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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
among
SIBIA NEUROSCIENCES, INC.,
MERCK & CO., INC.
and
MC SUBSIDIARY CORP.
Dated as of July 30, 1999
2
Table of Contents
Section Page
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ARTICLE I The Tender Offer...................................................................................... 2
1.1. The Offer........................................................................................... 2
1.2. SEC Filings......................................................................................... 3
1.3. Company Action...................................................................................... 5
1.4 Composition of the Company Board..................................................................... 5
ARTICLE II The Merger; Closing; Effective Time.................................................................. 6
2.1. The Merger.......................................................................................... 6
2.2. Closing............................................................................................. 7
2.3. Effective Time...................................................................................... 7
ARTICLE III Certificate of Incorporation and Bylaws of the Surviving Corporation................................ 7
3.1. The Certificate of Incorporation.................................................................... 7
3.2. The Bylaws.......................................................................................... 8
ARTICLE IV Officers and Directors of the Surviving Corporation.................................................. 8
4.1. Directors........................................................................................... 8
4.2. Officers............................................................................................ 8
ARTICLE V Effect of the Merger on Capital Stock; Exchange of Certificates....................................... 8
5.1. Effect on Capital Stock............................................................................. 8
5.2. Surrender and Payment............................................................................... 9
5.3. Adjustment of Merger Consideration.................................................................. 12
5.4. Merger Without Meeting of Stockholders.............................................................. 12
5.5. Treatment of Convertible Preferred Stock............................................................ 12
ARTICLE VI Representations and Warranties....................................................................... 12
6.1. Representations and Warranties of the Company....................................................... 13
6.2. Representations and Warranties of Parent and Merger Sub............................................. 30
ARTICLE VII Covenants........................................................................................... 33
7.1. Company Interim Operations.......................................................................... 33
7.2. Acquisition Proposals............................................................................... 35
7.3. Company Stockholder Approval; Proxy Statement....................................................... 37
7.4. Approvals and Consents; Cooperation................................................................. 39
7.5. Filings; Other Actions; Notification................................................................ 40
7.6. Access.............................................................................................. 40
7.7. De-registration..................................................................................... 41
7.8. Publicity........................................................................................... 41
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7.9. Benefits............................................................................................ 41
7.10. Expenses........................................................................................... 43
7.11. Indemnification; Directors' and Officers' Insurance................................................ 43
7.12. Other Actions by the Company and Parent............................................................ 45
7.13. Convertible Preferred Stock........................................................................ 46
ARTICLE VIII Conditions......................................................................................... 46
8.1. Conditions to Each Party's Obligation to Effect the Merger.......................................... 46
ARTICLE IX Termination.......................................................................................... 47
9.1. Termination by Mutual Consent....................................................................... 47
9.2. Termination by Either Parent or the Company......................................................... 47
9.3. Termination by the Company.......................................................................... 48
9.4. Termination by Parent............................................................................... 49
9.5. Effect of Termination and Abandonment............................................................... 49
ARTICLE X Miscellaneous and General............................................................................. 51
10.1. Survival........................................................................................... 52
10.2. Modification or Amendment.......................................................................... 52
10.3. Waiver of Conditions............................................................................... 52
10.4. Counterparts....................................................................................... 52
10.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL...................................................... 52
10.6. Notices............................................................................................ 53
10.7. Entire Agreement................................................................................... 54
10.8. No Third Party Beneficiaries....................................................................... 55
10.9. Obligations of Parent and of the Company........................................................... 55
10.10. Severability...................................................................................... 55
10.11. Specific Performance.............................................................................. 55
10.12. Interpretation.................................................................................... 56
10.13. Assignment........................................................................................ 56
10.14. Captions.......................................................................................... 56
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AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of July 30, 1999, among SIBIA Neurosciences, Inc., a
Delaware corporation (the "Company"), Merck & Co., Inc., a New Jersey
corporation ("Parent"), and MC Subsidiary Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub," the Company and Merger Sub
sometimes being hereinafter collectively referred to as the "Constituent
Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Merger
Sub and the Company have each approved the Offer (as defined herein) and the
Merger (as defined herein) and have determined that it is in the best interests
of their respective companies and stockholders for Parent to acquire the Company
upon the terms and subject to the conditions set forth herein;
WHEREAS, in order to complete such acquisition, the respective
Boards of Directors of Parent, Merger Sub and the Company have each approved the
merger of Merger Sub with and into the Company (the "Merger"), upon the terms
and subject to the conditions of this Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"), whereby each issued and
outstanding Share (as defined herein) not owned directly or indirectly by Parent
or the Company will be converted into the right to receive the highest price per
share in cash actually paid in the Offer;
WHEREAS, the Board of Directors of the Company has unanimously
approved this Agreement, the Offer and the Merger, has determined that the Offer
and the Merger are fair to and in the best interests of the Company's
stockholders and is recommending that the Company's stockholders accept the
Offer, tender their Shares thereunder and adopt this Agreement;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the Company is entering into a stock option agreement with
Parent (the "Stock Option Agreement"), pursuant to which the Company has granted
to Parent an option to purchase Shares (as defined in Section 1.1(a)) under the
terms and conditions set forth in the Stock Option Agreement; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, certain holders of Shares are entering into an agreement with
Parent (the "Shareholders Agreement") pursuant to which such holders have made
certain agreements with respect to the Shares held by them.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein and in
the Stock Option Agreement, the parties hereto agree as follows:
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ARTICLE I
The Tender Offer
1.1. The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set forth
in Annex A hereto (the "Offer Conditions") shall be existing, within five
Business Days of the date hereof, Merger Sub will commence a tender offer (the
"Offer") for all of the outstanding shares of common stock, par value $0.001 per
share, of the Company (each a "Share" or, collectively, the "Shares") at a price
per Share of U.S. $8.50 net to the Seller in cash (such price, or any higher
price paid in the Offer, the "Price Per Share") upon the terms and conditions
set forth in this Agreement, including Annex A hereto.
(b) The obligation of Merger Sub to accept for payment,
purchase and pay for any Shares tendered pursuant to the Offer shall be subject
only to the satisfaction or waiver of the Offer Conditions, including the Offer
Condition that at least that number of Shares equivalent to a majority of the
total issued and outstanding Shares on a fully diluted basis on the date such
shares are purchased pursuant to the Offer shall have been validly tendered and
not withdrawn prior to the expiration of the Offer (the "Minimum Condition").
Merger Sub will not, without the prior written consent of the Company (such
consent to be authorized by the Company Board) (i) decrease the amount or change
the form of consideration payable in the Offer, (ii) decrease the number of
Shares sought in the Offer, (iii) impose additional conditions to the Offer,
(iv) change any Offer Condition or amend any other term of the Offer if any such
change or amendment would be adverse in any respect to the holders of Shares
(other than Parent or Merger Sub), (v) except as provided below, extend the
Offer if all of the Offer Conditions have been satisfied or (vi) amend or waive
the Minimum Condition. Subject to the terms and conditions hereof, the Offer
shall expire at midnight, New York City time, on the date that is twenty (20)
Business Days after the Offer is commenced (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (the
"Scheduled Expiration Date"); provided, however, that without the consent of the
Company Board, Merger Sub may (x) extend the Offer, if on the Scheduled
Expiration Date of the Offer any of the Offer Conditions shall not have been
satisfied or waived, for one (1) or more periods (none of which shall exceed ten
(10) Business Days) but in no event past 90 days from the date of this Agreement
unless the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act has not terminated or expired in which case not past
the date set forth in Section 9.2(i), (y) extend the Offer for such period as
may be required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission ("SEC") or the staff thereof applicable to
the Offer or (z) extend the Offer for one (1) or more periods (each such period
to be for not more than three (3) Business Days and such extensions to be for an
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aggregate period of not more than ten (10) Business Days beyond the latest
expiration date that would otherwise be permitted under clause (x) or (y) of
this sentence) if on such expiration date the Offer Conditions shall have been
satisfied or waived but there shall not have been tendered that number of Shares
which would equal more than ninety percent (90%) of the issued and outstanding
Shares. Merger Sub agrees that if all of the Offer Conditions are not satisfied
on the Scheduled Expiration Date, then, provided that all such conditions are
and continue to be reasonably probable of being satisfied by the date that is 60
business days after the commencement of the Offer, Merger Sub shall extend the
Offer for one or more periods of not more than ten (10) Business Days each if
requested to do so by the Company; provided that Merger Sub shall not be
required to extend the Offer beyond 60 business days after commencement of the
Offer or, if earlier, the date of termination of this Agreement in accordance
with the terms hereof. On the terms of the Offer and subject to the satisfaction
or waiver of the Offer Conditions and the terms of this Agreement, Merger Sub
shall be obligated to purchase all Shares tendered and not validly withdrawn on
the earliest date that all of the Offer Conditions are first satisfied or waived
and shall pay for all Shares validly tendered and not withdrawn pursuant to the
Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as
soon as practicable after the Scheduled Expiration Date of the Offer.
Notwithstanding any other provision of this Agreement, the Stock Option
Agreement or the Shareholders Agreement, any reference to a majority of the
total issued and outstanding shares or Shares, or shares or Shares outstanding
on a fully diluted basis, or similar references, shall, for purposes of such
agreements, exclude from the determination thereof any shares of Common Stock
issuable upon exercise of or subject to the Stock Option Agreement and any
reference to beneficial ownership of shares of Common Stock or similar
references shall, for purposes of such agreements, exclude from the
determination thereof any shares of Common Stock issuable upon exercise of or
subject to the Stock Option Agreement and/or the Shareholders Agreement.
1.2. SEC Filings.
(a) As soon as reasonably practicable after the execution of
this Agreement, but in any event no later than the date of commencement of the
Offer, Parent and Merger Sub shall file with the SEC a Tender Offer Statement on
Schedule 14D-l with respect to the Offer (as supplemented or amended from time
to time, the "Schedule 14D-l") to provide for the purchase of the issued and
outstanding Shares in accordance with the terms hereof. Parent and Merger Sub
agree, as to this Schedule 14D-l, the Offer to Purchase and related Letter of
Transmittal (which documents, as supplemented or amended from time to time,
together constitute the "Offer Documents") will comply as to form and content in
all material respects with the applicable provisions of the federal securities
laws. The Company and its counsel shall be given an opportunity to review and
comment upon the Offer Documents and any amendment or supplement thereto prior
to the filing thereof with the SEC and Parent and Merger Sub shall consider such
comments in good faith. Parent and Merger Sub agree to provide to the Company
and its
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counsel any comments which Parent, Merger Sub or their counsel may receive from
the Staff of the SEC promptly after receipt thereof, and any proposed responses
thereto, with respect to the Offer Documents and any amendment or supplement
thereto. Parent, Merger Sub and the Company agree to correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading in any material respect, and Parent and Merger
Sub further agree to take all steps necessary to cause the Schedule 14D-l as so
corrected to be filed with the SEC and to disseminate any revised Offer
Documents to the Company's stockholders, in each case as and to the extent
required by the applicable provisions of the federal securities laws.
(b) The Company Board shall recommend acceptance of the Offer
to its Stockholders in a Solicitation/Recommendation on Schedule 14D-9 (as
supplemented or amended from time to time, the "Schedule 14D-9"), provided,
however, that the Company Board may thereafter amend or withdraw its
recommendation if it has received an Acquisition Proposal which in accordance
with Section 7.2 is a Superior Proposal. The Company shall file the Schedule
14D-9 with the SEC upon commencement of the Offer which will comply as to form
and content in all material respects with the applicable provisions of the
federal securities laws. The Company will cooperate with Parent and Merger Sub
in mailing or otherwise disseminating the Schedule 14D-9 with the appropriate
Offer Documents to the stockholders of the Company. Parent and its counsel shall
be given an opportunity to review and comment upon the Schedule 14D-9 and any
amendment or supplement thereto prior to the filing thereof with the SEC, and
the Company shall consider any such comments in good faith. The Company agrees
to provide to Parent and Merger Sub and their counsel any comments which the
Company or its counsel may receive from the Staff of the SEC promptly after
receipt thereof, and any proposed responses thereto, with respect to the
Schedule 14D-9 and any amendment or supplement thereto. The Company, Parent and
Merger Sub agree to correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause such Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by the applicable provisions of the federal securities laws. Parent,
Merger Sub and the Company each hereby agree to provide promptly such
information necessary to the preparation of the exhibits and schedules to the
Schedule 14D-9 and the Offer Documents which the respective party responsible
therefor shall reasonably request. The Company represents that CIBC World
Markets Corp. has delivered to the Company Board a written opinion, as of the
date hereof, that the consideration to be paid in the Offer and the Merger is
fair to the holders of the Shares from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
and approvals referred to in this Section 1.2, unless the Company Board has
changed or withdrawn its recommendation after receipt of an Acquisition Proposal
that in accordance with Section 7.2 is a Superior Proposal.
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1.3. Company Action.
(a) In connection with the Offer, the Company shall promptly
furnish Merger Sub with such information (including a list of the record holders
of the Company Common Stock and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares, any
non-objecting beneficial owner lists and lists of security positions of Shares
held in stock depositories in the Company's possession or control, in each case
as of a recent date), and shall thereafter render such assistance as Parent,
Merger Sub or their agents may reasonably request in communicating the Offer to
the record and beneficial holders of Shares. Subject to the requirements of
applicable law and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Merger Sub shall (a) hold in confidence the information
contained in any of such labels and lists, (b) use such information only in
connection with the Offer and the Merger and (c) if this Agreement is
terminated, shall, upon request, deliver to the Company or destroy all copies of
such information then in their possession.
1.4 Composition of the Company Board.
(a) Promptly upon the acceptance for payment of, and payment
by Merger Sub in accordance with the Offer for, not less than that number of
Shares equal to the Minimum Condition, Merger Sub shall be entitled to designate
such number of members of the Company Board, rounded up to the next whole
number, equal to that number of directors which equals the product of the total
number of directors on the Company Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that such number of
Shares owned in the aggregate by Merger Sub or Parent, upon such acceptance for
payment, bears to the number of Shares outstanding. Upon the written request of
Merger Sub, the Company shall, on the date of such request, (i) either increase
the size of the Company Board or use its reasonable efforts to secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees to be so elected to the Company Board and (ii) cause Parent's
designees to be so elected, in each case as may be necessary to comply with the
foregoing provisions of this Section 1.4(a).
(b) The Company's obligation to cause designees of Merger Sub
to be elected or appointed to the Company Board shall be subject to Section
14(f) of the Exchange Act and Rule 14f-l promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section 14(f) and Rule
14f-l in order to fulfill its obligations under this Section 1.4, and shall
include in the Schedule 14D-9 such information with respect to Merger Sub and
its designees as is required under Section 14(f) and Rule 14f-l. Parent and
Merger Sub will supply to the Company in writing and be solely responsible for
any information with respect to any of them and their designees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-l and applicable
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rules and regulations.
(c) After the time that Merger Sub's designees constitute at
least a majority of the Company Board and until the Effective Time, the Company
Board shall always have at least two members (the "Independent Directors") who
are neither officers of Parent nor designees, shareholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of this Agreement, (ii) extension of time for the performance or
waiver of the obligations or other acts of Parent or Merger Sub or waiver of the
Company's rights hereunder or (iii) action by the Company with respect to this
Agreement and the transactions contemplated hereby which adversely affects the
interests of the stockholders of the Company, shall require the approval of a
majority of the Independent Directors in addition to any required approval
thereof by the full Company Board. Notwithstanding the foregoing, any amendment
or withdrawal by the Company's Board of its recommendation of the Merger
pursuant to Section 7.3(a) shall require only the approval of the Independent
Directors, and no other action on the part of the Company or any other director
of the Company shall be required to authorize or approve such matter. If the
number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Director shall be entitled to designate a
person to fill the vacancy, which designee shall not be a current or former
officer, affiliate of Parent or any of Parent's affiliates, or, if no
Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be current or former officers,
affiliates of Parent or any of Parent's affiliates, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. The Company
Board shall not delegate any matter set forth in this Section 1.4(c) to any
committee of the Company Board.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 2.3)
Merger Sub shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in Articles III and IV. The Merger
shall have the effects specified in the DGCL. Parent, as the sole stockholder of
Merger Sub, hereby approves the Merger and this Agreement.
2.2. Closing. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, One
Xxx Xxxx Xxxxx, Xxx
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Xxxx, Xxx Xxxx at 10:00 a.m. on the latest to occur of (A) the business day on
which the condition set forth in Section 8.1(a) shall be satisfied or waived in
accordance with this Agreement and (B) the first business day following the date
on which the last to be satisfied or waived of the other conditions set forth in
Article VIII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement, or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree in writing (the "Closing Date").
2.3. Effective Time. As soon as practicable following the
Closing, the Company will cause a Certificate of Merger (the "Certificate of
Merger") to be executed, acknowledged and filed with the Secretary of State of
Delaware as provided in Section 251 of the DGCL. The Merger shall become
effective at the time when the Certificate of Merger has been duly filed with
the Secretary of State of the State of Delaware or, if agreed to by Parent and
the Company, such later time or date set forth in the Certificate of Merger (the
"Effective Time").
ARTICLE III
Certificate of Incorporation
and Bylaws of the Surviving Corporation
3.1. The Certificate of Incorporation. The certificate of
incorporation of Merger Sub as in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation (the
"Charter"), except that Article FIRST of the Charter shall be amended to provide
that the name of the Surviving Corporation shall be the name of the Company.
3.2. The Bylaws. The bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation (the "Bylaws"), until thereafter amended as provided therein or by
applicable law.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1. Directors. The directors of Merger Sub immediately prior
to the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and Bylaws. Subject to the consummation of the Offer
and the purchase by Merger Sub of at
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least that number of shares equal to the Minimum Condition, prior to the
Effective Time, the Company shall take all actions necessary to obtain any
resignations of its directors necessary to give effect to the provisions of this
Section.
4.2. Officers. The officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and Bylaws.
ARTICLE V
Effect of the Merger on Capital Stock;
Exchange of Certificates
5.1. Effect on Capital Stock. At the Effective Time, as a
result of the Merger and without any action on the part of the Company, Parent,
Merger Sub or any holder of any capital stock of the Company:
(a) Merger Consideration. (i) Each Share issued and
outstanding immediately prior to the Effective Time (other than (A) Shares owned
by Parent or any direct or indirect Subsidiary of Parent (collectively, the
"Parent Companies"), (B) Dissenting Shares (as defined below), (C) or Shares
that are owned by the Company or any direct or indirect Subsidiary of the
Company (and in each case not held on behalf of third Parties) (collectively,
"Excluded Shares")) shall be converted into, and become exchangeable for the
right to receive the Price Per Share in cash (the "Merger Consideration").
(ii) At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such Shares (other
than Excluded Shares) shall thereafter represent only the right to receive the
Merger Consideration.
(b) Cancellation of Excluded Shares. Each Excluded Share
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub. As of and following the Effective Time, each
share of Common Stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall continue to remain
outstanding and shall constitute one share of common stock of the Surviving
Corporation.
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5.2. Surrender and Payment.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of Shares in connection with the Merger (the "Exchange
Agent") to receive the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 5.1. Prior to the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, Parent or Merger
Sub shall deposit with the Exchange Agent cash in an aggregate amount equal to
the product of (i) the number of Shares outstanding (and not to be canceled
pursuant to Section 5.1(b)) immediately prior to the Effective Time, multiplied
by (ii) the Merger Consideration. The deposit made by Parent or Merger Sub
pursuant to the preceding sentence is hereinafter referred to as (the "Payment
Fund") . The Exchange Agent shall cause the Payment Fund to be (i) held for the
benefit of the holders of Shares and (ii) promptly applied to making the
payments provided for in Section 5.1(a). The Payment Fund shall not be used for
any purpose that is not provided for herein.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding Shares, other
than shares to be canceled in accordance with Section 5.1(b), (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 (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such Letter of Transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the Exchange Agent shall pay the
holder of such Certificate the Merger Consideration in respect of such
Certificate, less any required withholding taxes, and the Certificate so
surrendered shall forthwith be canceled. If any portion of the Merger
Consideration is to be paid to a Person other than the registered holder of the
shares represented by the Certificate or Certificates surrendered in exchange
therefor, it shall be a condition to such payment that the Certificate or
Certificates so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a Person other than the registered holder of such shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable. Until surrendered as contemplated by this Section 5.2, each Certificate
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(other than Certificates representing Dissenting Shares (as defined below) or
Shares to be canceled pursuant to Section 5.1(b)) shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration upon such surrender.
(c) No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article V shall be deemed to have been paid in
full satisfaction of all rights pertaining to the Shares theretofore represented
by such Certificates. There shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Article V, except as otherwise provided by law.
(d) Unclaimed Funds. Any portion of the Payment Fund made
available to the Exchange Agent pursuant to Section 5.2(a) that remains
unclaimed by holders of the Certificates for six months after the Effective Time
shall be delivered to the Surviving Corporation or a United States parent
thereof, upon demand, and any holders of Certificates who have not theretofore
complied with this Article V shall thereafter look only to Parent for payment of
their claim for Merger Consideration.
(e) No Liability. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), 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 interest
of any person previously entitled thereto.
(f) Investment of Funds. The Payment Fund shall be invested by
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-l or P-l or better by Xxxxx'x
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven days. All earnings thereon shall inure to
the benefit of Parent or Merger Sub.
(g) Lost Certificates. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the granting of an indemnity reasonably satisfactory
to Parent against any claim that may be made against it, the Surviving
Corporation or the Exchange Agent, with respect to such
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Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration with respect to such Certificate,
to which such Person is entitled pursuant hereto.
(h) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such shares in accordance
with the DCCL (the "Dissenting Shares"), shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses its right to appraisal. If after the Effective Time
such holder fails to perfect or withdraws or loses its right to appraisal, such
shares shall be treated as if they had been converted as of the Effective Time
into a right to receive the Merger Consideration. The Company shall give Parent
prompt notice of any demands received by the Company for appraisal of Shares,
and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands except as otherwise required under applicable
law.
5.3. Adjustment of Merger Consideration. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding Shares shall have been changed into a different number of shares or
a different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, split, combination, exchange,
recapitalization or other similar transaction, the Merger Consideration shall be
appropriately adjusted.
5.4. Merger Without Meeting of Stockholders. In the event that
Merger Sub, or any other direct or indirect subsidiary of Purchaser, shall
acquire at least 90 percent of the outstanding Shares, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
vote of stockholders of the Company, in accordance with Section 253 of the DGCL.
5.5. Treatment of Convertible Preferred Stock. The Convertible
Preferred Stock (as defined in Section 6.1(b)) shall be treated as set forth in
Section 7.13.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Merger Sub, except as set
forth in the Company Reports (as defined in Section 6.1(e)) or in the Disclosure
Schedule delivered
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to Parent on the date of this Agreement (the "Company Disclosure Schedule"), as
follows:
(a) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing (where such concept is recognized) under the laws of its
respective jurisdiction of organization and has all requisite corporate power
and authority to own and operate its properties and assets and to carry on its
business as presently conducted and is qualified to do business and is in good
standing as a foreign corporation in each jurisdiction (where such concept is
recognized) where the ownership or operation of its properties or conduct of its
business requires such qualification, except where the failure to be so
qualified or in such good standing, when taken together with all other such
failures, is not reasonably likely to have a Company Material Adverse Effect (as
defined below) or materially impair the ability of the Company, the Surviving
Corporation, Parent or any of their respective affiliates, following
consummation of the Offer or the Merger, to conduct any material business or
operations in any jurisdiction where they are now being conducted. The Company
has made available to Parent a complete and correct copy of the Company's and
its Subsidiaries' certificates of incorporation and bylaws (or documents of a
similar scope for corporations organized in jurisdictions outside the United
States), each as amended to date. The Company's and its Subsidiaries'
certificates of incorporation and bylaws (or similar documents) so made
available are in full force and effect.
As used in this Agreement, (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries, and (ii) "Company Material Adverse Effect" means
any change in or effect on the business of the Company and its Subsidiaries that
is, or is reasonably likely to be, materially adverse to the business,
operations or assets (including intangible assets), liabilities (contingent or
otherwise), prospects, condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole. In no event shall any of the following
constitute, or be taken into account in determining whether there has been or is
likely to be, a "Company Material Adverse Effect": (i) an adverse change in the
trading price of the Company's Common Stock between the date of this Agreement
and the Effective Time, in and of itself, (ii) any adverse conditions, events,
circumstances, changes or effects generally affecting the industry in which the
Company operates or arising from changes in general business or economic
conditions, (iii) any adverse conditions, events, circumstances, changes or
effects attributable to expenses (including without limitation legal, accounting
and financial consulting fees and expenses) incurred in connection with the
transactions contemplated by this Agreement,
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(iv) any conditions events, circumstances, changes or effects resulting from any
change in law or generally accepted accounting principles, which affect
generally entities such as the Company, or (v) any adverse conditions, events,
circumstances, changes or effects resulting from compliance by the Company with,
or the taking of any action required or contemplated by, the terms of this
Agreement or any other agreement entered into by the Company with Parent or
Merger Sub in connection with the transactions contemplated by this Agreement or
(vi) any event or condition referred to on Schedule 6.1(a).
(b) Capital Structure. The authorized capital stock of the
Company consists of 25,000,000 Shares, of which only 9,703,769 Shares were
outstanding as of the close of business on July 23, 1999, and 5,000,000 shares
of Preferred Stock, par value $0.001 per share (the "Preferred Shares"), of
which 150,000 shares have been designated Series A Junior Participating
Preferred Stock, none of which were outstanding as of the close of business on
July 23, 1999, one share has been designated as Series B Convertible Preferred
Stock, which share was outstanding as of the close of business on July 23, 1999.
All of the outstanding Shares have been duly authorized and are validly issued,
fully paid and nonassessable. Other than Shares reserved for issuance pursuant
to the Stock Option Agreement, the Company has no Shares or Preferred Shares
subject to issuance, except (i) 150,000 Preferred Shares, designated Series A
Junior Participating Preferred Stock, subject to issuance upon exercise of the
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March
17, 1997 (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, (ii) one share of Series B
Convertible Preferred Stock, which was outstanding as of July 23, 1999, (iii)
2,513,141 shares reserved for issuance under the Company's 1996 Equity Incentive
Plan, as amended, of which options to acquire 1,057,205 shares are outstanding
as of July 23, 1999, (iv) 500,000 shares reserved for issuance under the
Company's Employee Stock Purchase Plan, of which 416,581 shares are available
for purchase as of July 23, 1999, (v) 235,000 shares reserved for issuance under
the Company's 1996 Non-Employee Directors' Stock Option Plan, of which options
to acquire 65,000 shares are outstanding as of July 23, 1999, (vi) 219,304
shares reserved for issuance under the Company's Amended and Restated 1992 Stock
Option and Restricted Stock Plan, of which options to acquire 219,304 shares are
outstanding as of July 23, 1999, (vii) 205,487 shares outstanding under the
Management Change of Control Plan and (viii) 1,410 shares outstanding under the
1981 Employee Stock Option Plan. The Company Disclosure Schedule sets forth a
correct and complete list of each outstanding option to purchase Shares under
the Stock Plans, as defined below (each a "Company Option"), as of July 23,
1999, including the holder, date of grant, exercise price and number of Shares
subject thereto. As of July 23, 1999, there are no shares of capital stock of
the Company authorized, issued or outstanding and except as set forth above,
there are no preemptive rights or any outstanding subscriptions, options,
warrants, rights, convertible securities or other agreements or commitments of
any character to which the Company is a party or may be bound relating to the
issued or unissued capital stock or other securities of the Company and the
Shares subject to the Stock Option Agreement
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shall not be subject to any preemptive rights. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter
("Voting Debt"). Except for the Company's 1996 Equity Incentive Plan, 1996
Non-Employee Directors' Stock Option Plan, Employee Stock Purchase Plan, the
Amended and Restated 1992 Stock Option and Restricted Stock Plan and Management
Change of Control Plan and the 1981 Employee Stock Option Plan (such plans
collectively, the "Stock Plans"), at or after the Effective Time, neither the
Surviving Corporation nor Parent nor their respective affiliates will have any
obligation to issue, transfer or sell any shares or securities of the Surviving
Corporation, Parent or any of their respective affiliates pursuant to any
Compensation and Benefit Plan (as defined in Section 6.1(h)(i)) which
obligations were outstanding as of July 23, 1999. No Shares, Preferred Shares or
other securities of the Company, the Surviving Corporation, Parent or any of
their respective affiliates will be subject to issuance pursuant to the Rights
Agreement as a result of the Offer, the Merger or the other transactions
contemplated by this Agreement, the Stock Option Agreement and the Shareholders
Agreement and no Distribution Date or Shares Acquisition Date (as such terms are
defined in the Rights Agreement) shall have occurred as a result of the Offer,
the Merger or the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholders Agreement.
(c) Corporate Authority; Approval. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate the Offer and,
subject only to obtaining the adoption of this Agreement by a majority of the
Shares outstanding as of the record date of the Company's stockholders meeting
(the "Company Requisite Vote"), the Merger. This Agreement and the Stock Option
Agreement are valid and binding agreements of the Company, enforceable against
the Company in accordance with their respective terms subject to (i) applicable
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or
similar laws from time to time in effect affecting creditors' rights generally,
and (ii) general principles of equity including, without limitation, standards
of materiality, good faith, fair dealing and reasonableness, whether such
principles are considered in a proceeding of law or in equity.
(ii) The Company Board has, at a meeting duly called and held,
(A) unanimously approved this Agreement and the Stock Option Agreement, the
Offer and the Merger and the transactions contemplated hereby in accordance with
the DGCL, (B) determined that the Offer and the Merger are fair to and in the
best interests of the Company's stockholders, and (C) recommended that the
stockholders of the Company tender their shares of Company Common Stock into the
Offer and adopt this Agreement.
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(d) Governmental Filings; No Violations. (i) Other than any
filings and/or notices required (A) pursuant to Section 2.3, (B) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
the Exchange Act and state securities or "blue sky" laws and (C) such filings or
consents, registrations, approvals, permits or authorizations as may be required
under the competition or antitrust laws of jurisdictions outside the United
States, no notices or other filings are required to be made with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by the Company from, any U.S. governmental or regulatory authority,
agency, commission, body or other governmental entity ("Governmental Entity"),
in connection with the execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the Offer
and the Merger and the other transactions contemplated hereby and thereby,
except those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement.
(ii) Except as set forth in Schedule 6.1(d) (ii), the
execution, delivery and performance of this Agreement and the Stock Option
Agreement by the Company do not and will not, and the consummation by the
Company of the Offer and the Merger and the other transactions contemplated
hereby and thereby will not, constitute or result in (A) a breach or violation
of, or a default under, the certificate or bylaws of the Company or the
comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of the Company or any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture
or other obligation ("Contracts") binding upon the Company or any of its
Subsidiaries or any Law (as defined in Section 6.1(i)) or governmental or
non-governmental permit or license to which the Company or any of its
Subsidiaries is subject, or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement and the Stock Option Agreement. Schedule 6.1(d)(ii) sets forth a
correct and complete list of all consents and waivers which are or may be
required in connection with the consummation of the transactions contemplated by
this Agreement and the Stock Option Agreement (whether or not subject to the
exception set forth with respect to clause (B) or (C) above) under Contracts to
which the Company or any of its Subsidiaries is a party, other than any consent
or waiver (other than consents or waivers pursuant to Contracts relating to
indebtedness, securities or the guarantee thereof) the failure to obtain which
is not reasonably likely to have a Company Material Adverse Effect.
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(e) Company Reports; Financial Statements. The Company and, to
the extent applicable, each of its then or current Subsidiaries has made all
filings required to be made by it with the SEC since January 1, 1998
(collectively, including any such reports filed subsequent to the date hereof,
the "Company Reports"). The Company has made available to Parent each
registration statement, report, proxy statement or information statement filed
with the SEC by it since December 31, 1996, including, without limitation, (i)
the Company's Annual Report on Form 10-K for the year ended December 31, 1998,
(ii) the Company's Quarterly Report for the quarter ended March 31, 1999, as
amended, (iii) the Company's Proxy Statement filed on April 12, 1999, all in the
form (including exhibits, annexes and any amendments thereto) filed with the
SEC. Except as set forth in Schedule 6.1(e), as of their respective dates, the
Company Reports did not, and any Company Reports filed with the SEC prior to the
expiration of the Offer will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in which they
were made, not misleading. Each of the consolidated balance sheets included in
or incorporated by reference into the Company Reports (including the related
notes and schedules) presents fairly, or will present fairly, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included in or incorporated by reference
into the Company Reports (including any related notes and schedules) presents
fairly, or will present fairly, in all material respects, the results of
operations, retained earnings and changes in financial position, as the case may
be, of the Company and its Subsidiaries for the periods set forth therein
(except as otherwise noted therein and subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except, in the case of unaudited financial statements, as permitted by
SEC Form 10-Q, and except as may be noted therein. Other than the Company
Reports specifically recited in clauses (i) through (v) of the first sentence of
this Section 6.1(e), the Company has not, on or prior to the date hereof, filed
any other definitive reports or statements with the SEC since the Audit Date (as
defined in Section 6.1(f)).
(f) Absence of Certain Changes. Except as disclosed in the
Company Reports filed prior to the date of this Agreement or in Schedule 6.1(f),
since December 31, 1998 (the "Audit Date") the Company and its Subsidiaries have
conducted their respective businesses in all material respects only in, and have
not engaged in any material transaction other than according to, the ordinary
and usual course of such businesses and there has not been (i) any change in the
financial condition, properties, business or results of operations of the
Company or any of its Subsidiaries or any occurrence or combination of
occurrences of which the Company has knowledge that, individually or in the
aggregate, has had or is reasonably likely to have a Company Material Adverse
Effect; (ii) any material damage, destruction or other casualty loss with
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respect to any material asset or property owned, leased or otherwise used by the
Company or any of its Subsidiaries, that has had or is reasonably likely to have
a Company Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution in respect of the capital stock of
the Company; or (iv) other than as set forth in Schedule 6.1(f), any material
change by the Company in accounting principles, practices or methods. Schedule
6.1(f) contains a document setting forth the name, title, salary and other
compensation of each employee of the Company as of July 23, 1999. Since the date
of such document, there has not been any increase in the compensation payable or
that could become payable by the Company or any of its Subsidiaries to officers
or key employees of the Company or its Subsidiaries, or any amendment of any of
the Stock Plans or compensation and Benefit Plans.
(g) Litigation and Liabilities. Except as disclosed in
Schedule 6.1(g) or as disclosed in the Company Reports filed prior to the date
of this Agreement, and except for matters which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement, the Stock Option
Agreement and the License Agreement, there are no (i) civil, criminal,
administrative or regulatory actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, overtly threatened
against the Company or any of its Subsidiaries or (ii) material obligations or
liabilities, whether or not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to matters involving any
Environmental Law (as defined in Section 6.1(k)).
(h) Employee Benefits.
(i) The Company Reports accurately describe in all
material respects all material incentive, bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option and other stock based
plans, all employment or severance agreements, plans, policies or arrangements,
other employee benefit plans and any applicable "change of control" or similar
provisions in any plan, agreement, policy or arrangement which covers current or
former employees of the Company and its Subsidiaries (the "Compensation and
Benefit Plans") or with respect to which the Company or any of its Subsidiaries
may have any liability. The Compensation and Benefit Plans and all other benefit
plans, agreements, policies or arrangements covering current or former employees
or directors of the Company and its Subsidiaries (the "Employees"), including,
but not limited to, "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
are listed in Schedule 6.1(h)(i). True and complete copies of all documents
embodying the Compensation and Benefit Plans, including written interpretations
thereof, and such other benefit plans, agreements, policies or arrangements,
including, but not limited to, any
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trust instruments and/or insurance contracts, if any, forming a part of any such
plans and agreements, and all amendments thereto have been provided or made
available to Parent.
(ii) The Compensation and Benefit Plans have been
administered in compliance with their terms and all applicable law, except where
the failure to administer in compliance would not have or be reasonably likely
to have a Company Material Adverse Effect. Each Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") and which is intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") is so qualified, and has
received a favorable determination letter from the Internal Revenue Service, and
the Company is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. There is no material pending or, to the
knowledge of the Company, threatened, litigation, audit or investigation
relating to any Compensation and Benefit Plan. Neither the Company nor any of
its Subsidiaries has engaged in a transaction with respect to any Compensation
and Benefit Plan that, assuming the taxable period of such transaction expired
as of the date hereof, could subject the Company or any of its Subsidiaries to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount which would be material.
(iii) Neither the Company nor any of its Subsidiaries
has, nor has ever had, any obligation or liability with respect to an employee
benefit plan which is subject to Title IV of ERISA. There is no entity (other
than the Company or any of its Subsidiaries) which is or was considered one
employer with the Company or any of its Subsidiaries under Section 4001 of ERISA
or Section 414 of the Code (an "ERISA Affiliate"). No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Compensation and Benefit Plan within the 12-month period ending on the date
hereof.
(iv) Except as set forth in Schedule 6.1(h)(iv), all
contributions required to be made under the terms of any Compensation and
Benefit Plan have been timely made or accrued on the Company's financial
statements.
(v) Neither the Company nor any of its Subsidiaries has
any obligations for retiree health and life benefits under any Compensation and
Benefit Plan, except as set forth on Schedule 6.1(h)(v). The Company or its
Subsidiaries may amend or terminate any Compensation and Benefit Plan at any
time without incurring any material liability thereunder.
(vi) Except as set forth on Schedule 6.1(h)(vi), the
consummation of the transactions contemplated by this Agreement will not (x)
entitle any Employees to severance pay, (y) accelerate the time of payment or
vesting or trigger any material
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payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, materially increase the amount payable or trigger any other
material obligation pursuant to, any of the Compensation and Benefit Plans or
(z) result in payments under any of the Compensation and Benefit Plans which may
not be deductible under Section 162(m) or Section 280G of the Code.
(i) Compliance. Except as set forth in Schedule 6.1(i),
neither the Company nor any of its Subsidiaries is in default or violation of,
(i) any law, ordinance, rule, regulation, order, judgment, decree, arbitration
award, license or permit of any Governmental Entity (collectively, "Laws")
applicable to the Company or any of its Subsidiaries or by which its or any of
their respective properties are bound, or (ii) any Contract to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties are bound or affected,
except for any such defaults or violations that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect,
or prevent or materially delay the transactions contemplated by this Agreement.
To the knowledge of the Company, no material change is required in the Company's
or any of its Subsidiaries' processes, properties or procedures in order to
comply in all material respects with any material Laws, and the Company has not
received any notice or overt communication of any material noncompliance with
any such material Laws that has not been cured.
(j) Antitakeover Statutes. The board of directors of the
Company has taken all necessary action to approve the transactions contemplated
by this Agreement, the Stock Option Agreement and the Shareholders Agreement
such that the restrictions under Section 203 of the DGCL shall not apply to such
transactions. No "fair price," "moratorium," "control share acquisition" or
other similar antitakeover statute or regulation (each, an "Antitakeover
Statute") is applicable to the Company, the Shares, the Offer, the Merger, this
Agreement, the Stock Option Agreement, the Shareholders Agreement or the other
transactions hereby or thereby.
(k) Environmental Matters. Except as disclosed in the Company
Reports filed with the Commission to the date of this Agreement or in Schedule
6.1(k) and except as would not have or be reasonably likely to have a Company
Material Adverse Effect, (i) the Company and its Subsidiaries have complied in
all material respects at all times with all applicable Environmental Laws; (ii)
to the knowledge of the Company, no property currently or formerly owned or
operated by the Company or any of its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) has been contaminated
with any Hazardous Substance; (iii) to the knowledge of the Company, neither the
Company nor any of its Subsidiaries is subject to any liability for Hazardous
Substance disposal or contamination on any third party property; (iv) to the
knowledge of the Company, neither the Company nor any of its Subsidiaries is
subject to liability for any release or threat of release of any Hazardous
Substance; (v)
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neither the Company nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information indicating that it may be in violation
of or subject to liability under any Environmental Law; (vi) neither the Company
nor any of its Subsidiaries is subject to any order, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other agreement
with any third party relating to liability under any Environmental Law; (vii) to
the knowledge or the Company, none of the properties of the Company or any of
its Subsidiaries contain any underground storage tanks, asbestos-containing
material, lead products, or polychlorinated biphenyls; (viii) to the knowledge
of the Company, there are no other circumstances or conditions involving the
Company or any of its Subsidiaries that could reasonably be expected to result
in any claims, liability, investigations, costs or restrictions on the
ownership, use, or transfer of any property in connection with any Environmental
Law; and (ix) the Company has delivered or made available to Parent copies of
all environmental reports, studies, assessments, sampling data and other
environmental information in its possession relating to the Company or any of
its Subsidiaries or any of their current or former properties or operations.
"Environmental Law" means any federal, state or local law,
regulation, order, decree, permit, authorization, common law or agency
requirement relating to (A) the protection, investigation or restoration of the
environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, indoor air, employee exposure, wetlands, pollution,
contamination or any injury or threat of injury to persons or property relating
to any Hazardous Substance.
"Hazardous Substance" means any substance that is (A) listed,
classified or regulated pursuant to any Environmental Law; (B) any chemical,
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon,
pharmaceutical, biological and/or medical waste or materials; or (C) any other
substance which may be the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
(l) Opinion of Financial Advisor. The Company's Board has
received the written opinion of CIBC World Markets Corp. to the effect that, as
of the date hereof, the consideration to be received by the holders of Shares
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view.
(m) Taxation. The Company and each of its Subsidiaries, and
any consolidated, combined or unitary group for tax purposes of which the
Company or any of its Subsidiaries is or has been a member, has timely filed all
Tax Returns required to be filed by it in the manner provided by law except
where the failure to have so filed would not have or be reasonably likely to
have a Company Material Adverse Effect. All
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such Tax Returns are true, correct and complete in all material respects. The
Company and each of its Subsidiaries have timely paid all Taxes due or required
to be withheld from amounts owing to any employee, creditor or third party or
have provided adequate reserves in their financial statements for any Taxes that
have not been paid, whether or not shown as being due on any Tax Returns. Except
as has been disclosed to Parent in Schedule 6.1(m): (i) no material claim for
unpaid Taxes has become a lien or encumbrance of any kind against the property
of the Company or any of its Subsidiaries or is being asserted against the
Company or any of its Subsidiaries; (ii) no audit, examination, investigation or
other proceeding in respect of Taxes is pending being conducted, or to the
knowledge of the Company, threatened by a Tax authority; (iii) no material
issues have been raised by the relevant taxing authority in connection with any
examination of the Tax Returns filed by the Company and its Subsidiaries; (iv)
no extension or waiver of the statute of limitations on the assessment of any
Taxes has been granted by the Company or any of its Subsidiaries and is
currently in effect; (v) neither the Company nor any of its Subsidiaries is a
party to, is bound by, or has any obligation under, or potential liability with
regards to, any Tax sharing agreement, Tax indemnification agreement or similar
contract or arrangement; (vi) no power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any matter
relating to Taxes; (vii) neither the Company nor any of its Subsidiaries is a
party to any agreement, plan, contract or arrangement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (viii) neither the
Company nor any of its Subsidiaries has any deferred intercompany gain or loss
arising as a result of a deferred intercompany transaction within the meaning of
Treasury Regulation Section 1.1502-13 (or similar provision under state, local
or foreign law) or any excess loss accounts within the meaning of Treasury
Regulation Section 1.1502-19; (ix) the Company is not and has not been a United
States real property holding corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(ii) of the
Code; (x) neither the Company nor any of its Subsidiaries has been the subject
to a Tax ruling that has continuing effect; and (xi) neither the Company nor any
of its Subsidiaries has agreed to include, or is required to include, in income
any adjustment under either Section 481(a) or 482 of the Code (or an analogous
provision of state, local or foreign law) by reason of a change in accounting
method or otherwise.
"Taxes" means any taxes of any kind, including but not limited
to those on or measured by or referred to as income, gross receipts, capital,
sales, use, ad valorem, franchise, profits, license, withholding, employment,
payroll, premium, value added, property or windfall profits taxes, environmental
transfer taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign.
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"Tax Return" means any return, report or statement required to
be filed with any governmental authority with respect to Taxes.
(n) Certain Regulatory Matters. (i) Schedule 6.1(n) sets forth
a complete and accurate list for the last five years, of (a) all Warning Letters
(as defined below), Section 305 notices and similar letters or notices issued by
the Food and Drug Administration (the "FDA") or any other governmental entity,
domestic or foreign, that is concerned with the quality, identity, strength,
purity, safety, efficacy, marketing or manufacturing of the pharmaceutical
compounds or products tested or sold by the Company or its Subsidiaries (any
such governmental entity, a "Pharmaceutical Regulatory Agency") to the Company
or any of its Subsidiaries; (B) all United States product problem reporting
program complaints or reports, MedWatch form FDA-3500A, FDA-1639 or Form CIMOS I
filed by the Company or any of its Subsidiaries, which complaints or reports
pertain to any incident involving death or serious injury, and for which
incident there has been (I) a notice or follow-up inquiry to the Company or any
of its Subsidiaries by the FDA, (II) a litigation or arbitration claim or cause
of action commenced, or (III) a notice to any insurance carrier of the Company
or any of its Subsidiaries tendering the defense or giving any notice of a
possible or actual claim against the Company or such subsidiary; (C) all product
recalls conducted by or issued to the Company or any of its Subsidiaries and any
requests from the FDA or any other Pharmaceutical Regulatory Agency requesting
the Company or any of its Subsidiaries to cease to investigate, test or market
any compound or product; and (D) any civil penalty actions begun by the FDA or
any other Pharmaceutical Regulatory Agency against the Company or any of its
Subsidiaries and all consent decrees and all documents relating to the
negotiation of and compliance with such consent decree issued with respect to
the Company or any of its Subsidiaries. The Company has made available to Parent
copies of all documents referred to in Schedule 6.1(n) and any other written
communications between the Company or any of its Subsidiaries, on the one hand,
and the FDA or any other Pharmaceutical Regulatory Agency on the other hand that
describe matters that could have a material adverse effect on the projected
sales or revenues attributable to any compound, product or product line of the
Company or its Subsidiaries or discuss material issues concerning the quality,
identity, strength, purity, safety or efficacy of any such compound, product or
product line as well as copies of all complaints and other information required
to be maintained by the Company pursuant to the United States Federal Food, Drug
and Cosmetic Act and Comprehensive Drug Abuse Prevention and Control Act of 1970
and the corresponding laws of jurisdictions other than the United States. For
purposes of this subparagraph (i), "Warning Letter" means a letter characterized
by the FDA or any other Pharmaceutical Regulatory Agency as a warning letter, a
notice of adverse finding, observation of noncompliance or a similar letter or
report in which FDA or any other Pharmaceutical Regulatory Agency expresses the
opinion that violations of law, regulation or guideline have occurred.
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(ii) With such exceptions as will not have or be reasonably
likely to have a Company Material Adverse Effect and except as set forth in
Schedule 6.l(n), (A) the Company (or, if applicable, one of its Subsidiaries)
has obtained all consents, approvals, certifications, authorizations and permits
of, and has made all filings with, or notifications to, all Pharmaceutical
Regulatory Agencies pursuant to applicable requirements of all FDA regulations
and consent decrees, and all applicable state and foreign laws, and regulations
applicable to the Company or any of its Subsidiaries; (B) all representations
made by the Company or any of its Subsidiaries in connection with any such
consents, approvals, certifications, authorizations, permits, filings and
notifications were true and correct in all material respects at the time such
representations and warranties were made, and the Company's compounds and
products, and the compounds and products of its Subsidiaries, substantially
comply with, and perform in accordance with the specifications described in,
such representations; (C) the Company and its Subsidiaries and their respective
products and all of the facilities and entities which manufacture such compounds
and products, are in substantial compliance with all applicable FDA rules,
regulations and consent decrees, and all applicable state and foreign laws,
rules and regulations (including Good Manufacturing Practices) relating to
pharmaceutical manufacturers and distributors or otherwise applicable to the
Company's or its Subsidiaries' business; and (D) the Company has no reason to
believe that any of the consents, approvals, authorizations, registrations,
certifications, permits, filings or notifications that it or any of its
Subsidiaries has received or made to operate their respective businesses have
been or are being revoked or challenged.
(o) Intellectual Property.
(i) Set forth in Schedule 6.1(o)(i) is a complete list
of each of the following items (1) all patents and applications therefor,
registrations of trademarks (including service marks) and applications therefor,
and registrations of copyrights and applications therefor that are owned by the
Company or any of its Subsidiaries or licensed to the Company or any of its
Subsidiaries (collectively, the "Company Owned IP"), (2) all licenses,
agreements and contracts relating to the Company Intellectual Property (as
defined in Section 6.1(o) (ii) of this Agreement) pursuant to which the Company
or any of its Subsidiaries are entitled to use any Company Intellectual Property
owned by any third party (the "Third Party Licenses") and (3) all agreements
under which the Company or any of its Subsidiaries has granted any third party
the right to use any Company Intellectual Property, including the unexpired
material transfer agreements.
(ii) Except to the extent identified in Schedule
6.1(o)(ii) and except for any failures of this representation and warranty to be
true and accurate that have or would be reasonably likely to have a Company
Material Adverse Effect that arise from instances involving the infringement by
the Company or its Subsidiaries on the intellectual property rights of others or
the infringement by others on intellectual property rights of the Company or its
Subsidiaries of which, in either such case, the Company does
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not have any knowledge after due investigation, the Company, or its Subsidiaries
where expressly indicated, is the owner of, or is licensed to use, or otherwise
possesses legally enforceable rights in, all intellectual property, including,
without limitation, all patents and patent applications, supplementary
protection certificates and patent extensions, trademarks and trademark
applications, service xxxx and service xxxx registrations, logos, commercial
symbols, business name registrations, trade names, copyrights and copyright
registrations, computer software, mask works and mask work registration
applications, industrial designs and applications for registration of such
industrial designs, including, without limitation, any and all applications for
renewal, extensions, reexaminations and reissues of any of the foregoing
intellectual property rights where applicable, inventions, biological materials,
trade secrets, formulae, know-how, technical information, research data,
research raw data, laboratory notebooks, procedures, designs, proprietary
technology and information held or used in the business of the Company and its
Subsidiaries (hereinafter the "Company Intellectual Property").
(iii) Except to the extent identified in Schedule
6.1(o)(iii), the Company and its Subsidiaries are the sole legal and beneficial
owners of all the Company Intellectual Property (except for the Company
Intellectual Property that is the subject of any Third Party Licenses) and all
the Company Intellectual Property is valid and subsisting.
(iv) The Company has not entered into any agreements,
licenses or created any mortgages, liens, security interests, leases, pledges,
encumbrances, equities, claims, charges, options, restrictions, rights of first
refusal, title retention agreements or other exceptions to title which
materially affect the Company Intellectual Property or materially restrict the
use by the Company or any of its Subsidiaries of the Company Intellectual
Property, except as provided in agreements and instruments disclosed in Schedule
6.1(o)(i) and furnished or made available to Parent prior to the date of this
Agreement.
(v) Except as listed in Schedule 6.1(o)(v), to the
knowledge of the Company, the Company and its Subsidiaries are in compliance in
all material respects with the Third Party Licenses that are material to the
conduct of the business of the Company.
(vi) The Company and its Subsidiaries are not, and will
not be as a result of the execution, delivery or performance of this Agreement
or the Stock Option Agreement or the consummation of the Offer and the Merger or
the other transactions contemplated hereby or thereby in breach, violation or
default of any Third Party Licenses that are material to the conduct of the
business of the Company. Except as indicated in Schedule 6.1(o)(vi), the rights
of the Company or any of its Subsidiaries to the Company Intellectual Property
will not be affected by the execution, delivery or
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performance of this Agreement or the Stock Option Agreement or the consummation
of the Offer and the Merger or the other transactions contemplated hereby or
thereby.
(vii) The Company and its Subsidiaries have the right to
license to third parties the use of the Company Owned IP.
(viii) Except as listed in Schedule 6.1(o)(viii), all
registrations and filings relating to the Company Owned IP are in good standing.
All maintenance and renewal fees necessary to preserve the rights of the Company
in respect of the Company Owned IP have been made. Except as indicated in
Schedule 6.1(o)(viii), the registrations and filings relating to the Company
Owned IP are proceeding and there are no material facts of which the Company has
knowledge after due investigation which could significantly undermine those
registrations or filings or reduce to a significant extent the scope of
protection of any patents arising from such applications.
(ix) The manufacturing, marketing, distribution, sale
and use of compounds by the Company or its Subsidiaries, licensees or
sublicensees in the countries where the Company has conducted or proposes to
conduct such activities, to the knowledge of the Company after due
investigation, does not and would not infringe the patents, patent applications,
trademarks, trademark applications, service marks, service xxxx applications,
copyrights, copyright applications, and proprietary trade names, publication
rights, computer programs (including source code and object code), inventions,
know-how, trade secrets, technology, processes, confidential information and all
other intellectual property rights throughout the world (collectively,
"Intellectual Property Rights") of any third party.
(x) Except for the matters set forth in Schedule
6.1(o)(x), there are no allegations, claims or proceedings instituted or pending
which challenge the rights possessed by the Company or its Subsidiaries to use
the Company Intellectual Property or the validity or effectiveness of the
Company Intellectual Property, including without limitation any interferences,
oppositions, cancellations or other contested proceedings.
(xi) There are no outstanding claims or proceedings
instituted or pending by any third party challenging the ownership, priority,
scope or validity or effectiveness of any Company Intellectual Property.
(xii) To the knowledge of the Company, there are no
Intellectual Property Rights of any third party that have been or would be
infringed by the identification, manufacture, marketing, distribution and sale
and use of any products that have been identified for development by the
Company.
(xiii) To the knowledge of the Company, there are no
Intellectual Property Rights of any third party that would be infringed by the
continued practice of any technologies previously used or presently in use by
the Company.
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(xiv) To the knowledge of the Company, except for the
matters set forth in Schedule 6.1(o)(xiv) or as would not have or be reasonably
likely to have a Company Material Adverse Effect, there is no unauthorized use,
infringement or misappropriation of the Company Intellectual Property by any
third party, including any employee or former employee of the Company or any of
its Subsidiaries.
(xv) Except for the matters set forth in Schedule
6.1(o)(xv), the Company and its Subsidiaries have not granted any licenses,
immunities, options or other rights to the Company Intellectual Property which
could provide a third party with a defense to patent infringement proceedings,
whether domestic or foreign.
(xvi) Commercially reasonable measures have been taken
to maintain the confidentiality of the inventions, trade secrets, formulae,
know-how, technical information, research data, research raw data, laboratory
notebooks, procedures, designs, proprietary technology and information of the
Company and its Subsidiaries, and all other information the value of which to
the Company or any of its Subsidiaries is contingent upon maintenance of the
confidentiality thereof. Without limiting the generality of the foregoing, (1)
each employee of the Company and each consultant to the Company who has had
access to proprietary information with respect to the Company has entered into
an agreement suitable to vest ownership rights to any inventions, creations,
developments, and works in the Company and has entered into an agreement for
maintaining the confidential information of the Company and (2) each officer and
director of the Company has entered into an agreement to maintain the
confidential information of the Company, except for those individuals listed in
Schedule 6.1(o) (xvi) whose involvement in the business of the Company is
described with specificity therein.
(p) Product Registration Files. The product registration files
and dossiers of the Company and its Subsidiaries have been maintained in
accordance with reasonable industry standards. The Company and each of its
Subsidiaries has in its possession copies of all the material documentation
filed in connection with filings made by the Company or any of its Subsidiaries
for regulatory approval or registration of the compounds and products of the
Company or any of its Subsidiaries, as the case may be. To the knowledge of the
Company, the filings made by the Company and its Subsidiaries for regulatory
approval or registration of the products of the Company or any of its
Subsidiaries did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading.
(q) Year 2000 Compliance. Schedule 6.1(q) contains the
Company's Year 2000 plan, which indicates the actions to be taken pursuant to
such plan that have been completed as of the date of this Agreement and the
actions to be taken pursuant to such plan that have not been completed as of the
date of this Agreement and the aggregate expense expected to be incurred by the
Company in connection with the actions to be
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taken pursuant to such plan that have not been completed as of the date of this
Agreement.
(r) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its Subsidiaries the subject of
any material proceeding asserting that the Company or any of its Subsidiaries
has committed an unfair labor practice or is seeking to compel it to bargain
with any labor union or labor organization nor is there pending or, to the
knowledge of the Company, threatened, any labor strike, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries.
(s) Rights Agreement. The Company has irrevocably amended the
Rights Agreement to provide that neither Parent nor Merger Sub nor any of their
respective affiliates shall be deemed to be an Acquiring Person (as such term is
defined in the Rights Agreement), that neither a Distribution Date nor a Shares
Acquisition Date (as each such term is defined in the Rights Agreement) shall be
deemed to occur, and the Rights will not separate from the Shares, as a result
of the execution, delivery or performance of this Agreement, the Stock Option
Agreement or the Shareholders Agreement or the consummation of the Offer and the
Merger or the other transactions contemplated hereby or thereby, and that none
of the Company, Parent, Merger Sub, nor the Surviving Corporation, nor any of
their respective affiliates, shall have any obligations under the Rights
Agreement to any holder (or former holder) of Rights as of and following the
consummation of the Offer and/or the Effective Time.
(t) Brokers and Finders. Except as disclosed in Schedule
6.1(t), neither the Company nor any of its Subsidiaries, officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the Offer and
the Merger or the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholders Agreement, except that the Company has
employed CIBC World Markets Corp. as its financial advisor, the arrangements
with which have been disclosed to Parent prior to the date hereof.
(u) Supply Arrangements. As of the date of this Agreement, to
the Company's knowledge, there are no facts or circumstances that have
materially adversely affected or are reasonably likely to materially adversely
affect the continued supply (either for clinical purposes or in bulk) of the
active ingredients of the compounds of the Company and its Subsidiaries
currently used in clinical trials.
(v) Investigational Compounds. As of the date of this
Agreement, to the Company's knowledge, there are no facts or circumstances that
have materially adversely affected or that management of the Company has
determined are reasonably likely to
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materially adversely affect the commercialization of its compounds, other than
factors that are generally applicable to the development and commercialization
of pharmaceutical compounds that are not specific to the Company or such
compounds.
(w) Certain Agreements. (i) All contracts listed as an exhibit
to the Company's Annual Report on Form 10-K under the rules and regulations of
the SEC relating to the business of the Company and its Subsidiaries and (ii)
any other agreement within the meaning set forth in item 601(b)(10) of
Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations (all of
which are listed on Schedule 6.1(w)) (the "Company Material Contracts") are
valid and in full force and effect, except to the extent they have previously
expired in accordance with their terms and other than as is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Neither the Company nor its Subsidiaries has violated any provision
of, or committed or failed to perform any act which, with or without notice,
lapse of time, or both, is reasonably likely to constitute a default under the
provisions of, any such Company Material Contract, and neither the Company nor
any of its Subsidiaries has received notice that any party to any Company
Material Contract intends to cancel, terminate or otherwise modify the terms of
any applicable Company Material Contract, except in each case, as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company. To the knowledge of the Company, no counterparty to any
such Company Material Contract has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both,
is reasonably likely to constitute a default or other breach under the
provisions of, such Company Material Contract, except for defaults or breaches
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries is a party to, nor are any of their assets bound by, any agreement,
arrangement, commitment or understanding with any company engaged primarily in
the pharmaceutical business, other than as listed on Schedule 6.1(w).
(x) Schedule 14D-9; Offer Documents. Neither the Schedule
14D-9, any other document required to be filed by the Company with the SEC in
connection with the transactions contemplated hereby, nor any information
supplied by the Company for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, any such other filings by the Company, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they are
made, not misleading. The Schedule 14D-9, any other document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement will, when filed by the Company with the SEC,
comply as to form in all material respects with the applicable provisions of the
Exchange Act and the rules and
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regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to the statements made in any of the
foregoing documents based on and in conformity with information supplied by or
on behalf of Parent or Merger Sub in writing specifically for inclusion therein.
(y) Required Vote of Company Stockholders. Unless the Merger
may be consummated in accordance with Section 253 of the DGCL, the only vote of
the stockholders of the Company required to adopt this Agreement and the Stock
Option Agreement and to approve the Merger and the transactions contemplated
hereby and thereby, is the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock (the "Company Requisite Vote").
6.2. Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub each hereby represent and warrant to the Company, except
as set forth in the Disclosure Schedule delivered to the Company on the date of
this Agreement (the "Parent Disclosure Schedule"), as follows:
(a) Capitalization of Merger Sub. The authorized capital stock
of Merger Sub consists of one thousand (1,000) shares of Common Stock, par value
$.01 per share, all of which are validly issued and outstanding. All of the
issued and outstanding capital stock of Merger Sub is, and upon the consummation
of the Offer and at the Effective Time will be, owned by Parent, and there are
(i) no other shares of capital stock or other voting securities of Merger Sub,
(ii) no securities of Merger Sub convertible into or exchangeable for shares of
capital stock or voting securities of Merger Sub and (iii) no options or other
rights to acquire from Merger Sub, and no obligations of Merger Sub to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Merger Sub. Merger Sub
has not conducted any business prior to the date hereof and has no, and prior to
the Effective Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this
Agreement, the Offer and the Merger and the other transactions contemplated by
this Agreement.
(b) Organization, Good Standing and Qualification. Each of
Parent and its Subsidiaries is a corporation duly organized, validly existing
and in good standing (where such concept is recognized) under the laws of its
respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is qualified to do business and
is in good standing as a foreign corporation in each jurisdiction (where such
concept is recognized) where the ownership or operation of its properties or
conduct of its business requires such qualification, except where the failure to
be so qualified or in such good standing, when taken together with all other
such failures, is not reasonably likely to prevent, materially delay or
materially impair the ability of Parent and Merger Sub to consummate the
transactions contemplated by this
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Agreement, the Stock Option Agreement and the Shareholders Agreement. Parent has
made available to the Company a complete and correct copy of Parent's and Merger
Sub's certificate of incorporation and bylaws, as amended to the date hereof.
Parent's and Merger Sub's certificate of incorporation and bylaws so delivered
are in full force and effect.
(c) Corporate Authority. No vote of holders of capital stock
of Parent is necessary to approve this Agreement, the Offer and the Merger and
the other transactions contemplated hereby. Each of Parent and Merger Sub has
all requisite corporate power and authority and each has taken all corporate
action (including approval of the shareholders of Merger Sub) necessary in order
to execute, deliver and perform its obligations under this Agreement and to
consummate the Offer and the Merger. Parent has all requisite power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under the Stock Option Agreement. This
Agreement is a valid and binding agreement of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms. The Stock
Option Agreement is a valid and binding agreements of Parent enforceable against
Parent in accordance with its respective terms.
(d) Governmental Filings; No Violations. (i) Other than any
filings and/or notices required (A) pursuant to Section 2.3, (B) under the HSR
Act and the Exchange Act and (C) such filings or consents, registrations,
approvals, permits or authorizations as may be required under the laws of the
competition or antitrust laws of jurisdictions outside the United States, no
notices or other filings are required to be made by Parent or Merger Sub with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Parent or Merger Sub from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by Parent and
Merger Sub or the execution and delivery of the Stock Option Agreement and the
License Agreement by Parent or the consummation by Parent and Merger Sub of the
Offer and the Merger and the other transactions contemplated hereby and by the
Stock Option Agreement, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to prevent, materially delay
or materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement, the Stock Option Agreement and the
License Agreement.
(ii) The execution, delivery and performance of this
Agreement and the Stock Option Agreement, by Parent and Merger Sub, as the case
may be, do not and will not, and the consummation by Parent and Merger Sub of
the Offer and the Merger and the other transactions contemplated hereby and by
the Stock Option Agreement, will not, constitute or result in (A) a breach or
violation of, or a default under, the certificate or bylaws of Parent and Merger
Sub or the comparable governing instruments of any of its Subsidiaries, (B) a
breach or violation of, or a default under, the acceleration of or the creation
of a lien, pledge, security interest or other encumbrance on
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the assets of Parent or any of its Subsidiaries (with or without notice, lapse
of time or both) pursuant to, any Contracts binding upon Parent or any of its
Subsidiaries or any Law or governmental or non-governmental permit or license to
which Parent or any of its Subsidiaries is subject, or (C) any change in the
rights or obligations of any party under any of the Contracts, except, in the
case of clause (B) or (C) above, for breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to prevent, materially delay or materially impair the ability of Parent
or Merger Sub to consummate the transactions contemplated by this Agreement.
(e) Litigation. Except as disclosed in the Parent Reports
filed prior to the date hereof, and except for matters which are not,
individually or in the aggregate, reasonably likely to prevent or materially
delay or materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement, the Stock Option Agreement and the
License Agreement, there are no civil, criminal, administrative or regulatory
actions, suits, claims, hearings, investigations or proceedings pending or, to
the knowledge of Parent, overtly threatened against Parent or any of its
Subsidiaries.
(f) Compliance. Neither Parent nor any of its Subsidiaries is
in default or violation of, (i) any Law applicable to Parent or any of its
Subsidiaries or by which its or any of their respective properties are bound, or
(ii) any Contract to which Parent or any or its Subsidiaries is a party or by
which Parent or any of its Subsidiaries or its or any of their respective
properties are bound or affected, except for any such defaults or violations
that, individually or in the aggregate, are not reasonably likely to prevent,
materially delay or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(g) Brokers and Finders. Neither Parent nor any of its
Subsidiaries, officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger or the other transactions contemplated by this
Agreement, the Stock Option Agreement or the Shareholders Agreement.
(h) Financing. Parent will have the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Merger Sub at or prior to the consummation of the
Offer and the Merger, as applicable.
(i) Offer Documents. The Offer Documents and any other
documents to be filed by Parent with the SEC or any other Government Entity in
connection with the Merger and the other transactions contemplated hereby will
(in the case of the Offer Documents and any such other documents filed with the
SEC under the Securities Act or the Exchange Act) comply as to form in all
material respects with applicable provisions
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of the Exchange Act and the Securities Act, respectively, and the rules and
regulations thereunder. None of the Offer Documents, any other documents
required to be filed by Parent with the SEC in connection with the transactions
contemplated hereby, nor any information supplied by Parent for inclusion in the
Schedule 14D-9 or in the information required to be distributed to the
stockholders of the Company pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder as is necessary to enable Parent's designees
to be elected to the Company's Board pursuant to Section 1.4 hereof shall, at
the respective times the Offer Documents or any amendments and supplements
thereto, any such other filings by Parent or Purchaser are filed with SEC or are
first published, sent or given to stockholders of the Company, as the case may
be, contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. Notwithstanding the foregoing, neither Parent nor Merger
Sub makes any representation or warranty with respect to the statements made in
any of the foregoing documents based on and in conformity with information
supplied by or on behalf of the Company in writing specifically for inclusion
therein.
ARTICLE VII
Covenants
7.1. Company Interim Operations. Except as set forth in the
document entitled "Schedule 7.1" furnished to the Company by Parent prior to the
execution and delivery of this Agreement, the Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise consent in writing (such consent
not to be unreasonably withheld or delayed) and except as otherwise expressly
contemplated by this Agreement and the Stock Option Agreement):
(a) the business of it and its Subsidiaries shall be
conducted, in all material respects, in the ordinary and usual course and, to
the extent consistent therewith, it and its Subsidiaries shall use their
respective commercially reasonable best efforts to preserve its business
organization substantially intact and substantially maintain its existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
(b) it shall not (i) issue, sell, pledge, dispose of or
encumber any capital stock owned by it in any of its Subsidiaries; (ii) amend
its certificate or bylaws or amend, modify or terminate the Rights Agreement,
except as set forth in Section 6.1(s) hereof; (iii) split, combine or reclassify
its outstanding shares of capital stock; (iv) declare, set aside or pay any
dividend payable in cash, stock or property in respect of any capital stock, or
(v) repurchase, redeem or otherwise acquire, except in connection with the
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Stock Plans, or permit any of its Subsidiaries to purchase or otherwise acquire,
any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class or any Voting Debt or any other property or assets (other than (A) the
issuance of Shares pursuant to options outstanding on the date of this Agreement
under the Stock Plans and the issuance of Shares under the Company's Employee
Stock Purchase Plan and (B) the issuance of Shares upon conversion of
Convertible Preferred Stock outstanding on the date of this Agreement); (ii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness or other liability;
or (iii) make any commitments for, make or authorize any capital expenditures
or, by any means, make any acquisition of, or investment in, assets or stock of
any other Person or entity in each case, involving amounts in excess of $100,000
in the aggregate other than in the ordinary and usual course;
(d) Except as may be required by existing contractual
commitments or as required by applicable law, neither it nor any of its
Subsidiaries shall (i) enter into any new agreements or commitments for any
severance or termination pay to, or enter into employment or severance agreement
with, any of its directors, officers or employees, including adding new
participants to the Company's Management Change of Control Plan or (ii)
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Compensation and Benefit Plans or increase or
accelerate the salary, wage, bonus or other compensation of any employees,
officers or directors (except for increases in salaries, wages and cash bonuses
of nonexecutive employees made in the ordinary course of business consistent
with past practice) or pay or agree to pay any pension, retirement allowance or
other employee benefit not required by any existing Compensation and Benefit
Plan;
(e) neither it nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or modify, amend or terminate any
of its material Contracts or waive, release or assign any material rights or
claims;
(f) neither it nor any of its Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and usual
course of business;
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(g) except as may be required as a result of a change in law
or in generally accepted accounting principles, neither it nor any of its
Subsidiaries shall change any of the accounting practices or principles used by
it;
(h) neither it nor any of its Subsidiaries shall adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization of the Company or any
of its subsidiaries not constituting an inactive Subsidiary (other than the
Merger);
(i) it shall not suffer or permit capital expenditures made or
incurred by the Company and its Subsidiaries for any period to exceed $100,000
except for expenses incurred in connection with the transactions contemplated by
this Agreement; and
(j) neither it nor any of its Subsidiaries will offer to, or
enter into an agreement to, do any of the foregoing.
7.2. Acquisition Proposals. The Company shall, and shall use
its best efforts to cause its nonstockholder affiliates and the officers,
directors and employees of the Company and its Subsidiaries to, and shall
instruct its stockholder affiliates and the representatives and agents of the
Company and its Subsidiaries (including, without limitation, any investment
banker, attorney or accountant retained by the Company or any of its
Subsidiaries) to, immediately cease and terminate any existing activities,
discussions or negotiations, if any, with any parties (other than Parent and
Merger Sub, any affiliate or associate of Parent and Merger Sub or any designees
of Parent and Merger Sub) conducted heretofore with respect to any acquisition
or exchange of all or any material portion of the assets of, or more than 20% of
the equity interest in, the Company or any of its Subsidiaries (by direct
purchase from the Company, tender or exchange offer or otherwise) or any
business combination, merger or similar transaction (including an exchange of
stock or assets) with or involving the Company or any Subsidiary of the Company
(an "Acquisition Transaction"), other than the Offer and the Merger. Except as
set forth in this Section 7.2, the Company shall not, and shall use its best
efforts to cause its nonstockholder affiliates and the officers, directors and
employees of the Company and its Subsidiaries not to, and shall instruct its
stockholder affiliates and the representatives and agents of the Company and its
Subsidiaries (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) not to, directly
or indirectly, knowingly encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any nonpublic information or data
(other than the Company's standard public information package) to, any
corporation, partnership, person or other entity or group (other than Parent and
Merger Sub, any affiliate or associate of Parent and Merger Sub or any designees
of Parent and Merger Sub) with respect to any inquiries or the making of any
offer or proposal (including, without limitation, any offer or proposal to the
stockholders of the Company) concerning an Acquisition Transaction (an
"Acquisition Proposal" (it being understood that an
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Acquisition Proposal that is conditioned upon the completion of due diligence
shall be deemed to constitute a bona fide Acquisition Proposal if such proposal
otherwise meets the definition of Acquisition Proposal)) or otherwise knowingly
facilitate any effort or attempt to make or implement an Acquisition Proposal;
provided, however, that prior to the Merger Sub beneficially owning a majority
of the then outstanding Shares, the Company may furnish information and access,
but only in response to a request for information or access, to any person or
entity making a bona fide written Acquisition Proposal to the board of directors
of the Company after the date hereof which was not knowingly encouraged,
solicited or initiated by the Company or any of its affiliates or any director,
employee, representative or agent of the Company or any of its Subsidiaries
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) on or after the date hereof
and may participate in discussions and negotiate with such person or entity
concerning any such Acquisition Proposal and may authorize the Company to enter
into a binding written agreement concerning a Superior Proposal (as defined
below), if and only if, in any such case, (i) the board of directors of the
Company determines in good faith, (A) after consultation with outside counsel to
the Company to the effect that failing to provide such information or access or
to participate in such discussions or negotiations or so to authorize, as the
case may be, is reasonably likely to constitute a breach of such board's
fiduciary duties under applicable law, that failing to provide such information
or access or to participate in such discussions or negotiations or to so
authorize, as the case may be, is reasonably likely to constitute a breach of
such board's fiduciary duties under applicable law, and (B) after consultation
with the financial advisors to the Company to such effect, that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person or entity making the proposal and would, if consummated, result in a
transaction more favorable to the Company's stockholders from a financial point
of view than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal as to which both of the determinations referred
to in subclauses (A) and (B) above have been made being referred to in this
Agreement as a "Superior Proposal"), and (ii) the Company receives from the
person or entity making such bona fide written Acquisition Proposal an executed
confidentiality agreement the terms of which are (without regard to the terms of
such Acquisition Proposal) (A) no less favorable to the Company, and (B) no less
restrictive to the person or entity making such bona fide written Acquisition
Proposal than those contained in the Confidentiality Agreement, dated as of June
21, 1999, referring to Parent as the "Recipient" (the "Company Confidentiality
Agreement"), between the Company and Parent. Nothing in this Agreement shall
prohibit the Board of Directors of the Company from, to the extent applicable,
complying with Rule 14e-2 or 14D-9 promulgated under the Exchange Act with
regard to an Acquisition Proposal. The Company will notify Parent within 48
hours if any such inquiries or proposals are received by, any such information
is requested from, or any such negotiations or discussions are sought to be
initiated or continued with the Company and shall in such
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notice indicate the identity of the offeror and the material terms and
conditions of any such proposal and thereafter shall keep Parent reasonably
informed, on a current basis, of the status and material terms of such proposals
and the status of such negotiations or discussions, providing copies to Parent
of any Acquisition Proposals made in writing. The Company shall provide Parent
with three business days advance notice of, in each and every case, its
intention to either enter into any agreement with or to provide any information
to any person or entity making any such inquiry or proposal. The Company agrees
not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party and will
use its best efforts to enforce any such agreements at the request of and on
behalf of Parent. The Company will inform the individuals or entities referred
to in the first sentence of this Section 7.2 of the obligations undertaken in
this Section 7.2. The Company also will promptly request each person or entity
which has executed, within 12 months prior to the date of this Agreement, a
confidentiality agreement in connection with its consideration of acquiring the
Company to return or destroy all confidential information heretofore furnished
to such person or entity by or on behalf of the Company.
7.3. Company Stockholder Approval; Proxy Statement
(a) If approval or action in respect of the Merger by the
stockholders of the Company is required by applicable law, the Company, acting
through the Company Board, shall (i) call as promptly as practicable following
consummation of the Offer, a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of voting upon the Merger, (ii) hold the
Company Stockholders Meeting as soon as practicable following the purchase of
Shares pursuant to the Offer, and (iii) recommend to its stockholders the
approval of the Merger. Notwithstanding the foregoing, the Company Board may
withdraw, modify or amend any recommendation that the Stockholders approve the
merger if the Company has received an Acquisition Proposal which in accordance
with Section 7.2 is a Superior Proposal. The record date for the Company
Stockholders Meeting shall be a date subsequent to the date on which Parent or
Merger Sub becomes the a record holder of Shares purchased pursuant to the
Offer. At the Company Stockholders Meeting, Parent and Merger Sub shall cause
all shares then owned beneficially or of record by them to be voted in favor of
approval and adoption of this Agreement, the Merger and the transactions
contemplated hereby. Notwithstanding the foregoing, if Parent, Merger Sub or any
other subsidiary of Parent shall acquire at least 90% of the outstanding Shares
and outstanding Preferred Stock, the parties shall take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a stockholders meeting in
accordance with Section 253 of the DGCL.
(b) If required by applicable Law, the Company will, as soon
as practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement (such proxy statement, and any amendments or
supplements thereto, the
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"Proxy Statement") or , if applicable, an information statement with the SEC
with respect to the Company Stockholders Meeting and will use its best efforts
to respond to any comments of the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. Parent and Merger Sub shall furnish to the Company all information
regarding Parent, Merger Sub and their affiliates that may be required (pursuant
to the Exchange Act and other applicable Laws) to be set forth in the Proxy
Statement. The Company shall give Parent and its counsel the opportunity to
review the Proxy Statement prior to it being filed with the SEC and shall give
Parent and its counsel the opportunity to review all amendments and supplements
to the Proxy Statement and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of the Company and Parent agrees to use its best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the stockholders of the Company. If at any time prior to the
approval of this Agreement by the Company's stockholders there shall occur any
event which should be set forth in an amendment or supplement to the Proxy
Statement, the Company will prepare and mail to its stockholders such an
amendment or supplement.
(c) The Company represents and warrants that the Proxy
Statement will comply in all material respects with the Exchange Act and, at the
respective times filed with the SEC and distributed to stockholders of the
Company, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation or
warranty as to any information included in the Proxy Statement that was provided
by Parent or Merger Sub. Parent represents and warrants that none of the
information supplied by Parent or Merger Sub for inclusion in the Proxy
Statement will, at the respective times filed with the SEC and distributed to
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(d) Following the consummation of the Offer, the Company shall
use its best efforts to obtain the necessary approvals by its stockholders of
the Merger, this Agreement and the transactions contemplated hereby.
7.4. Approvals and Consents; Cooperation. The Company and
Parent shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) their respective commercially reasonable best efforts to
take or cause to be taken all
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actions, and do or cause to be done all things, necessary, proper or advisable
under this Agreement, the Stock Option Agreement, the Shareholders Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement, the Stock Option Agreement and the
Shareholders Agreement as soon as practicable, including preparing and filing as
promptly as practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as
practicable all permits, consents, approvals and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Offer and the Merger or any of the other transactions
contemplated by this Agreement, the Stock Option Agreement and the Shareholders
Agreement. In particular, the Company and Parent each agree to use commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and
do, or cause to be done, such things as may be necessary under federal or state
securities laws or the HSR Act applicable to or necessary for, and will file as
soon as reasonably practicable and, if appropriate, use commercially reasonable
efforts to have declared effective or approved, all documents and notifications
with the SEC and other governmental or regulatory bodies (including, without
limitation, the FDA) that they deem necessary or appropriate for, the
consummation of the Offer and the Merger or any of the other transactions
contemplated hereby and each party shall give the other information reasonably
requested by such other party pertaining to it and its subsidiaries and
affiliates to enable such other party to take such actions. Each of the Company,
Parent and Merger Sub agrees to use commercially reasonable efforts to contest
and resist any action, including legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) that is
in effect and that restricts, prevents or prohibits the consummation of the
Offer and the Merger or any of the other transactions contemplated by this
Agreement, including, without limitation, by pursuing available avenues of
administrative and judicial appeal. Each of the Company, Parent and Merger Sub
also agrees to use commercially reasonable efforts to take any and all actions
necessary to avoid or eliminate each and every impediment under any antitrust
law that may be asserted by any governmental antitrust authority or any other
party so as to enable the parties to close by the date specified in Section
9.2(i) the transactions contemplated hereby; provided, however, that nothing in
this Section 7.4 shall require, or be construed to require, Parent to proffer
to, or agree to, sell or hold separate and agree to sell, before or after the
Effective Time, any assets, businesses, or interest in any assets or businesses
of Parent, the Company or any of their respective affiliates (or to consent to
any sale, or agreement to sell, by the Company of any of its assets or
businesses) or to agree to any material changes or restriction in the operations
of any such assets or businesses; and provided, further, that nothing in this
Section 7.4 shall require, or be construed to require, a proffer or agreement
that would, in the good faith judgment of Parent, be reasonably likely to have a
material adverse effect on the benefits to Parent of the transactions
contemplated by this Agreement. Subject to applicable Laws relating to the
exchange of
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information, Parent and the Company shall have the right to review in advance,
and to the extent practicable each will consult the other on, all the
information relating to Parent or the Company, as the case may be, and any of
their respective Subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Offer or the Merger and the other transactions contemplated
by this Agreement, the Stock Option Agreement and the Shareholders Agreement. In
exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
7.5. Filings; Other Actions; Notification. (a) The Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning itself, its subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement or any other statement, filing, notice or
application made by or on behalf of Parent, the Company or any of their
respective subsidiaries to any Governmental Entity in connection with the Offer
or the Merger and the transactions contemplated by this Agreement, the Stock
Option Agreement and the Shareholders Agreement.
(b) The Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
their respective subsidiaries, from any third party or any Governmental Entity
with respect to the Offer or the Merger and the other transactions contemplated
by this Agreement, the Stock Option Agreement and the Shareholders Agreement.
The Company shall give prompt notice to Parent of any change that has resulted
in or is reasonably likely to result in a Company Material Adverse Effect and
Parent shall give the Company prompt notice of any event, fact, circumstance or
occurrence that would be reasonably likely to have an adverse effect on Parent's
or Merger Sub's ability to complete the Offer or the Merger or to comply with
their obligations contained in this Agreement or in the Stock Option Agreement.
7.6. Access. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement, upon reasonable notice, the
Company shall afford to the officers, employees, accountants, counsel, financial
advisors and other representatives of Parent ("Parent Representatives")
reasonable access to all of its and its Subsidiaries properties, books,
contracts, commitments and records (including security position listings or
other information concerning beneficial and record owners of the Company's
securities) and its officers, management employees and representatives and,
during such period, the Company shall furnish promptly to Parent, consistent
with its legal obligations, all information concerning its business, properties
and personnel as the other party may reasonably request. Such information shall
be held in confidence to the
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extent required by, and in accordance with, the provisions of the Company
Confidentiality Agreement which shall remain in full force and effect.
7.7. De-registration. The Company shall use its best efforts
to cause the Shares to be de-registered from the NASDAQ National Market and
de-registered under the Exchange Act as soon as practicable following the
Effective Time.
7.8. Publicity. The initial press release relating to the
Offer and this Agreement shall be a joint press release, the content of which
shall be mutually agreed upon by the Company and Parent, and thereafter the
Company and Parent shall consult with each other prior to issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated by this Agreement and the Stock Option Agreement and prior to
making any filings with any Governmental Entity with respect to the transactions
contemplated by this Agreement.
7.9. Benefits.
(a) Stock Options. (i) At the Effective Time, each outstanding
Company Option under the Stock Plans, whether vested or unvested, shall be
deemed to constitute an option to acquire (a "New Parent Option"), on the same
terms and conditions as were applicable under such Company Option, the number of
shares of Common Stock of Parent (rounded to the nearest whole number) equal to
the product of (A) the number of Shares issuable upon exercise of such Company
Option and (B) the Price Per Share divided by the average of the closing sales
prices of Common Stock of Parent on the New York Stock Exchange for the ten (10)
consecutive days immediately prior to and including the day preceding the
Effective Time, at an exercise price per share (rounded to the nearest whole
cent) equal to (x) the aggregate exercise price for the Shares otherwise
purchasable pursuant to such Company Option divided by (y) the aggregate number
of shares of Common Stock of Parent purchasable pursuant to the New Parent
Option (as calculated immediately above); provided, however, that in the case of
any Company Option to which Section 422 of the Code applies, the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in accordance with the
foregoing, subject to such adjustments as are necessary in order to satisfy the
requirements of Section 424(a) of the Code. At or prior to the Effective Time,
the Company shall take all necessary actions to permit the assumption of the
unexercised Company Options by Parent pursuant to this Section and shall take
all action necessary to cause the funds held in the Company's Employee Stock
Purchase Plan to be used to purchase outstanding Shares through open market
transactions so that such Shares will be converted into the right to receive
cash in the Merger; provided that thereafter the Company shall terminate the
Company's Employee Stock Purchase Plan.
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(ii) Effective at the Effective Time, Parent shall assume, as
a New Parent Option, each outstanding Company Option in accordance with this
Section and with the terms of the Stock Plan under which it was issued and the
stock option agreement by which it is evidenced. Not later than thirty calendar
days after the Closing Date, Parent shall file a registration statement under
the Securities Act of 1933 on Form S-8, or other appropriate form, covering
shares of Parent Common Stock subject to such New Parent Options.
(b) Employee Benefits. Parent agrees that during the period
commencing at the Effective Time and ending on the first anniversary thereof,
the Employees will continue to be provided with benefits under employee benefit
plans (other than stock options or other plans involving the issuance of
securities of the Company or Parent) which in the aggregate are substantially
comparable to those currently provided by the Company to such Employees. Parent
will cause each employee benefit plan of Parent in which Employees are eligible
to participate to take into account for purposes of eligibility and vesting
thereunder the service of such Employees with the Company as if such service
were with Parent, to the same extent that such service was credited under a
comparable plan of the Company and such service period would have been credited
to an employee of the Parent participating in the relevant plan. For the first
plan year ending after the Effective Time, any pre-existing condition exclusion
under any Purchase Benefit Plan providing medical or dental benefits shall be no
more restrictive for any Employee who, immediately prior to commencing
participation in such Purchaser Benefit Plan, was participating in a Company
Benefit Plan providing medical or dental benefits and had satisfied any
pre-existing condition provision under such Company Benefit Plan. Any expenses
that were taken into account under a Company Benefit Plan providing medical or
dental benefits in which the Employee participated immediately prior to
commencing participation in a Purchaser Benefit Plan providing medical or dental
benefits shall be taken into account to the same extent under such Purchaser
Benefit Plan, in accordance with the terms of such Purchaser Benefit Plan, for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions and life-time benefit limits. Parent will, and will
cause the Surviving Corporation to, honor in accordance with their terms (i) all
employee benefit obligations to Employees accrued as of the Effective Time and
(ii) to the extent set forth on Schedule 6.1(h)(i), all employee severance plans
in existence on the date hereof and all employment or severance agreements
entered into prior to the date hereof.
7.10. Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in connection with
the transactions contemplated in Article V, and Parent shall reimburse the
Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 9.5(b), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement, the Stock Option
Agreement, the Shareholders Agreement, the Offer and the Merger and the other
transactions contemplated by this Agreement, the Stock Option
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Agreement and the Shareholders Agreement shall be paid by the party incurring
such expense.
7.11. Indemnification; Directors' and Officers' Insurance. (a)
From and after the earliest date on which Merger Sub owns at least a majority of
the outstanding Shares on a fully diluted basis, Parent agrees that it will
indemnify, defend and hold harmless each individual and every person who is or
was a director or officer of the Company or any of its Subsidiaries prior to the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding, inquiry or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time
(including transactions contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time (and Parent shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Person is not
entitled to indemnification).
(b) From and after the earliest date on which Merger Sub owns
at least a majority of the outstanding Shares on a fully diluted basis, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of the Company pursuant to each indemnification agreement listed in
Schedule 7.11(b) and any indemnification provision or any exculpation provision
set forth in the Company's certificate of incorporation or bylaws in effect on
the date hereof. The certificate of incorporation and bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification and
exculpation from liability set forth in the Company's certificate of
incorporation and bylaws on the date of this Agreement, and during the period
commencing on the earliest date in which Merger Sub purchases Shares pursuant to
the Offer and ending on the sixth anniversary of the Effective Time, such
provisions shall not be amended, repealed or otherwise modified in any manner
that would adversely affect the rights thereunder of any of the Indemnified
Parties.
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 7.11, upon learning of any such claim,
action, suit, proceeding, inquiry or investigation, shall promptly notify Parent
thereof. In the event of any such claim, action, suit, proceeding, inquiry or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume the defense thereof
and Parent shall be liable to such Indemnified Parties for the legal expenses of
one counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof unless there is a conflict of
interest between the Indemnified Parties and Parent, in which event Parent shall
be liable to the Indemnified Parties for the fees and expenses of each
Indemnified Parties' counsel,
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(ii) the Indemnified Parties will cooperate in the defense of any such matter
and (iii) Parent shall not be liable for any settlement effected without its
prior written consent and no Indemnified Party shall be liable for any
settlement effected without its prior written consent unless such settlement
includes a complete unconditional release of all claims against all Indemnified
Parties; and provided, further, that Parent shall not have any obligation
hereunder to any Indemnified Party if and when a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Parent and the Surviving Corporation jointly
and severally agree to pay all expenses, including attorneys' fees, that may be
incurred by the Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 7.11.
(d) Notwithstanding any contrary provision of this Agreement,
prior to the Effective Time, the Company may purchase insurance coverage
extending for a period of six years after the Effective Time the level and scope
of the Company's directors' and officers' liability insurance coverage in effect
as of the date hereof; provided that the aggregate annual premium payable for
such insurance shall not exceed 175% of the last annual premium paid for such
coverage prior to the date hereof. Through the sixth anniversary of the
Effective Time, Parent shall maintain in effect, for the benefit of the
Indemnified Parties, such insurance coverage, and subject to the limitations in
the preceding sentence, shall pay the annual premium for such insurance
coverage. In the event the annual premium payable for such insurance coverage
exceeds 175% of the last annual premium paid by the Company for such coverage,
Parent shall be obligated to obtain and maintain in effect a policy with the
greatest amount of coverage available for a cost not exceeding 175% of such
amount.
(e) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section.
(f) The provisions of this Section shall survive the earliest
date on which Merger Sub owns at least a majority of the outstanding Shares on a
fully diluted basis and the consummation of the Merger and the Effective Time,
are intended to be for the benefit of, and shall be enforceable by, each of the
Indemnified Parties as intended third party beneficiaries and their heirs and
estates and shall be binding on all successors and assigns of Parent and the
Surviving Corporation.
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7.12. Other Actions by the Company and Parent.
(a) Rights. Prior to the consummation of the Offer, the
Company Board shall take all necessary action to ensure that the representation
and warranty in Section 6.1(s) is accurate.
(b) Antitakeover Statutes. If any Antitakeover Statute is or
may become applicable to the Offer or the Merger or the other transactions
contemplated by this Agreement, the Stock Option Agreement, or the Shareholders
Agreement, each of Parent and the Company and its board of directors shall grant
such approvals and take such lawful actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement, the Stock Option Agreement or the Shareholders
Agreement or by the Offer or the Merger and otherwise act to eliminate or
minimize the effects of such statute or regulation on such transactions.
7.13. Convertible Preferred Stock. Prior to the Effective
Time, the Company and Parent shall take all action necessary to provide that on
and after the Effective Time, the Convertible Preferred Stock will be
convertible only into the Merger Consideration.
ARTICLE VIII
Conditions
8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Closing of each of the
following conditions:
(a) Stockholder Approval. If the approval of this Agreement
and the Merger by the holders of Shares is required by applicable law, this
Agreement shall have been duly adopted by holders of Shares constituting the
Company Requisite Vote.
(b) Regulatory Consents. Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) Litigation. (i) No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Offer or Merger (collectively, an
"Order"); provided however, that prior to invoking this provision, each party
shall use its commercially reasonable best efforts to have any such Order lifted
or withdrawn, and (ii) no Governmental Entity shall have instituted any
proceeding seeking any such Order.
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(d) Completion of the Offer. Merger Sub shall have (i)
commenced the Offer pursuant to Section 1.1 hereof and (ii) purchased, pursuant
to the terms and conditions of such Offer, all shares of Company Common Stock
duly tendered and not withdrawn; provided, however, that neither Parent nor
Merger Sub shall be entitled to rely on the condition in clause (ii) above if
either of them shall have failed to purchase shares of Company Common Stock
pursuant to the Offer in breach of their obligations under this Agreement.
ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 8.1(a), by mutual written consent of the Company, Parent
and Merger Sub, by action of their respective boards of directors.
9.2. Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of Parent or the board of directors of the Company
if (i) the Merger shall not have been consummated by February 1, 2000, whether
such date is before or after the date of approval by the stockholders of the
Company referred to in Section 8.1(a); provided, however, that if a request for
additional information is received from the United States Federal Trade
Commission or the Antitrust Division of the United States Department of Justice
pursuant to the HSR Act or additional information is requested by a governmental
authority (a "Foreign Authority") pursuant to the antitrust, competition,
foreign investment, or similar laws or any foreign countries or supranational
commissions or boards that require pre-merger notifications or filings with
respect to the Merger (collectively, "Foreign Merger Laws"), then such date
shall be extended to the 30th day following certification by Parent and/or the
Company, as applicable, that Parent and/or the Company, as applicable, have
substantially complied with such request, but in any event not later than Xxxxx
0, 0000, (xx) the Company Stockholders Meeting shall have been convened, held
and completed and the approval referred to in Section 8.1(a) shall not have been
obtained thereat or at any adjournment or postponement thereof, provided
however, that Parent shall not be permitted to terminate the Agreement pursuant
to this clause (ii) if Parent or Merger Sub shall not have voted all Shares then
owned beneficially or of record by them in favor of approval and adoption of
this Agreement, the Merger and the transactions contemplated hereby as required
by Section 7.3(a), (iii) any Order permanently restraining, enjoining or
otherwise prohibiting the Offer or the Merger shall become final and
non-appealable (whether before or after the approval referred to in
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Section 8.1(a)) or (iv) if the Offer terminates or expires on account of the
failure of any condition specified in Exhibit A without Merger Sub having
purchased any Shares thereunder; provided that the right to terminate this
Agreement pursuant to clause (i) above shall not be available to any party that
has breached in any material respect its obligations under this Agreement in any
manner that shall have been the proximate cause of, or resulted in, the failure
to consummate the Merger by the date referred to in clause (i) of this Section
9.2 and, provided, further, that the right to terminate this Agreement pursuant
to clause (iii) of this Section 9.2 shall not be available to any party that has
breached its covenant in Section 7.4 to use commercially reasonable best efforts
to prevent such Order from being issued and to use commercially reasonable best
efforts to cause such Order to be vacated, withdrawn or lifted.
9.3. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 8.1(a), by action of the board of directors of the
Company:
(a) If (i) the Company is not in material breach of any of its
covenants or agreements in this Agreement, (ii) the board of directors of the
Company authorizes the Company, prior to Parent beneficially owning a majority
of the outstanding shares of Common Stock, and subject to complying with the
terms of this Agreement, to enter into a binding written agreement concerning a
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 to such notice, and (iii) Parent does not make, within three business
days of receipt of the Company's written notification of its intention to enter
into such an agreement, a written offer that is at least as favorable, from a
financial point of view, to the stockholders of the Company as the Superior
Proposal. The Company agrees (x) that it will not enter into a binding agreement
referred to in clause (ii) of the previous sentence until at least the first
calendar day following the third business day after it has provided the written
notice to Parent required thereby, (y) to notify Parent promptly if its
intention to enter into a written agreement referred to in such notice shall
change at any time after giving such notification and (z) that it will not
terminate this Agreement or enter into a binding agreement referred to in clause
(ii) of the previous sentence if Parent has, within the period referred to in
clause (x) of this sentence, made a written offer that is at least as favorable
to the Company's stockholders from a financial point of view as the Superior
Proposal; or
(b) If, prior to consummation of the Offer and prior to Parent
beneficially owning a majority of the outstanding shares of Common Stock, there
has been a material breach by Parent or Merger Sub of any representation,
warranty, covenant or agreement of Parent or Merger Sub contained in this
Agreement which has had, or is reasonably likely to have, the effect of
materially impairing the ability of Parent or Merger Sub to consummate the Offer
or the Merger (a "Terminating Parent Breach");
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provided, however, that, if such Terminating Parent Breach is curable by Parent
through the exercise of reasonable best efforts and such cure is reasonably
likely to be completed prior to the applicable date specified in Section 9.2(i),
then for so long as Parent continues to exercise reasonable best efforts to cure
such Terminating Parent Breach, the Company may not terminate this Agreement
under this Section 9.3(b); or
(c) If Merger Sub shall have failed to commence the Offer
within five Business Days after the date of this Agreement.
9.4. Termination by Parent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Parent and Merger Sub,
collectively beneficially owning a majority of the outstanding shares on a fully
diluted basis (so long as the Company has complied with its obligations under
Section 1.4 of this Agreement) by action of the Parent:
(a) If the board of directors of the Company shall have failed
to recommend, or shall have withdrawn or adversely modified its approval or
recommendation of, the Offer or the Merger or failed to reconfirm its
recommendation of the Offer or the Merger within five calendar days after a
written request by Parent to do so, or shall have resolved to do any of the
foregoing; or
(b) There has been a material breach by the Company of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement which would give rise to the failure of a condition set forth in
paragraph (c) of Exhibit A (a "Terminating Company Breach"); provided, however,
that, if such Terminating Company Breach is curable by the Company through the
exercise of reasonable best efforts and such cure is reasonably likely to be
completed prior to the applicable date specified in Section 9.2(i), then for so
long as the Company continues to exercise reasonable best efforts, Parent may
not terminate this Agreement under this Section 9.4(b).
9.5. Effect of Termination and Abandonment. (a) In the event
of termination of this Agreement and the abandonment of the Merger pursuant to
this Article IX, this Agreement (other than as set forth in Section 10.1) shall
become void and of no effect with no liability of any party hereto (or any of
its directors, officers, employees, agents, legal and financial advisors or
other representatives); provided, however, that except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability or
damages resulting from any willful breach of this Agreement.
(b) In the event that (i)(A) a bona fide Acquisition Proposal
shall have been made to the Company or any of its stockholders or any Person
shall have announced an intention (whether or not conditional) to make an
Acquisition Proposal with respect to the Company, and on or following the date
of this Agreement but prior to the date that the
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Offer is consummated and Parent owns a majority of the outstanding shares of
Common Stock, such Acquisition Proposal, announcement or intention is or becomes
publicly known, and (B) on or following the date of this Agreement and prior to
the time such Acquisition Proposal, announcement or intention is or becomes
publicly known, the occurrence of an event which would have a material adverse
effect on the ability of Parent and Merger Sub to consummate the Merger shall
not have become publicly known, and (C) on or following the date on which such
Acquisition Proposal, announcement or intention is or becomes publicly known,
this Agreement is terminated by either Parent or the Company pursuant to Section
9.2(i) and if terminated by Parent or Merger Sub, Parent or Merger Sub shall not
collectively beneficially own a majority of the outstanding Shares on a fully
diluted basis, or (ii) this Agreement is terminated (x) by the Company pursuant
to Section 9.3(a) or (y) by Parent pursuant to Section 9.4(a), or (z) pursuant
to Section 9.2(iv) as a result of the failure of the Company to satisfy any one
of the conditions set forth in paragraphs (e) or (f) of Annex A, then, subject
to Section 9.5(c), the Company (p) shall promptly, but in no event later than
two Business Days after the date of such termination if terminated by Parent or
Merger Sub and simultaneously with such termination if terminated by Company
(except as otherwise provided in the proviso to this sentence), pay Parent a
termination fee of $2 million in cash payable by wire transfer of same day
funds, and (q) shall promptly, but in no event later than two Business Days
after being notified of such by Parent, pay all of the charges and expenses
incurred by Parent or Merger Sub in connection with this Agreement, the Stock
Option Agreement and the Shareholders Agreement and the transactions
contemplated by this Agreement and the Stock Option Agreement and the
Shareholders Agreement, including, without limitation, fees and expenses of
accountants, attorneys and financial advisors, up to a maximum of $500,000, in
the aggregate; provided, however, that no termination fee shall be payable to
Parent by reason of Section 9.5(b)(i) unless and until (I) any person or entity
(other than Parent) (an "Acquiring Party") has within 9 months of such
termination entered into a definitive agreement to be acquired, by purchase,
merger, consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or any related series of transactions, a majority of the voting
power of the outstanding securities of the Company or (II) a definitive
agreement has been entered into with respect to a merger, consolidation or
similar business combination between the Company and an Acquiring Party or an
affiliate thereof as a result of which the stockholders of the Company
immediately prior to the transaction do not own at least 50% of the surviving
entity. The Company acknowledges that the agreements contained in this Section
9.5(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent and Merger Sub would not enter into
this Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 9.5(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a binding nonappealable judgment
rendered by a court of competent jurisdiction against the Company for the fee
set forth in this paragraph (b) the Company shall pay to Parent or Merger Sub
its costs and expenses (including
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attorneys' fees) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
(c) Parent agrees that the payment provided for in Section
9.5(b) shall be the sole and exclusive remedy of Parent upon termination of this
Agreement pursuant to Sections 9.3(a) or 9.4(a) and such remedy shall be limited
to the aggregate of the sums stipulated in such Section 9.5(b); provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement. In no event shall the Company be
required to pay to Parent more than one termination fee pursuant to Section
9.5(b)(p). Notwithstanding any other provision of this Agreement or the Stock
Option Agreement, any termination fee required to be paid to Parent pursuant to
Section 9.5(b)(p) shall be reduced (but not below zero) to the extent necessary
so that the sum of (1) the portion of any termination fee actually paid to
Parent pursuant to Section 9.5(b)(p), (2) the aggregate of all Cancellation
Amounts (as defined in the Stock Option Agreement) paid to Parent pursuant to
the Stock Option Agreement and (3) the proceeds actually received by Parent as
the result of selling Shares issued to Parent pursuant to the Stock Option
Agreement to a third party which acquires more than 50% of the Company's
outstanding voting securities (other than the Company or any of its affiliates)
shall not exceed $4.4 million. In no event shall (i) the sum of the portion of
any termination fee actually paid to Parent pursuant to Section 9.5(b)(p), and
the cash proceeds actually received by Parent as the result of selling Shares
issued to Parent pursuant to the Stock Option Agreement to a third party which
acquires more than 50% of the Company's outstanding voting securities (other
than the Company or any of its affiliates) exceed $4.4 million, or (ii) the sum
of the portion of any termination fees actually paid to Parent pursuant to
Section 9.5(b)(p), the aggregate Cancellation Amounts paid to parent pursuant to
the Stock Option Agreement and the cash proceeds actually received by parent as
the result of selling Shares issued to Parent pursuant to the Stock Option
Agreement to a third party which acquires more than 50% of the Company's
outstanding voting securities (other than the Company or any of its affiliates)
exceed $4.4 million.
ARTICLE X
Miscellaneous and General
10.1. Survival. This Article X and the agreements of the
Company, Parent and Merger Sub contained in Articles I, II, III, IV and V and
Sections 7.9 (Benefits), 7.10 (Expenses), and 7.11 (Indemnification; Directors'
and Officers' Insurance) shall survive the consummation of the Offer and the
Merger. This Article X and the agreements of the Company, Parent and Merger Sub
contained in Section 7.10 (Expenses), and Section 9.5 (Effect of Termination and
Abandonment) shall survive the termination of this Agreement. All other
agreements and covenants in this Agreement and all representations
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and warranties contained herein shall not survive the consummation of the Merger
or the termination of this Agreement other than the representations and
warranties set forth in Section 6.1(s) which shall survive termination of this
Agreement.
10.2. Modification or Amendment. Subject to the provisions of
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
10.3. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
10.4. Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
10.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. THE
PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN
THE COUNTY OF NEW CASTLE, DELAWARE SOLELY IN RESPECT OF THE INTERPRETATION AND
ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT, THE STOCK OPTION AGREEMENT AND
THE SHAREHOLDERS AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT,
THE STOCK OPTION AGREEMENT AND THE SHAREHOLDERS AGREEMENT, AND IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND HEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR
ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT, THAT IT IS NOT SUBJECT THERETO OR
THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE
IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS
AGREEMENT, THE STOCK OPTION AGREEMENT OR THE SHAREHOLDERS AGREEMENT OR ANY SUCH
DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO
IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR PROCEEDING
SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE OR FEDERAL COURT. THE
PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT
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JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH
DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 10.6 OR IN SUCH
OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, THE STOCK OPTION AGREEMENT OR
THE SHAREHOLDERS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE STOCK OPTION AGREEMENT OR THE SHAREHOLDERS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.5.
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10.6. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
if to Parent or Merger Sub
Xxxxx Xxxxxxx
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000 XX0XX-00
Whitehouse Station, N.J. 08889-0100
Fax: (000) 000-0000
with copies to:
Xxxx X. Xxxxxxxxxxx, Esq.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
if to the Company
Xxxxxxx X. Xxxxx
SIBIA Neurosciences, Inc.
000 Xxxxx Xxxx. Xxxxx
Xxxxx 000
Xx Xxxxx, XX 00000
fax: (000) 000-0000
with copies to:
Xxxxxxxxx X. Xxxx, Esq.
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.7. Entire Agreement. This Agreement (including any exhibits
hereto), the Stock Option Agreement, the Company Confidentiality Agreement and
the Parent Confidentiality Agreement constitute the entire agreement, and
supersede all other prior
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agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof.
10.8. No Third Party Beneficiaries. Except as provided in
Section 7.11 (Indemnification; Directors' and Officers' Insurance), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
10.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
10.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11. Specific Performance. The parties hereto each
acknowledge that, in view of the uniqueness of the subject matter hereof, the
parties hereto would not have an adequate remedy at law for money damages if
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
10.12. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section,
Schedule or Exhibit, such reference shall be to a Section of or Schedule or
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."
10.13. Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Parent may designate, by
written notice to the
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Company, another wholly owned direct subsidiary of Parent to be a Constituent
Corporation in lieu of Merger Sub, in the event of which, all references herein
to Merger Sub shall be deemed references to such other subsidiary. Any purported
assignment made in contravention of this Agreement shall be null and void.
10.14. Captions. The Article, Section and Paragraph captions
herein are for convenience of reference only and do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by duly authorized officers of the parties hereto as of the date
hereof.
SIBIA NEUROSCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: President, Chief
Executive Officer
MERCK & CO., INC.
By: /s/ Xxxx X. Xxxxxx
----------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
and Chief Financial
Officer
MC SUBSIDIARY CORP.
By: /s/ Xxxx X. Xxxxxx
----------------------
Name: Xxxx X. Xxxxxx
Title: President
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Merger Sub shall not be obligated to
accept for payment any shares of Company Common Stock until all Required
Regulatory Approvals shall have been obtained, made or satisfied including until
the expiration or termination of any waiting periods applicable under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and Merger Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC (including Rule 14e-l(c) under the
Exchange Act) pay for, and may delay the acceptance for payment of or payment
for, any shares of Company Common Stock tendered in the Offer and (subject to
the terms and conditions of the Agreement, including Section 1.1(b)) may amend,
extend or terminate the Offer if, (i) immediately prior to the Schedule
Expiration Date (as extended in accordance with clauses (x), (y) or (z) of
Section 1.1(b) of the Agreement) the Minimum Condition shall not have been
satisfied or (ii) prior to the expiration of the Offer any of the following
shall exist and be continuing:
(a) there shall be threatened or pending any action,
litigation or proceeding (hereinafter, an "Action") brought by any U.S.
Governmental Entity: (i) challenging the acquisition by Parent or Merger Sub of
shares of Company Common Stock or seeking to restrain or prohibit the
consummation of the Offer or the Merger; (ii) seeking to prohibit or impose any
material limitation on Parent's, Merger Sub's or any of their respective
affiliates' ownership or operation of all or any material portion of the
business or assets of the Company and its Subsidiaries taken as a whole or
Parent and its Subsidiaries taken as a whole that, in each case referred to in
this clause (ii) individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on the Company or Parent; or (iii) seeking to impose
material limitations on the ability of Parent or Merger Sub effectively to
acquire or hold, or to exercise full rights of ownership of, the shares of
Company Common Stock including the right to vote the shares of Company Common
Stock purchased by them on an equal basis with all other shares of Company
Common Stock on all matters properly presented to the shareholders of the
Company; or
(b) any U.S. statute, rule, regulation, order or injunction
shall be enacted, promulgated, entered, enforced or deemed to or become
applicable to the Offer or the Merger (and in each case, remain in effect), or
any other action shall have been taken, by any court of competent jurisdiction
or other U.S. Governmental Entity, that has any of the consequences referred to
in clauses (i) through (iii) of paragraph (a) above; or
(c) (i) The representations and warranties of the Company set
forth in this Agreement shall be true and correct as of the date of the
Agreement and as of the consummation of the Offer (except for those
representations and warranties made as of a
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specific date, which shall be true and correct as of such date), and considered
without regard to any qualification by, or references to, "material," "in all
material respects" or "Company Material Adverse Effect," except for such
failures of such representations and warranties to be true and correct that
individually or in the aggregate, do not have and are not reasonably likely to
have a Company Material Adverse Effect; or (ii) the Company shall have breached
or failed to comply in any material respect with any of its material
obligations, covenants or agreements under the Agreement and any such breach or
failure shall not have been substantially cured by the Company within five
Business Days after Parent provides written notice to the Company of such breach
or failure; or
(d) the Agreement shall have been terminated in accordance
with its terms; or
(e) any corporation, entity, "group" or "person" (as defined
in the Exchange Act), other than Parent, Merger Sub or any of the shareholders
that are party to the Shareholders Agreement (so long as such shareholders do
not become beneficial owners of any additional Shares after the date hereof and
so long as such shareholders do not breach any of the provisions of the
Shareholders Agreement), shall have acquired beneficial ownership of more than
20% of the outstanding Shares; or
(f) the Company's Board shall have modified or amended its
recommendation of the Offer in any manner adverse to Parent or Merger Sub or
shall have withdrawn its recommendation of the Offer or shall have recommended
acceptance of any Acquisition Proposal or shall have failed to reconfirm its
recommendation of the Offer within five calendar days after a written request by
Parent to do so, or shall have resolved to do any of the foregoing; or
(g) there shall exist (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over the counter market in the United States (other than
shortening of trading hours or any trading halt resulting from a specified
increase or decrease in a market index), (ii) a declaration of any banking
moratorium by federal or state authorities or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) imposed by federal
or state authorities on the extension of credit by lending institutions in the
United States, or (iii) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof.
The conditions set forth in clauses (a) through (g) are for
the sole benefit of Parent and Merger Sub and may be asserted by Parent and
Merger Sub regardless of the circumstances giving rise to such conditions and
may be waived by Parent and Merger Sub in whole or in part at any time and from
time to time, by express and specific action to that effect, in their reasonable
discretions. The failure by Parent or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such
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right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
The capitalized terms used in this Annex A shall have the
meanings set forth in the Agreement to which it is annexed.
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