to occur.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time by action taken or authorized by the Board of
Directors of the terminating party or parties, which in the case of Sections
7.1(a), (b)(i) and (b)(ii), (c) and (d), may be taken before or after the
Parent Stockholder Approval or the Company Stockholder Approval, as the case
may be:
(a) by mutual written consent of the Company and Parent, if the
Board of Directors of each so determines;
(b) by written notice of either the Company or Parent:
(i) if the Merger shall not have been consummated by
February 28, 2005 (the "Outside Date"); provided, however, that the right
to terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the primary cause of, or resulted in, the failure to
consummate the merger prior to the Outside Date;
(ii) if a Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
(including the failure to have taken an action), in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and
nonappealable; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(ii) shall not be available to a party
which has not used its reasonable best efforts to resist, resolve or lift
as applicable (as contemplated by Section 5.4) any such order, decree,
ruling or other action;
78
(iii) if the Parent Stockholder Approval shall not have
been obtained at the Parent Stockholders' Meeting, or at any adjournment
or postponement thereof, at which the vote was taken; provided, however,
that the right to terminate this Agreement under this Section 7.1(b)(iii)
shall not be available to Parent if the failure to obtain the Parent
Stockholder Approval shall have been caused by the action or failure to
act of Parent and such action or failure to act constitutes a material
breach by Parent of this Agreement;
(iv) if the Company Stockholder Approval shall not have
been obtained at the Company Stockholders' Meeting, or at any adjournment
or postponement thereof, at which the vote was taken; provided, however,
that the right to terminate this Agreement under this Section 7.1(b)(iv)
shall not be available to the Company if the failure to obtain the
Company Stockholder Approval shall have been caused by the action or
failure to act of the Company and such action or failure to act
constitutes a material breach by the Company of this Agreement;
(v) at any time prior to the Parent Stockholder Approval,
if there shall have been a Company Material Adverse Effect and a Parent
Change of Recommendation, or
(vi) at any time prior to the Company Stockholder
Approval, if there shall have been a Parent Material Adverse Effect and a
Company Change of Recommendation;
(c) by the Company upon a breach or violation of any
representation, warranty, covenant or agreement on the part of Parent set
forth in this Agreement, which breach or violation would result in the failure
to satisfy either of the conditions set forth in Section 6.2(a) or Section
6.2(b) and in any such case, such breach or violation shall be incapable of
being cured by the Outside Date, or Parent shall not be using on a continuous
basis its reasonable best efforts to cure in all material respects such breach
or violation after the giving of written notice thereof by the Company to
Parent of such violation or breach;
(d) by Parent upon a breach or violation of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, which breach or violation would result in the failure to satisfy
the conditions set forth in Section 6.3(a) or Section 6.3(b) and in any such
case, such breach or violation shall be incapable of being cured by the
Outside Date, or the Company shall not be using on a continuous basis its
reasonable best efforts to cure in all material respects such breach or
violation after the giving of written notice thereof by Parent to the Company
of such violation or breach;
(e) by Parent, at any time prior to the Company Stockholder
Approval, if (i) the Company Board of Directors determines in accordance with
Section 4.2(c) and Section 8.3(h) that an Alternative Transaction Proposal
constitutes a Company Superior Proposal and (ii) the Company notifies Parent
in writing that it intends to enter into a binding agreement for a Company
Superior Proposal; or
79
(f) by the Company, at any time prior to the Company
Stockholder Approval, if (i) the Board of Directors of the Company authorizes
the Company, subject to complying with the terms of this Agreement, to enter
into a binding written agreement concerning a transaction that constitutes a
Company Superior Proposal and the Company notifies Parent in writing that it
intends to enter into such an agreement, attaching the most current version of
such agreement (or a description of all material terms and conditions thereof)
to such notice, (ii) Parent does not make, within four business days of
receipt of the Company's written notification of its intention to enter into a
binding agreement for a Company Superior Proposal, an offer that the Board of
Directors of the Company determines, in good faith after consultation with a
financial advisor of nationally recognized reputation, is at least as
favorable to the Company's stockholders as the Company Superior Proposal, it
being understood that the Company shall not enter into any such binding
agreement during such four business day period, and (iii) the Company, at or
prior to any termination pursuant to this Section 7.1(f), pays to Parent the
Company Termination Fee (as defined in Section 7.3).
SECTION 7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1 hereof this Agreement shall
forthwith become void and there shall be no liability on the part of any of
the parties, except (i) as set forth in Section 5.3(d), Section 5.7, this
Section 7.2 and Section 7.3, as well as Article VIII (other than Section 8.1)
to the extent applicable to such surviving sections, each of which shall
survive termination of this Agreement and (ii) that nothing herein shall
relieve any party from liability for any breach of any covenant or agreement
of such party contained herein or any willful or intentional breach of any
representation or warranty of such party contained herein. No termination of
this Agreement shall affect the obligations of the parties contained in the
CDA, all of which obligations shall survive termination of this Agreement in
accordance with their terms. Payments made pursuant to Section 7.3 shall be in
addition to any other rights, remedies and relief of the parties hereto or
with respect to the subject matter of this Agreement.
SECTION 7.3 PAYMENTS.
(a) PAYMENT OF COMPANY TERMINATION FEE. In the event that this
Agreement is terminated pursuant to any of Sections 7.1(b)(iv), 7.1(e) or
7.1(f), the Company shall pay Parent a fee equal to $85,000,000 in immediately
available funds (the "Company Termination Fee"); provided, that (i) in the
case of a termination pursuant to Section 7.1(b)(iv), the Company Termination
Fee shall be payable only if following the date hereof and prior to such
termination, any Person shall have made to the Company or its stockholders, or
publicly announced, a proposal, offer or indication of interest relating to
any Acquisition (as defined in Section 7.3(d)) with respect to the Company and
within twelve months following termination of this Agreement, an Acquisition
of the Company is consummated or the Company enters into an agreement
providing for an Acquisition of the Company, such fee payment to be made
concurrently with the earlier of the consummation of such Acquisition or the
execution of such agreement, as applicable, (ii) in the case of a termination
pursuant to Section 7.1(e), the Company Termination Fee shall be paid
promptly, but in no event later than two business days after such termination,
and (iii) in the case of a termination pursuant to Section 7.1(f), the Company
Termination Fee shall be paid simultaneously with such termination.
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(b) PAYMENT OF PARENT TERMINATION FEE. In the event that this
Agreement is terminated pursuant to Section 7.1(b)(iii), Parent shall pay the
Company a fee equal to $85,000,000 in immediately available funds (the "Parent
Termination Fee"); provided, that the Parent Termination Fee shall be payable
only if following the date hereof and prior to such termination, any Person
shall have made to Parent or its stockholders, or publicly announced, a
proposal, offer or indication of interest relating to any Acquisition (as
defined in Section 7.3(d)) with respect to Parent and within twelve months
following termination of this Agreement, an Acquisition of Parent is
consummated or Parent enters into an agreement providing for an Acquisition of
Parent, such fee payment to be made concurrently with the earlier of the
consummation of such Acquisition or the execution of such agreement, as
applicable.
(c) PAYMENT OF TERMINATION FEE. All payments under this Section
7.3 shall be made by wire transfer of immediately available funds to an
account designated by the party to receive payment.
(d) CERTAIN DEFINITIONS. For the purposes of this Section 7.3
only, "Acquisition," with respect to a party hereto, shall mean any of the
following transactions (other than the Merger): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the party pursuant to which the stockholders of the
party immediately preceding such transaction hold less than 45% of the
aggregate equity interests in the surviving or resulting entity of such
transaction or any direct or indirect parent thereof, (ii) a sale or other
disposition by the party or any of its Subsidiaries of assets representing in
excess of 45% of the aggregate fair market value of the consolidated assets of
the party and its Subsidiaries immediately prior to such sale, or (iii) the
acquisition by any Person or group of Persons (including by way of a tender
offer or an exchange offer or issuance by the party or such Person or group of
Persons), directly or indirectly, of beneficial ownership or a right to
acquire beneficial ownership of shares representing in excess of 45% of the
voting power of the then outstanding shares of capital stock of the Person.
SECTION 7.4 AMENDMENT. Subject to compliance with Applicable
Law, this Agreement may be amended by the parties at any time before or after
the Parent Stockholder Approval or the Company Stockholder Approval; provided,
however, that after the Company Stockholder Approval, there may not be,
without further approval of the stockholders of the Company, any amendment of
this Agreement that changes the amount or the form of the consideration to be
delivered to the holders of Company Common Stock hereunder, or which by
Applicable Law otherwise expressly requires 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 and duly approved by
the parties' respective Boards of Directors or a duly designated committee
thereof.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the
Effective Time, a party may by action taken or authorized by its respective
Board of Directors to the extent legally permitted (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of
the other parties contained in this Agreement or in any document delivered
pursuant to this
81
Agreement and (c) waive compliance by the other party hereto with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Any
extension or waiver given in compliance with this Section 7.5 or failure to
insist on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit the survival of any covenant or agreement of the
parties in the Agreement which by its terms contemplates performance after the
Effective Time.
SECTION 8.2 NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, sent via facsimile (receipt confirmed)
or sent by a nationally recognized overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Company to:
King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: General Counsel
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
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(b) if to Parent or Merger Sub, to it at:
Mylan Laboratories Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Chief Legal Officer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxxxx, Esq.
SECTION 8.3 DEFINITIONS. For purposes of this Agreement:
(a) An "Affiliate" of any Person shall mean another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a Person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) An "ALTERNATIVE TRANSACTION" with respect to a party
hereto, shall mean any of the following transactions: (i) any transaction or
series of related transactions with one or more third Persons involving: (A)
any purchase from such party or acquisition (whether by way of a merger, share
exchange, consolidation, business combination, consolidation or similar
transaction) by any Person or "group" of Persons (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) of more
than a 25% interest in the total outstanding voting securities of such party
or any tender offer or exchange offer that if consummated would result in any
Person or group of Persons beneficially owning 25% or more of the total
outstanding voting securities of such party or any merger, consolidation,
business combination or similar transaction involving such party, or (B) any
sale, lease, exchange, transfer, license, acquisition or disposition of more
than 25% of the aggregate fair market value of the consolidated assets of such
Person and its Subsidiaries, taken as a whole, immediately prior to such sale,
lease, exchange, transfer, license, acquisition or disposition, or (ii) any
liquidation or dissolution of such party;
(c) "ALTERNATIVE TRANSACTION PROPOSAL" shall mean any offer,
inquiry, proposal or indication of interest (whether binding or non-binding)
to any Person or its stockholders relating to an Alternative Transaction;
83
(d) "COMPANY INTELLECTUAL PROPERTY" shall mean, collectively,
the Company Owned Intellectual Property and the Company Licensed Intellectual
Property;
(e) "COMPANY LICENSED INTELLECTUAL PROPERTY" shall mean all
Intellectual Property owned or controlled by a third Person and licensed to
the Company or any of its Subsidiaries;
(f) "COMPANY MATERIAL ADVERSE CHANGE" or "COMPANY MATERIAL
ADVERSE EFFECT" shall mean, when used with respect to the Company and its
Subsidiaries, any change, event, violation, circumstance or effect (any such
item, an "Effect") that, individually or when taken together with all other
Effects that have occurred prior to the date of determination of the
occurrence of the Company Material Adverse Change or Company Material Adverse
Effect, is materially adverse to the business, assets, liabilities, financial
condition or results of operations of the Company and its Subsidiaries, taken
as a whole; provided, however, that, in no event shall any of the following,
alone or in combination, be deemed to constitute, nor shall any of the
following be taken into account in determining whether there has been or will
be, a Company Material Adverse Change with respect to, or a Company Material
Adverse Effect on, the Company and its Subsidiaries, taken as a whole: (A)
events or circumstances adversely and generally affecting the industry in
which the Company operates, and which do not have a materially
disproportionate effect on the Company, (B) general economic conditions, or
(C) the announcement or performance of this Agreement or (D) any Effects to
the extent resulting from the matters set forth in clauses (A), (B), or (C)
above; provided, further, that, subject to Section 8.3(f) of the Parent
Disclosure Letter, notwithstanding matters known to Parent or its
representatives on the date of this Agreement or otherwise, all Losses
incurred or reasonably expected to be incurred in connection with any Effect
arising out of the Investigations and the Shareholder and Derivative Actions
shall be considered in the determination of a Company Material Adverse Effect;
(g) "COMPANY OWNED INTELLECTUAL PROPERTY" shall mean any
Intellectual Property in which the Company or its Subsidiaries has any
ownership interest, whether singly, jointly or otherwise;
(h) "COMPANY SUPERIOR PROPOSAL" shall mean an unsolicited, bona
fide written Alternative Transaction Proposal made by a third Person to
acquire (which term shall include a parent to parent merger or other business
combination with a similar result), directly or indirectly, pursuant to a
tender offer, exchange offer, merger, share exchange, consolidation or other
business combination, (A) all or substantially all of the assets of the
Company or (B) all of the outstanding voting securities of the Company and as
a result of which the stockholders of the Company immediately preceding such
transaction would hold less than 55% of the aggregate equity interests in the
surviving or resulting entity of such transaction (or its ultimate parent),
which the Board of Directors of the Company has in good faith determined
(taking into account, among other things, (1) the advice of its outside legal
counsel and a nationally-recognized independent financial adviser, and (2) all
terms and conditions of such Alternative Transaction Proposal and this
Agreement (as it may be proposed to be amended by Parent)) to be more
favorable, from a financial point of view, to the Company's stockholders (in
their capacities as stockholders) than the terms of this Agreement (as it may
be proposed to be amended by Parent)
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and such Alternative Transaction Proposal is reasonably capable of being
consummated on the terms proposed, taking into account all other legal,
financial, regulatory and other aspects of such Alternative Transaction
Proposal and the Person making such Alternative Transaction Proposal;
(i) "CONTRACT" shall mean any written or oral agreement,
contract, subcontract, settlement agreement, lease, sublease, binding
understanding, instrument, note, option, bond, mortgage, indenture, trust
document, loan or credit agreement, purchase order, license, sublicense,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature, as in effect as of the date hereof or as may hereinafter be in
effect;
(j) "ENVIRONMENTAL LAWS" shall mean any and all applicable
federal, state, foreign, interstate, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, injunctions, decrees, requirements
of any Governmental Entity, any and all common law requirements, rules and
bases of liability regulating, relating to, or imposing liability or standards
of conduct concerning (i) pollution, (ii) any materials or wastes defined,
listed, classified or regulated as hazardous or toxic, or as a pollutant or
contaminant including petroleum, petroleum products, friable asbestos, urea
formaldehyde, radioactive materials and polychlorinated biphenyls, or (iii)
protection of human health, safety or the environment, as currently in effect,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Clean Water
Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et
seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C., ss. 136 et seq.,
Occupational Safety and Health Act 29 U.S.C. ss. 651 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., and the Endangered Species
Act (16 U.S.C. ss. 1531 et seq.) as such laws have been amended or
supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes;
(k) "ENVIRONMENTAL LIABILITIES" with respect to any Person
shall mean any and all liabilities of such Person or any of its Subsidiaries
(including any entity which is, in whole or in part, a predecessor of such
Person or any of such Subsidiaries), which (i) arise under or are based upon
Environmental Laws and (ii) relate to actions occurring or conditions existing
on or prior to the Closing Date;
(l) "GOOD CLINICAL PRACTICES" means (i) with respect to the
Company, the then current standards for clinical trials for pharmaceuticals,
as set forth in the FDCA and applicable regulations promulgated thereunder, as
amended from time to time, and such standards of good clinical practice as are
required by the regulatory authorities of the European Union and other
organizations and governmental agencies in any other countries in which the
products of the Company, any of its Subsidiaries or any Company Partner are
sold or intended to be sold, to the extent such standards are not less
stringent than in the United States and (ii) with respect to Parent, the then
current standards for clinical trials for pharmaceuticals, as set forth in the
FDCA and applicable regulations promulgated thereunder, as amended from time
to time, and such standards of good clinical practice as are required by the
regulatory authorities of the European Union and other organizations and
governmental agencies in any other countries in
85
which the products of Parent, any of its Subsidiaries or any Parent Partner
are sold or intended to be sold, to the extent such standards are not less
stringent than in the United States.
(m) "GOOD LABORATORY PRACTICES" means (i) with respect to the
Company, the then current standards for pharmaceutical laboratories, as set
forth in the FDCA and applicable regulations promulgated thereunder, as
amended from time to time, and such standards of good laboratory practices as
are required by the regulatory authorities of the European Union and other
organizations and governmental agencies in any other countries in which the
products of the Company, any of its Subsidiaries or any Company Partner are
sold or intended to be sold, to the extent such standards are not less
stringent than in the United States and (ii) with respect to Parent, the then
current standards for pharmaceutical laboratories, as set forth in the FDCA
and applicable regulations promulgated thereunder, as amended from time to
time, and such standards of good laboratory practices as are required by the
regulatory authorities of the European Union and other organizations and
governmental agencies in any other countries in which the products of Parent,
any of its Subsidiaries or any Parent Partner are sold or intended to be sold,
to the extent such standards are not less stringent than in the United States.
(n) "GOOD MANUFACTURING PRACTICES" means (i) with respect to
the Company, the then current standards for the manufacture, processing,
packaging, testing and holding of drug products, as set forth in the FDCA and
applicable regulations promulgated thereunder, as amended from time to time,
and such standards of good manufacturing practices as are required by the
regulatory authorities of the European Union and other organizations and
governmental agencies in any other countries in which the products of the
Company, any of its Subsidiaries or any Company Partner are sold or intended
to be sold, to the extent such standards are not less stringent than in the
United States and (ii) with respect to Parent, the then current standards for
the manufacture, processing, packaging, testing and holding of drug products,
as set forth in the FDCA and applicable regulations promulgated thereunder, as
amended from time to time, and such standards of good manufacturing practices
as are required by the regulatory authorities of the European Union and other
organizations and governmental agencies in any other countries in which the
products of Parent, any of its Subsidiaries or any Parent Partner are sold or
intended to be sold, to the extent such standards are not less stringent than
in the United States.
(o) "HAZARDOUS MATERIALS" shall mean any materials or wastes,
defined, listed, classified or regulated as hazardous, toxic, a pollutant, a
contaminant or dangerous in or under any Environmental Laws including, but not
limited to, petroleum, petroleum products, friable asbestos, urea
formaldehyde, radioactive materials and polychlorinated biphenyls.
(p) "INTELLECTUAL PROPERTY" shall mean trademarks, service
marks, trade names, brand names, certification marks, designs, logos, slogans,
commercial symbols, business name registrations, Internet domain names, trade
dress and other similar indications of source or origin and general
intangibles of like nature, the goodwill associated with the foregoing and
registrations and applications relating to the foregoing in any jurisdiction,
including any extension, modification or renewal of any such registration or
application; industrial designs,
86
inventions, discoveries, ideas and biological materials, whether patentable or
not and whether or not reduced to practice, in any jurisdiction; patents and
patent applications (including divisions, continuations,
continuations-in-part, reissues and renewals, and applications for any of the
foregoing), and any renewals, extensions, supplementary protection
certificates or reissues thereof, in any jurisdiction; research and
development data (including the results of research into and development of
drug or biologic-based products and drug delivery systems), formulae,
know-how, proprietary processes, algorithms, models and methodologies,
technical information, designs, procedures, laboratory notes, trade secrets
and confidential information and rights in any jurisdiction to limit the use
or disclosure thereof by any Person; writings and other works of authorship of
any type (including the content contained on any Web site), whether
copyrightable or not, in any jurisdiction; computer software (whether in
source code or object code form), databases, compilations and data; copyright
registrations and applications in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary rights
and the right to xxx for past infringement of any of the foregoing;
(q) "INVESTIGATING ENTITIES" shall mean the SEC, the Office of
Inspector General at the Department of Health & Human Services, the U.S.
Attorney for Eastern District of Pennsylvania, the DOJ, the Department of
Veterans Affairs, and the Centers for Medicare and Medicaid Services, and all
other Governmental Entities investigating the Medicaid Claims, and the state
and local equivalents thereof;
(r) "INVESTIGATIONS" shall mean the investigations of Medicaid
Claims and the state and local equivalents thereof by the Investigating
Entities.
(s) "KEY PRODUCTS" shall mean the products of the Company and
certain expansions and line extensions set forth in Section 8.3(s) of the
Company Disclosure Letter;
(t) "KNOWLEDGE" of (i) the Company shall mean the actual
knowledge as of the date of this Agreement of those individuals set forth in
Section 8.3(t)(i) of the Company Disclosure Letter, and (ii) Parent shall mean
the actual knowledge as of the date of this Agreement of those individuals set
forth in Section 8.3(t)(ii) of the Parent Disclosure Letter;
(u) "LEASED REAL PROPERTY" shall mean all leasehold or
subleasehold estates and other rights to use or occupy any land, buildings,
structures, improvements, fixtures or other interest in real property held by
the Company or any of its Subsidiaries;
(v) "LEASES" shall mean all leases, subleases, licenses or
other agreements, including all amendments, extensions, renewals, guaranties
or other agreements with respect thereto, pursuant to which the Company or any
of its Subsidiaries holds or uses any Material Leased Real Property;
(w) "LOSSES" shall mean any costs or expenses (including,
without limitation, reasonable attorneys' and accountants' fees and expenses),
judgments, fines, claims, damages and assessments asserted against or incurred
by a Person.
87
(x) "MATERIAL LEASED REAL PROPERTY" shall mean the Company's
leased properties located in St. Louis, Missouri; Cary, North Carolina and
Princeton, New Jersey;
(y) "MATERIAL OWNED REAL PROPERTY" shall mean the Company's
Owned properties located in Bristol, Tennessee; Rochester, Michigan; Xx.
Xxxxx, Xxxxxxxx; Xx. Xxxxxxxxxx, Xxxxxxx; and Middleton, Wisconsin;
(z) "MATERIAL REAL PROPERTY" shall mean the Material Owned Real
property and the Material Leased Real Property;
(aa) "MEDICAID CLAIMS" shall mean the calculation, payment and
reporting of Medicaid rebates and sales and marketing of products (including
those matters set forth in Section 8.3(aa) of the Company Disclosure
Schedule);
(bb) "MULTIEMPLOYER PLAN" shall mean a "multiemployer pension
plan," as that term is defined in Section 3(37) of ERISA;
(cc) "OWNED REAL PROPERTY" shall mean all land, together with
all interests in buildings, structures, improvements and fixtures located
thereon and all easements and other rights and interests appurtenant thereto
owned by Parent or any of its Subsidiaries;
(dd) "PARENT INTELLECTUAL PROPERTY" shall mean, collectively,
the Parent Owned Intellectual Property and the Parent Licensed Intellectual
Property;
(ee) "PARENT KEY PRODUCTS" shall mean the Parent products set
forth in Section 8.3(ee) of the Parent Disclosure Letter;
(ff) "PARENT LICENSED INTELLECTUAL PROPERTY" shall mean all
Intellectual Property owned or controlled by a third Person and licensed to
Parent or any of its Subsidiaries;
(gg) "PARENT MATERIAL ADVERSE CHANGE" or "Parent Material
Adverse Effect" shall mean, when used with respect to Parent and its
Subsidiaries, any Effect that, individually or when taken together with all
other Effects that have occurred prior to the date of determination of the
occurrence of the Parent Material Adverse Change or Parent Material Adverse
Effect, is materially adverse to the business, assets, liabilities, financial
condition or results of operations of Parent and its Subsidiaries, taken as a
whole; provided, however, that, in no event shall any of the following, alone
or in combination, be deemed to constitute, nor shall any of the following be
taken into account in determining whether there has been or will be, a Parent
Material Adverse Change with respect to, or a Parent Material Adverse Effect
on, Parent and its Subsidiaries, taken as a whole: (A) events or circumstances
adversely and generally affecting the industry in which Parent operates, and
which do not have a materially disproportionate effect on Parent, (B) general
economic conditions, (C) the announcement or performance of this Agreement or
(D) any Effects to the extent resulting from the matters set forth in clauses
(A), (B), or (C) above;
88
(hh) "PARENT OWNED INTELLECTUAL PROPERTY" shall mean any
Intellectual Property in which Parent or its Subsidiaries has any ownership
interest, whether singly, jointly or otherwise;
(ii) "PERMITTED LIENS" shall mean (i) mechanics', carriers',
workers' or repairmen's liens arising in the ordinary course of business and
securing payments or obligations that are not delinquent, (ii) Liens for
Taxes, assessments and other similar governmental charges which are not due
and payable and (iii) Liens that arise under zoning, land use and other
similar laws and other imperfections of title or encumbrances, if any, which
do not, individually or in the aggregate, materially affect the value of the
property subject thereto and do not, individually or in the aggregate,
materially impair the use of the property subject thereto as presently used;
(jj) "PERSON" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(kk) "REAL PROPERTY" shall mean, collectively, the Owned Real
Property and the Leased Real Property;
(ll) "SHAREHOLDER AND DERIVATIVE ACTIONS" shall mean the
litigation matters listed in Section 8.3(ll) of the Company Disclosure Letter;
(mm) "SUBSIDIARY" of any Person shall mean another Person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body is (or, if there are no such voting
interests, more than 50% of the equity interests of which are) owned directly
or indirectly by such first Person.
SECTION 8.4 TERMS DEFINED ELSEWHERE. The following terms are defined
elsewhere in this Agreement, as indicated below:
TERM SECTION
---- -------
Acquisition 7.3(d)
Action 3.1(o)(i)
Affiliate Agreement 5.13
Agreement Preamble
Applicable Law 3.1(g)(ii)
Articles of Merger 1.3
CDA 4.2(c)(i)
Certificates 2.2(b)
Closing 1.2
Closing Date 1.2
Code Recitals
89
Company Preamble
Company 10-K 3.1(d)(iv)
Company Balance Sheet 3.1(d)(iv)
Company Benefit Agreements 3.1(j)(i)
Company Benefit Plans 3.1(j)(i)
Company Bylaws 3.1(a)(ii)
Company Change of Recommendation 4.2(d)(i)
Company Charter 3.1(a)(ii)
Company Common Stock 2.1
Company Disclosure Letter 3.1
Company ERISA Affiliate 3.1(j)(v)
Company Insiders 5.12(e)
Company Material Contract 3.1(u)(i)
Company Option 2.1(d)
Company Organizational Documents 3.1(a)(ii)
Company Partner 3.1(i)(iii)
Company Permits 3.1(g)(i)
Company Preferred Stock 3.1(b)(i)
Company Public Filings 3.1
Company Rights 3.1(b)(i)
Company Rights Agreement 3.1(b)(i)
Company SEC Documents 3.1(d)(i)
Company Severance Policy 5.6(b)
Company Stockholder Approval 3.1(c)(iii)
Company Stockholders' Meeting 5.1(b)
Company Stock Plans 3.1(b)(i)
Company Subsidiary Organizational Documents 3.1(a)(ii)
Company Termination Fee 7.3(a)
Company Voting Debt 3.1(b)(iii)
Competition Laws 5.4(a)
Continuing Employees 5.6(a)
Convertible Debentures 3.1(b)(i)
DOJ 5.4(a)
Drug Regulatory Agency 3.1(i)(i)
Effective Time 1.3
ERISA 3.1(j)(i)
Exchange Act 3.1(c)(v)(B)(2)
90
Exchange Agent 2.2(a)
Exchange Fund 2.2(a)
Exchange Ratio 2.1(a)
FCPA 3.1(t)
FDA 3.1(g)(i)
FDCA 3.1(g)(i)
Form S-4 3.1(e)
FTC 5.4(a)
GAAP 3.1(d)(iii)
Xxxxxxx 3.1(r)
Governmental Entity 3.1(c)(v)
HSR Act 3.1(c)(v)(A)
Indemnified Parties 5.5(a)(i)
Indemnified Liabilities 5.5(a)(i)
Independent Counsel 5.5(a)(i)
Indenture 5.18(a)
Intended Communications 5.3(b)
IP Contract 3.1(n)(i)
Joint Proxy Statement 3.1(c)(v)(B)(1)
Key Products Contract 3.1(u)(i)(17)
Liens 3.1(a)(iii)
Merger Recitals
Merger Consideration 2.1(a)
Merger Sub Preamble
Xxxxxxx 3.2(n)
NYSE 2.1(e)
Outside Date 7.1(b)(i)
Parent Preamble
Parent 10-K 3.2(p)
Parent Balance Sheet 3.2(d)(iv)
Parent Benefit Agreements 3.2(i)(i)
Parent Benefit Plans 3.2(i)(i)
Parent Bylaws 3.2(a)(ii)
Parent Change of Recommendation 4.2(e)(i)
Parent Charter 3.2(a)(ii)
Parent Common Stock 2.1(a)
Parent Disclosure Letter 3.2
Parent ERISA Affiliate 3.2(i)(i)
91
Parent Material Contracts 3.2(p)
Parent Options 3.2(b)(ii)
Parent Organizational Documents 3.2(a)(ii)
Parent Partner 3.2(h)(iii)
Parent Permits 3.2(g)(i)
Parent Preferred Stock 3.2(b)(i)
Parent Public Filings 3.2
Parent Rights 3.2(b)(i)
Parent Rights Agreement 3.2(b)(i)
Parent SEC Documents 3.2(d)(i)
Parent Stock Plans 3.2(b)(i)
Parent Stockholder Approval 3.2(c)(iii)
Parent Stockholders' Meeting 5.1(b)
Parent Subsidiary Organizational Documents 3.2(a)(ii)
Parent Termination Fee 7.3(b)
Parent Voting Debt 3.2(b)(iii)
Proposed Meetings 5.3(b)
Restraints 6.1(d)
SEC 2.2(j)
Section 16 Information 5.12(e)
Secretary of State 1.3
Securities Act 2.2(j)
SOX 3.1(d)(i)
Stock Issuance Recitals
Surviving Corporation 1.1
TBCA Recitals
Tax Authority 3.1(k)(xii)
Tax Counsel 6.1(g)
Tax Opinion 6.1(g)
Tax Return 3.1(k)(xii)
Taxes 3.1(k)(xii)
Trustee 5.18(a)
SECTION 8.5 INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular
92
provision of this Agreement. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such term. Any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
SECTION 8.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the CDA and the documents and instruments referred to
herein) (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and (b) except for the
provisions of Section 5.5 (which are intended to benefit the Indemnified
Parties, including Indemnified Parties who or which are not parties hereto),
is not intended to confer, nor shall it confer, upon any Person other than the
parties hereto any rights or remedies or benefits of any nature whatsoever.
SECTION 8.8 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflict
of laws thereof, except for such provisions where Tennessee law is mandatorily
applicable, which provisions shall be governed by and construed in accordance
with the laws of the State of Tennessee, and provided, that the Merger shall
be governed by the TBCA.
SECTION 8.9 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either of the parties
hereto without the prior written consent of the other party. Any assignment in
violation of the preceding sentence shall be void. Subject to the preceding
two sentences, this Agreement will be binding upon, inure to the benefit of,
and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.10 CONSENT TO JURISDICTION. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of New York or any New York state court for the purpose
of any action or proceeding arising out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not bring
any action relating to this Agreement or any
93
of the transactions contemplated by this Agreement in any court other than a
federal court located in the State of New York or a New York state court.
SECTION 8.11 HEADINGS, etc. The headings and table of contents
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. The
disclosure of any matter in the Company Disclosure Letter or the Parent
Disclosure Letter shall expressly not be deemed to constitute an admission by
the Company or Parent, respectively, or to otherwise imply, that any such
matter is material for the purpose of this Agreement.
SECTION 8.12 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect, insofar as the foregoing
can be accomplished without materially affecting the economic benefits
anticipated by the parties to this Agreement. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by Applicable Law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 8.13 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of any
right hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 8.14 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND
THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
SECTION 8.15 SPECIFIC PERFORMANCE. The parties agree that
irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
federal court located in the State of New York or in New York state court,
this being in addition to any other remedy to which they are entitled at law
or in equity.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub have
caused this Agreement to be executed under seal by their respective officers
thereunto duly authorized, all as of the date first written above.
KING PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and
Chief Executive Officer
MYLAN LABORATORIES INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice Chairman and
Chief Executive Officer
SUMMIT MERGER CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice Chairman and
Chief Executive Officer
