EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of January 15, 2003
Among
XXXXXXX & XXXXXXX,
LONGBOW MERGER SUB, INC.
And
3-DIMENSIONAL PHARMACEUTICALS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger...................................................2
SECTION 1.02. Closing......................................................2
SECTION 1.03. Effective Time ..............................................2
SECTION 1.04. Effects of the Merger........................................3
SECTION 1.05. Certificate of Incorporation and By-laws.....................3
SECTION 1.06. Directors....................................................3
SECTION 1.07. Officers.....................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock......................................3
SECTION 2.02. Exchange of Certificates.....................................5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company................................................8
SECTION 3.02. Representations and Warranties of
Parent and Sub............................................43
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.........................................46
SECTION 4.02. No Solicitation.............................................53
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement;
Stockholders' Meeting.....................................56
SECTION 5.02. Access to Information; Confidentiality......................58
SECTION 5.03. Commercially Reasonable Efforts.............................58
SECTION 5.04. Company Stock Options; Warrants.............................60
SECTION 5.05. Indemnification, Advancement of
Expenses, Exculpation and Insurance.......................61
SECTION 5.06. Fees and Expenses...........................................62
SECTION 5.07. Public Announcements........................................63
SECTION 5.08. Stockholder Litigation......................................64
SECTION 5.09. Employee Matters............................................64
SECTION 5.10. Stockholder Agreement Legend................................65
SECTION 5.11. Consents and Other Action...................................66
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger.........................................66
SECTION 6.02. Conditions to Obligations of Parent
and Sub...................................................66
SECTION 6.03. Conditions to Obligation of the Company.....................68
SECTION 6.04. Frustration of Closing Conditions...........................69
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................................69
SECTION 7.02. Effect of Termination.......................................71
SECTION 7.03. Amendment...................................................71
SECTION 7.04. Extension; Waiver...........................................71
SECTION 7.05. Procedure for Termination or Amendment......................72
(ii)
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations
and Warranties............................................72
SECTION 8.02. Notices.....................................................72
SECTION 8.03. Definitions.................................................73
SECTION 8.04. Interpretation..............................................75
SECTION 8.05. Consents and Approvals......................................76
SECTION 8.06. Counterparts................................................76
SECTION 8.07. Entire Agreement; No Third-Party
Beneficiaries.............................................76
SECTION 8.08. GOVERNING LAW...............................................76
SECTION 8.09. Assignment..................................................76
SECTION 8.10. Specific Enforcement;
Consent to Jurisdiction...................................77
SECTION 8.11. Severability................................................77
Annex I Index of Defined Terms
Exhibit A Restated Certificate of Incorporation of the
Surviving Corporation
(iii)
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of January 15, 2003,
among XXXXXXX & XXXXXXX, a New Jersey
corporation ("Parent"), LONGBOW MERGER
SUB, INC., a Delaware corporation and a
wholly owned Subsidiary of Parent ("Sub"),
and 3- DIMENSIONAL PHARMACEUTICALS, INC.,
a Delaware corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par
value $.001 per share, of the Company ("Company Common Stock"), other than (i)
shares of Company Common Stock directly owned by Parent, Sub or the Company
and (ii) the Appraisal Shares, will be converted into the right to receive
$5.74 in cash;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, Parent and certain stockholders of the Company (the "Principal
Stockholders") entered into an agreement (the "Stockholder Agreement")
pursuant to which the Principal Stockholders agreed to vote, approve and adopt
this Agreement and to take certain other actions in furtherance of the
consummation of the Merger upon the terms and subject to the conditions set
forth in the Stockholder Agreement; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agree ments in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements
2
contained in this Agreement, and subject to the conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged
with and into the Company at the Effective Time. Following the Effective Time,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations
of Sub in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or (to the
extent permitted by law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by law)
waiver of those conditions), at the offices of Cravath, Swaine & Xxxxx,
Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another
time, date or place is agreed to in writing by Parent and the Company;
provided, however, that if all the conditions set forth in Article VI shall
not have been satisfied or (to the extent permitted by law) waived on such
second business day, then the Closing shall take place on the first business
day on which all such conditions shall have been satisfied or (to the extent
permitted by law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Delaware a certificate of merger
(the "Certificate of Merger") executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and, as soon as
practicable on or after the Closing Date, shall make all other filings or
recordings required
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under the DGCL. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, or
at such later time as Parent and the Company shall agree and shall specify in
the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Ninth Restated Certificate of Incorporation of the Company (the "Company
Certificate") shall be amended at the Effective Time to be in the form of
Exhibit A and, as so amended, such Company Certificate shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the direc tors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective suc cessors
are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company
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Common Stock or any shares of capital stock of Parent or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock. Each
share of Company Common Stock that is directly owned by the Company,
Parent or Sub immediately prior to the Effective Time shall automatically
be canceled and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.01(b) and
the Appraisal Shares) shall be converted into the right to receive $5.74
in cash, without interest (the "Merger Consideration"). At the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to exist,
and each holder of a certificate which immediately prior to the Effective
Time represented any such shares of Company Common Stock (each, a
"Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration. The right of any
holder of a Certificate to receive the Merger Consideration shall be
subject to and reduced by the amount of any withholding that is required
under applicable tax law.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common Stock
issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands
appraisal of such Appraisal Shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("Section 262")
shall not be converted into the right to receive the Merger Consideration
as provided in Section 2.01(c),
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but instead such holder shall be entitled to payment of the fair value of
such Appraisal Shares in accordance with the provisions of Section 262.
At the Effective Time, all Appraisal Shares shall no longer be
outstanding, shall automatically be canceled and shall cease to exist,
and each holder of Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such
Appraisal Shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail to perfect
or otherwise shall waive, withdraw or lose the right to appraisal under
Section 262, or a court of competent jurisdiction shall determine that
such holder is not entitled to the relief provided by Section 262, then
the right of such holder to be paid the fair value of such holder's
Appraisal Shares under Section 262 shall cease and such Appraisal Shares
shall be deemed to have been converted at the Effective Time into, and
shall have become, the right to receive the Merger Consideration as
provided in Section 2.01(c). The Company shall serve prompt notice to
Parent of any demands for appraisal of any shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent
of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall appoint JPMorgan Chase or another comparable
bank or trust company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. At the Effective Time, Parent shall
deposit, or cause the Surviving Corporation to deposit, with the Paying Agent,
for the benefit of the holders of Certificates, cash in an amount sufficient
to pay the aggregate Merger Consideration required to be paid pursuant to
Section 2.01(c) (such cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as practicable after the Effective
Time, Parent shall cause the Paying Agent to mail to each holder of record of
a Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title
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to the Certificates shall pass, only upon proper delivery of the Certificates
to the Paying Agent and which shall be in customary form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Each holder of record of a Certificate shall, upon surrender to
the Paying Agent of such Certificate, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, be entitled to receive in exchange therefor the
amount of cash which the number of shares of Company Common Stock previously
represented by such Certificate shall have been converted into the right to
receive pursuant to Section 2.01(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company,
payment of the Merger Consideration may be made to a person other than the
person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of such Certificate or establish to
the reasonable satis faction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which
the holder thereof has the right to receive in respect of such Certificate
pursuant to this Article II. No interest shall be paid or will accrue on any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented
by such Certificates. At the close of business on the day on which the
Effective Time occurs, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior
7
to the Effective Time. If, after the Effective Time, any Certificate is
presented to the Surviving Corporation for transfer, it shall be canceled
against delivery of cash to the holder thereof as provided in this Article II.
(d) Termination of the Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for nine
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration shall, to the extent
permitted by applicable law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest the
cash in the Exchange Fund as directed by Parent. Any interest and other income
resulting from such investments shall be paid to Parent.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reason able
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
(h) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct
8
and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as
Parent, the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by Parent, the Surviving Corporation
or the Paying Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was made by
Parent, the Surviving Corporation or the Paying Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth in the disclosure schedule (with specific reference to the
particular Section or sub section of this Agreement to which the information
set forth in such disclosure schedule relates; provided, however, that any
information set forth in one section of the Company Disclosure Schedule shall
be deemed to apply to each other Section or subsection thereof or hereof to
which its relevance is readily apparent on its face) delivered by the Company
to Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its incorporation
or formation, as the case may be, and has all requisite power and
authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate
or other name and to own, lease or otherwise hold and operate its
properties and other assets and to carry on its business as presently
conducted and as currently proposed by its management to be conducted,
except where the failure to have such government licenses, permits,
authorizations or approvals individually or in
9
the aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in
eachjurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed individually or in the aggregate has not
had and would not reasonably be expected to have a Material Adverse
Effect. The Company has made available to Parent, prior to the execution
of this Agreement, complete and accurate copies of the Company
Certificate and its By-laws (the "Company By-laws"), and the comparable
organizational documents of each of its Subsidiaries, in each case as
amended to the date hereof. The Company has made available to Parent
complete and accurate copies of the minutes (or, in the case of minutes
that have not yet been finalized, drafts thereof) of all meetings of the
stockholders of the Company and each of its Subsidiaries, the Board of
Directors of the Company and each of its Subsidiaries and the committees
of each of such Board of Directors, in each case held since August 4,
2000 and prior to the date hereof.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure Schedule
lists each of the Subsidiaries of the Company and, for each such
Subsidiary, the state of incorporation or formation and, as of the date
hereof, each jurisdiction in which such Subsidiary is qualified or
licensed to do business. All the issued and out standing shares of
capital stock of, or other equity interests in, each such Subsidiary have
been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
equity interests. Except for the capital stock of, or voting securities
or equity interests in, its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other voting securities
or equity interests in, any corporation, partnership, joint venture,
association or other entity.
10
(c) Capital Structure. The authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $.001 per share ("Company Preferred
Stock"). At the close of business on January 14, 2003, (i) 22,595,758
shares of Company Common Stock were issued and outstanding, (ii) no
shares of Company Common Stock were held by the Company in its treasury,
(iii) 5,633,499 shares of Company Common Stock were reserved for issuance
pursuant to the Equity Compensation Plan of the Company, as amended, and
the 2000 Equity Compensation Plan of the Company, as amended (such plans,
collectively, the "Company Stock Plans"), of which 3,884,538 shares of
Company Common Stock were subject to outstanding Company Stock Options,
and 47,787 shares of Company Common Stock were subject to vesting and
restrictions on transfer (collectively, "Company Restricted Stock"), (iv)
no shares of Company Preferred Stock were issued or outstanding or were
held by the Company as treasury shares and (v) warrants to acquire
106,329 shares of Company Common Stock from the Company pursuant to the
warrant agreements set forth on Section 3.01(c) of the Company Disclosure
Schedule and previously delivered in complete and correct form to Parent
(the "Warrants") were issued and outstanding. Except as set forth above
in this Section 3.01(c), at the close of business on January 14, 2003, no
shares of capital stock or other voting securities or equity interests of
the Company were issued, reserved for issuance or outstanding. There are
no outstanding stock appreciation rights, "phantom" stock rights,
performance units, rights to receive shares of Company Common Stock on a
deferred basis or other rights (other than Company Stock Options and
Warrants) that are linked to the value of Company Common Stock
(collectively, "Company Stock-Based Awards"). Section 3.01(c) of the
Company Disclosure Schedule sets forth a complete and accurate list, as
of January 14, 2003, of all outstanding options to purchase shares of
Company Common Stock (collectively, "Company Stock Options") under the
Company Stock Plans or otherwise, and all outstanding Warrants, the
number of shares of Company Common Stock (or other stock) subject
thereto, the grant dates, expiration dates, exercise or base prices (if
applicable) and vesting schedules thereof and the names of the holders
thereof. No shares of Company Common Stock are subject to
11
repurchase by the Company at a fixed purchase price. All outstanding
Company Stock Options are evidenced by stock option agreements,
restricted stock purchase agreements or other award agreements, in each
case in the forms set forth in Section 3.01(c) of the Company Disclosure
Schedule, and no stock option agreement, restricted stock purchase
agreement or other award agreement contains terms that are inconsistent
with such forms. As of the close of business on January 14, 2003, there
were outstanding Company Stock Options to purchase 1,162,531 shares of
Company Common Stock with exercise prices on a per share basis lower than
the Merger Consideration, and the weighted average exercise price of such
Company Stock Options was equal to $2.67. As of the close of business on
January 14, 2003, there were outstanding Warrants to purchase 101,829
shares of Company Common Stock with exercise prices on a per share basis
lower than the Merger Consideration. Each Company Stock Option may, by
its terms, be canceled in connection with the transactions contemplated
hereby for a lump sum cash payment in accordance with and to the extent
required by Section 5.04(a). All Warrants may, by their terms, be
canceled in exchange for a lump sum cash payment in accordance with and
to the extent required by Section 5.04(b). All outstanding shares of
capital stock of the Company are, and all shares which may be issued
pursuant to the Company Stock Options or the Warrants will be, when
issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above in
this Section 3.01(c), (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities or
equity interests of the Company, (B) any securities of the Company
convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or equity interests of the Company or
(C) any warrants, calls, options or other rights to acquire from the
Company or any of its Subsidiaries, and no obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities,
equity interests or securities convertible
12
into or exchangeable or exercisable for capital stock or voting
securities of the Company and (y) there are not any outstanding
obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or
sell, or cause to be issued, delivered or sold, any such securities.
Neither the Company nor any of its Subsidiaries is a party to any voting
agreement with respect to the voting of any such securities. Except as
set forth above in this Section 3.01(c), there are no outstanding (1)
securities of the Company or any of its Subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities or equity interests of any Subsidiary of the Company, (2)
warrants, calls, options or other rights to acquire from the Company or
any of its Subsidiaries, and no obligation of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities, equity
interests or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of any Subsidiary of the Company
or (3) obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any such outstanding securities
or to issue, deliver or sell, or cause to be issued, delivered or sold,
any such securities.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder Approval, to consummate the trans
actions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly author ized by
all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the consummation of the Merger, to the
obtaining of the Stockholder Approval. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
13
subject to bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies. The Board of Directors of the Company, at a meeting
duly called and held at which all directors of the Company were present,
duly and unanimously adopted resolutions (i) approving and declaring
advisable this Agreement, the Merger and the other transactions
contemplated by this Agreement, (ii) declaring that it is in the best
interests of the stockholders of the Company that the Company enter into
this Agreement and consummate the Merger and the other transactions
contemplated by this Agreement on the terms and subject to the conditions
set forth in this Agreement, (iii) directing that the adoption of this
Agreement be submitted as promptly as practicable to a vote at a meeting
of the stockholders of the Company and (iv) recommending that the
stockholders of the Company adopt this Agreement, which resolutions, as
of the date of this Agreement, have not been subsequently rescinded,
modified or withdrawn in any way. The execution and delivery of this
Agreement do not, and the consummation of the Merger and the other trans
actions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties or
other assets of the Company or any of its Subsidiaries under, (x) the
Company Certificate or the Company By-laws or the comparable
organizational documents of any of its Subsidiaries, (y) any loan or
credit agreement, bond, debenture, note, mortgage, indenture, lease or
other contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit, franchise or license, whether oral or
written (each, including all amendments thereto, a "Contract"), to which
the Company or any of its Subsidiaries is a party or any of their
respective properties or other assets is subject or (z) subject to the
governmental filings, the obtaining of the Stockholder Approval and the
other matters referred to in the following sentence, any (A) statute,
law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or
14
their respective properties or other assets or (B) order, writ,
injunction, decree, judgment or stipulation, in each case applicable to
the Company or any of its Subsidiaries or their respective properties or
other assets, other than, in the case of clauses (y) and (z), any such
conflicts, violations, breaches, defaults, rights, losses or Liens that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. No consent, approval, order
or authorization of, action by or in respect of, or registration,
declaration or filing with, any Federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority (each, a "Governmental Entity") is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the
Company or the consummation of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), and the receipt, termination or
expiration, as applicable, of approvals or waiting periods required under
the HSR Act or any other applicable competition, merger control,
antitrust or similar law or regulation, (2) the filing with the
Securities and Exchange Commission (the "SEC") of (A) a proxy statement
relating to the adoption by the stockholders of the Company of this
Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and (B) such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this Agreement,
(3) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (4) any filings required under
the rules and regulations of the Nasdaq National Market and (5) such
other consents, approvals, orders, authorizations, actions,
registrations, declarations and filings the failure of which to be
obtained or made individually or in the
15
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect.
(e) Company SEC Documents. The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since August 4, 2000 (the "Company SEC Documents"). As of
their respective filing dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information
contained in any Company SEC Document has been revised, amended,
supplemented or superseded by a later-filed Company SEC Document, none of
the Company SEC Documents contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circum
stances under which they were made, not misleading. The financial
statements (including the related notes) of the Company included in the
Company SEC Documents complied at the time they were filed as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
in the United States ("GAAP") (except, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and each fairly presented in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Parent shall receive a certificate
16
signed by the chief executive officer and the chief financial officer of
the Company in their capacities as such, on or prior to the Closing Date,
with respect to the most recent annual report on Form 10-K and all
reports on Form 10-Q, all reports on Form 8-K and all definitive proxy
materials filed with the SEC, in each case subsequent to the filing of
the most recent Form 10-K and any amendments thereto filed prior to the
date hereof and except for any such reports or proxy materials that have
been certified pursuant to 18 U.S.C. ss.1350 (collectively, the "Covered
Reports") stating that, to such person's knowledge, (i) no Covered Report
contained an untrue statement of material fact as of the end of the
period covered by such report (or in the case of a report on Form 8-K or
definitive proxy materials, as of the date on which it was filed) and
(ii) no Covered Report omitted to state a material fact necessary to make
the statements in such Covered Report, in light of the circumstances
under which they were made, not misleading as of the end of the period
covered by such report (or in the case of a report on Form 8-K or
definitive proxy materials, as of the date on which it was filed). Except
as disclosed in the Company SEC Documents filed by the Company and
publicly available prior to the date of this Agreement (the "Filed
Company SEC Documents"), neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which individually or in the aggregate
have had or would reasonably be expected to have a Material Adverse
Effect. None of the Subsidiaries of the Company are, or have at any time
since August 4, 2000 been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first mailed to
the stockholders of the Company and at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation or
17
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by or on
behalf of Parent or Sub in writing specifically for inclusion or
incorporation by reference in the Proxy Statement. The Proxy Statement
will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement and except as disclosed in the
Filed Company SEC Documents or as expressly permitted pursuant to Section
4.01(a)(i) through (xvi), since the date of the most recent audited
financial statements included in the Filed Company SEC Documents, the
Company and its Subsidiaries have conducted their respective businesses
only in the ordinary course consistent with past practice, and there has
not been any Material Adverse Change, and from such date until the date
hereof there has not been (i) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its shareholders, (ii)
any purchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any shares of capital stock or any other securities
of the Company or any of its Subsidiaries or any options, warrants, calls
or rights to acquire such shares or other securities, (iii) any split,
combination or reclassification of any capital stock of the Company or
any of its Subsidiaries or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of their respective capital stock, (iv) (A) any
granting by the Company or any of its Subsidiaries to any current or
former director, officer, employee or consultant of the Company or its
Subsidiaries of any increase in compensation, bonus or fringe or other
benefits or any granting of any type of compensation or benefits to any
current or former director, officer, employee or consultant not
previously receiving or entitled to receive such type of compensation or
benefit, except for normal increases in cash compensation (including cash
bonuses)
18
in the ordinary course of business consistent with past practice or as
was required under any Company Benefit Agreement or Company Benefit Plan
in effect as of the date of the most recent audited financial statements
included in the Filed Company SEC Documents, (B) any granting by the
Company or any of its Subsidiaries to any current or former director,
officer, employee or consultant of the Company or any of its Subsidiaries
of any right to receive any increase in severance or termination pay, or
(C) any entry by the Company or any of its Subsidiaries into, or any
amendments of, (1) any employment, deferred compensation, consulting,
severance, change of control, termination or indemnification agreement or
any other agreement with or involving any current or former director,
officer, employee or consultant of the Company or any of its Subsidiaries
or (2) any agreement with any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of a
nature contemplated by this Agreement (all such agreements under this
clause (C), collectively, "Company Benefit Agreements"), (D) any adoption
of, any amendment to or any termination of any Company Benefit Plan, or
(E) any payment of any benefit under, or the grant of any award under, or
any amendment to, or termination of, any bonus, incentive, performance or
other compensation plan or arrangement, Company Benefit Agreement or
Company Benefit Plan (including in respect of stock options, "phantom"
stock, stock appreciation rights, restricted stock, "phantom" stock
rights, restricted stock units, deferred stock units, performance stock
units or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Company Benefit Agreement or
Company Benefit Plan or awards made thereunder) except as required to
comply with applicable law or any Company Benefit Agreement or Company
Benefit Plan in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (v) any
damage, destruction or loss to any tangible asset of the Company or any
of its Subsidiaries, whether or not covered by insurance, that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, (vi) any change in
19
accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or businesses, except insofar as may
have been required by a change in GAAP or (vii) any material tax election
or any settlement or compromise of any material income tax liability.
(h) Litigation. Except as disclosed in the Filed Company SEC
Documents, there is no suit, action or proceeding pending or, to the
Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation
by any Governmental Entity involving, the Company or any of its
Subsidiaries or any of their respective assets that individually or in
the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.
(i) Contracts. Except as disclosed in the Filed Company SEC
Documents and except with respect to licenses and other agreements
relating to intellectual property, which are the subject of Section
3.01(p), as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to, and none of their respective properties or
other assets is subject to, any contract or agreement that is of a nature
required to be filed as an exhibit to a report or filing under the
Securities Act or the Exchange Act and the rules and regulations
promulgated thereunder. None of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any other party thereto is in violation
of or in default under (nor does there exist any condition which upon the
passage of time or the giving of notice or both would cause such a
violation of or default under) any Contract, to which it is a party or by
which it or any of its properties or other assets is bound, except for
violations or defaults that individually or in the aggregate have not had
and would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has entered into any
Contract with any Affiliate of the Company that is currently in effect
20
other than agreements that are disclosed in the Filed Company SEC
Documents. Neither the Company nor any of its Subsidiaries is a party to
or otherwise bound by any agreement or covenant restricting the Company's
or any of its Subsidiaries' ability to compete or by any agreement or
covenant restricting in any respect the research, development,
distribution, training, sale, supply, license, marketing or manufacturing
of products or services of the Company or any of its Subsidiaries.
(j) Compliance with Laws; Environmental Matters. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and taxes, which are the subjects of
Sections 3.01(j)(ii), 3.01(l) and 3.01(n), respectively, and except as
set forth in the Filed Company SEC Documents, each of the Company and its
Subsidiaries is in compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Governmental Entity
applicable to it, its properties or other assets or its business or
operations (collectively, "Legal Provisions"), except for failures to be
in compliance that individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect. Each
of the Company and its Subsidiaries has in effect all approvals,
authorizations, certificates, filings, franchises, licenses, notices and
permits of or with all Governmental Entities (collectively, "Permits"),
including all Permits under the Federal Food, Drug and Cosmetic Act of
1938, as amended (the "FDCA"), and the regulations of the Federal Food
and Drug Administration (the "FDA") promulgated thereunder, necessary for
it to own, lease or operate its properties and other assets and to carry
on its business and operations as presently conducted and as currently
proposed by its management to be conducted, except where the failure to
have such Permits individually or in the aggregate has not had and would
not reasonably be expected to have a Material Adverse Effect. There has
occurred no default under, or violation of, any such Permit, except for
any such default or violation that individually or in the aggregate as
has not had and would not reasonably be expected to have a Material
Adverse Effect. The consummation of the Merger, in and of itself, would
not cause the revocation or cancellation of any such Permit that
individually or in the aggregate would reasonably
21
be expected to have a Material Adverse Effect. No action, demand,
requirement or investigation by any Governmental Entity and no suit,
action or proceeding by any other person, in each case with respect to
the Company or any of its Subsidiaries or any of their respective
properties or other assets under any Legal Provision, is pending or, to
the Knowledge of the Company, threatened, other than, in each case, those
the outcome of which individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect.
(ii) Except for those matters disclosed in the Filed Company SEC
Documents and those matters that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect: (A) each of the Company and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws and has obtained and
complied with all Permits required under any Environmental Laws to own,
lease or operate its properties or other assets and to carry on its
business and operations as presently conducted and as currently proposed
by its management to be conducted; (B) there have been no Releases or
threatened Releases of Hazardous Materials in, on, under or affecting any
properties currently or, to the Knowledge of the Company, formerly owned,
leased or operated by the Company or any of its Subsidiaries; (C) there
is no investigation, suit, claim, action or proceeding pending, or to the
Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries relating to or arising under Environmental Laws,
and neither the Company nor any of its Subsidiaries has received any
written notice of any such investigation, suit, claim, action or
proceeding; (D) neither the Company nor any of its Subsidiaries has
entered into or assumed by contract or operation of law or otherwise, any
obligation, liability, order, settlement, judgment, injunction or decree
relating to or arising under Environmental Laws; and (E) to the Knowledge
of the Company, there are no facts, circum stances or conditions that
would reasonably be expected to form the basis for any investigation,
suit, claim, action, proceeding or liability against or affecting the
Company or any of its Subsidiaries relating to or arising under
Environmental Laws. The term "Environmental Laws" means all Federal,
state, local
22
and foreign laws (including the common law), statutes, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices, Permits, treaties or binding agreements issued, promulgated or
entered into by any Governmental Entity, relating in any way to the
environment, preservation or reclamation of natural resources or
endangered species, the presence, management, Release or threat of
Release of, or exposure to, Hazardous Materials, or to human health and
safety. The term "Hazardous Materials" means (1) petroleum products and
by-products, asbestos and asbestos-containing materials, urea
formaldehyde foam insulation, medical or infectious wastes, poly
chlorinated biphenyls, radon gas, radioactive substances,
chlorofluorocarbons and all other ozone- depleting substances or (2) any
chemical, material, substance, waste, pollutant or contaminant that is
prohibited, limited or regulated by or pursuant to any Environmental Law.
The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any natural or
man-made structure.
(k) Absence of Changes in Company Benefit Plans; Labor Relations.
Except as disclosed in the Filed Company SEC Documents or as expressly
permitted pursuant to Section 4.01(a)(i) through (xvi), since the date of
the most recent audited financial statements included in the Filed
Company SEC Documents, there has not been any adoption or amendment by
the Company or any of its Subsidiaries of any collective bargaining
agreement or any employment, bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock option, "phantom" stock,
performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) maintained, contributed to or required to be maintained or
contributed to by the Company or any of its Subsidiaries or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a
"Commonly Controlled Entity"), in each
23
case providing benefits to any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries
(collectively, the "Company Benefit Plans"), or any material change in
any actuarial or other assumption used to calculate funding obligations
with respect to any Company Pension Plans, or any change in the manner in
which contributions to any Company Pension Plans are made or the basis on
which such contributions are determined, other than amendments or other
changes as required to ensure that such Company Benefit Plan is not then
out of compliance with applicable law, or reasonably determined by the
Company to be necessary or appropriate to preserve the qualified status
of a Company Pension Plan under Section 401(a) of the Code. Except as
disclosed in the Filed Company SEC Documents, there exist no currently
binding Company Benefit Agreements. There are no collective bargaining or
other labor union agreements to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound. As of the date hereof, none of the employees of
the Company or any of its Subsidiaries are represented by any union with
respect to their employment by the Company or such Subsidiary. As of the
date hereof, since August 4, 2000, neither the Company nor any of its
Subsidiaries has experienced any labor disputes, union organization
attempts or work stoppages, slowdowns or lockouts due to labor
disagreements.
(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each Company
Benefit Plan that is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) (sometimes referred to herein as a "Company
Pension Plan"), each Company Benefit Plan that is an "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and all other Company
Benefit Plans. The Company has provided to Parent complete and accurate
copies of (A) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof), (B) the two most recent
annual reports on Form 5500 required to be filed with the Internal
Revenue Service (the "IRS") with respect to each Company Benefit Plan (if
any such report was required), (C) the most recent summary plan
description for each Company Benefit Plan for which such summary
24
plan description is required and (D) each trust agreement and insurance
or group annuity contract relating to any Company Benefit Plan. Each
Company Benefit Plan has been administered in all material respects in
accordance with its terms. The Company, its Subsidiaries and all the
Company Benefit Plans are all in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable
laws, including laws of foreign jurisdictions, and the terms of all
collective bargaining agreements.
(ii) All Company Pension Plans intended to be tax- qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications with respect to
"GUST" (as defined in Section 1 of Notice 2001-42), to the effect that
such Company Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked (or, to the Knowledge of the
Company, has revocation been threatened) and no event has occurred since
the date of the most recent determination letter or application therefor
relating to any such Company Pension Plan that would reasonably be
expected to adversely affect the qualification of such Company Pension
Plan or materially increase the costs relating thereto or require
security under Section 307 of ERISA. In addition, all Company Pension
Plans have been, or shall have been by the end of the 2002 plan year,
amended to comply with the requirements of the Economic Growth and Tax
Relief Reconciliation Act of 2001 which are or have become effective on
or before the end of the 2002 plan year, as set forth in Notice 2001-42.
All Company Pension Plans required to have been approved by any foreign
Governmental Entity have been so approved, no such approval has been
revoked (or, to the Knowledge of the Company, has revocation been
threatened) and no event has occurred since the date of the most recent
approval or application therefor relating to any such Company Pension
Plan that would reasonably be expected to materially affect any such
approval relating thereto or materially increase the costs relating
thereto. The Company has delivered to Parent a complete and accurate
25
copy of the most recent determination letter received prior to the date
hereof with respect to each Company Pension Plan, as well as a complete
and accurate copy of each pending application for a determination letter,
if any. The Company has also provided to Parent a complete and accurate
list of all amendments to any Company Pension Plan as to which a
favorable determination letter has not yet been received.
(iii) Neither the Company nor any Commonly Controlled Entity has
(A) maintained, contributed to or been required to contribute to any
Company Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
(iv) All reports, returns and similar documents with respect to all
Company Benefit Plans required to be filed with any Governmental Entity
or distributed to any Company Benefit Plan participant have been duly and
timely filed or distributed. None of the Company or any of its
Subsidiaries has received notice of, and to the Knowledge of the Company,
there are no investigations by any Governmental Entity with respect to,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Company Benefit Plans), suits or
proceedings against or involving any Company Benefit Plan or asserting
any rights or claims to benefits under any Company Benefit Plan that
would give rise to any material liability, and, to the Knowledge of the
Company, there are not any facts that could give rise to any material
liability in the event of any such investigation, claim, suit or
proceeding.
(v) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been
made as of the date hereof in accordance with the terms of the Company
Benefit Plans have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference into
the Filed Company SEC Documents. Neither any Company Pension Plan nor any
single-employer plan of any Commonly Controlled Entity has an
"accumulated funding deficiency" (as such term is defined in Section 302
of ERISA or Section 412 of the Code), whether or not waived.
26
(vi) With respect to each Company Benefit Plan, (A) there has not
occurred any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) in which the Company or any of its
Subsidiaries or any of their respective employees, or any trustee,
administrator or other fiduciary of such Company Benefit Plan, or any
agent of the foregoing, has engaged that would reasonably be expected to
subject the Company or any of its Subsidiaries or any of their respective
employees, or a trustee, administrator or other fiduciary of any trust
created under any Company Benefit Plan, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company nor
any of its Subsidiaries nor, to the Knowledge of the Company, any
trustee, administrator or other fiduciary of any Company Benefit Plan nor
any agent of any of the foregoing, has engaged in any transaction or
acted in a manner, or failed to act in a manner, that would reasonably be
expected to subject the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any trustee, administrator or other fiduciary,
to any liability for breach of fiduciary duty under ERISA or any other
applicable law. No Company Benefit Plan or related trust has been
terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived with respect to any Company Benefit Plan
during the last five years, and no notice of a reportable event will be
required to be filed in connection with the transactions contemplated by
this Agreement.
(vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
discloses whether each Company Benefit Plan that is an employee welfare
benefit plan is (A) unfunded or self-insured, (B) funded through a
"welfare benefit fund", as such term is defined in Section 419(e) of the
Code, or other funding mechanism or (C) insured. Each such employee
welfare benefit plan may be amended or terminated (including with respect
to benefits provided to retirees and other former employees) without
material liability (other than benefits then payable under such plan
without regard to such amendment or termination) to the Company or any of
its Subsidiaries at any time after the
27
Effective Time. Each of the Company and its Subsidiaries complies in all
material respects with the applicable requirements of Section 4980B(f) of
the Code or any similar state statute with respect to each Company
Benefit Plan that is a group health plan, as such term is defined in
Section 5000(b)(1) of the Code or such state statute. Neither the Company
nor any of its Subsidiaries has any material obligations for retiree
health or life insurance benefits under any Company Benefit Plan (other
than for continuation coverage required under Section 4980(f) of the
Code).
(viii) None of the execution and delivery of this Agreement, the
Stockholder Agreement, the obtaining of the Stockholder Approval or the
consummation of the Merger or any other transaction expressly
contemplated by this Agreement or the Stockholder Agreement (including as
a result of any termination of employment on or following the Effective
Time) will (A) entitle any current or former director, officer, employee
or consultant of the Company or any of its Subsidiaries to severance or
termination pay, (B) accelerate the time of payment or vesting, or
trigger any payment or funding (through a grantor trust or otherwise) of,
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any Company Benefit Plan or
Company Benefit Agreement or (C) result in any breach or violation of, or
a default under, any Company Benefit Plan or Company Benefit Agreement.
The total amount of all payments and the fair market value of all
non-cash benefits (other than Company Stock Options and Company
Restricted Stock) that may become payable or provided to any director,
officer, employee or consultant of the Company or any of its Subsidiaries
under the Company Benefit Agreements (assuming for such purpose that such
individuals' employment were terminated immediately following the
Effective Time as if the Effective Time were the date hereof) will not
exceed the amount set forth in Section 3.01(l)(viii) of the Company
Disclosure Schedule.
(ix) Neither the Company nor any of its Subsidiaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and
28
treating such persons as consultants or independent contractors and not
as employees of the Company or any of its Subsidiaries.
(x) No deduction by the Company or any of its Subsidiaries in
respect of any "applicable employee remuneration" (within the meaning of
Section 162(m) of the Code) has been disallowed or is subject to dis
allowance by reason of Section 162(m) of the Code.
(m) No Excess Parachute Payments. Other than payments or benefits
that may be made to the persons listed in Section 3.01(m) of the Company
Disclosure Schedule ("Primary Company Executives"), no amount or other
entitlement or economic benefit that could be received (whether in cash
or property or the vesting of property) as a result of the execution and
delivery of this Agreement, the Stockholder Agreement, the obtaining of
the Stockholder Approval, the consummation of the Merger or any other
transaction contemplated by this Agreement or the Stockholder Agreement
(including as a result of termination of employment on or following the
Effective Time) by or for the benefit of any director, officer, employee
or consultant of the Company or any of its Affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any Company Benefit Plan, Company
Benefit Agreement or otherwise would be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code), and no disqualified individual is entitled to receive any
additional payment from the Company or any of its Subsidiaries, the
Surviving Corporation or any other person in the event that the excise
tax required by Section 4999(a) of the Code is imposed on such dis
qualified individual (a "Parachute Gross Up Payment"). Section 3.01(m) of
the Company Disclosure Schedule sets forth, calculated as of the date of
this Agreement, (i) the "base amount" (as such term is defined in Section
280G(b)(3) of the Code) for each Primary Company Executive and each other
disqualified individual (defined as set forth above) whose Company Stock
Options will vest pursuant to their terms in connection with the
execution and delivery of this Agreement, the Stockholder Agreement, the
obtaining of the Stockholder Approval, the consummation of the Merger or
any other transaction contemplated by this
29
Agreement or the Stockholder Agreement (including as a result of any
termination of employment on or following the Effective Time) and (ii)
the estimated maximum amount of "parachute payments" as defined in
Section 280G of the Code that could be paid or provided to each Primary
Company Executive as a result of the execution and delivery of this
Agreement, the Stockholder Agreement, the obtaining of the Stockholder
Approval, the consummation of the Merger or any other transaction
contemplated by this Agreement or the Stockholder Agreement (including as
a result of any termination of employment on or following the Effective
Time).
(n) Taxes. (i) Each of the Company, its Subsidiaries and each
Company Consolidated Group has filed or has caused to be filed in a
timely manner (within any applicable extension period) all tax returns
required to be filed with any taxing authority pursuant to the Code (and
any applicable U.S. Treasury regulations) or applicable state, local or
foreign tax laws. All such tax returns are complete and accurate in all
material respects and have been prepared in substantial compliance with
all applicable laws and regulations. Each of the Company, its
Subsidiaries and each Company Consolidated Group has paid or caused to be
paid (or the Company has paid on its behalf) all taxes due and owing, and
the most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve (determined in accordance with
GAAP) (excluding any reserves for deferred taxes established to reflect
timing differences between book and tax income) for all taxes payable by
the Company and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No tax return of the Company or any of its Subsidiaries or any
Company Consolidated Group is or has ever been under audit or examination
by any taxing authority, and no notice of such an audit or examination
has been received by the Company or any of its Subsidiaries or any
Company Consolidated Group. There is no deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any material
amount of taxes due and owing by the Company or any of its Subsidiaries
or any Company Consolidated
30
Group. Each deficiency resulting from any completed audit or examination
relating to taxes by any taxing authority has been timely paid or is
being contested in good faith and has been reserved for on the books of
the Company. No issues relating to any material amount of taxes were
raised by the relevant taxing authority in any completed audit or
examination that could reasonably be expected to recur in a later taxable
period. The relevant statute of limitation is closed with respect to
Federal, state, local and foreign tax returns of the Company, its
Subsidiaries and any Company Consolidated Group for all years through
1998. There is no currently effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any taxes of the Company or its Subsidiaries or any Company
Consolidated Group, nor has any request been made in writing for any such
extension, and no power of attorney (other than powers of attorney
authorizing employees of the Company to act on behalf of the Company)
with respect to any taxes has been executed or filed with any taxing
authority.
(iii) None of the Company or any of its Subsidiaries will be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued (for purposes of the
financial statements of the Company included in the Filed Company SEC
Documents) in a prior taxable period (or portion of a taxable period) but
was not recognized for tax purposes in any prior taxable period as a
result of (A) an open transaction disposition made on or before the
Effective Time, (B) a prepaid amount received on or prior to the
Effective Time, (C) the installment method of accounting, (D) the
completed contract method of accounting, (E) the long-term contract
method of accounting, (F) the cash method of accounting or Section 481 of
the Code or (G) any comparable provisions of state or local tax law,
domestic or foreign, or for any other reason, other than any amounts that
are specifically reflected in a reserve for taxes on the financial
statements of the Company included in the Filed Company SEC Documents.
(iv) The Company and its Subsidiaries have complied with all
applicable statutes, laws, ordinances, rules and regulations relating to
the
31
payment and withholding of any material amount of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of
the Code and similar provisions under any Federal, state, local or
foreign tax laws) and have, within the time and the manner prescribed by
law, withheld from and paid over to the proper governmental authorities
all material amounts required to be so withheld and paid over under
applicable laws.
(v) None of the Company or any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" as such
terms are defined in Section 355 of the Code in a distribution of stock
outside of the affiliated group of which the Company is the common parent
qualifying or intended to qualify for tax-free treatment (in whole or in
part) under Section 355(a) or 361 of the Code.
(vi) Neither the Company nor any of its Subsidiaries has filed a
consent under Section 341 of the Code concerning collapsible
corporations.
(vii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period in the filing of any affiliated,
aggregate, consolidated, combined or unitary tax return other than
consolidated tax returns for the consolidated group of which the Company
is the common parent.
(viii) No claim has ever been made by any authority in a
jurisdiction where any of the Company or its Subsidiaries does not file a
tax return that it is, or may be, subject to a material amount of tax by
that jurisdiction.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any tax sharing agreement, tax indemnity obligation or
similar agreement, arrangement or practice with respect to taxes
(including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(x) No "ownership change" (as described in Section 382(g) of the
Code) has occurred or will occur prior to the Effective Time that would
have the effect
32
of limiting the use of "pre-change tax losses" (as described in Section
382(d) of the Code) of the Company and its Subsidiaries following the
Effective Time.
(xi) No taxing authority has asserted any material liens for taxes
with respect to any assets or properties of the Company or its
Subsidiaries, except for statutory liens for taxes not yet due and
payable.
(xii) Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(xiii) As used in this Agreement (A) "tax" or "taxes" shall include
(whether disputed or not) all (x) Federal, state, local and foreign
income, property, sales, use, excise, withholding, payroll, employment,
social security, capital gain, alternative minimum, transfer and other
taxes and similar governmental charges, including any interest, penalties
and additions with respect thereto, (y) liability for the payment of any
amounts of the type described in clause (x) as a result of being a member
of an affiliated, consolidated, combined, unitary or aggregate group and
(z) liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the payment of
any amounts of the type described in clause (x) or (y); (B) "Company
Consolidated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code, or any other similar state, local or foreign
law, in which the Company (or any Subsidiary of the Company) is or has
ever been a member or any group of corporations with which the Company
files, has filed or is or was required to file an affiliated,
consolidated, combined, unitary or aggregate tax return; (C) "taxing
authority" means any Federal, state, local or foreign government, any
subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising tax regulatory authority; and (D) "tax
return" or "tax returns" means all returns, declarations of estimated tax
payments, reports, estimates, information returns
33
and statements, including any related or supporting information with
respect to any of foregoing, filed or to be filed with any taxing
authority in connection with the determination, assessment, collection or
administration of any taxes.
(o) Title to Properties. (i) Neither the Company nor any of its
Subsidiaries owns any real property. Each of the Company and its
Subsidiaries has good and valid leasehold or sublease interests or other
comparable contract rights in or relating to all of its real properties
and other tangible assets necessary for the conduct of its business as
currently conducted and as currently proposed by its management to be
conducted, except as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate
have not materially interfered with, and would not reason ably be
expected to materially interfere with, its ability to conduct its
business as presently conducted and as currently proposed by its
management to be conducted. All such properties and other assets, other
than properties and other assets in which the Company or any of its
Subsidiaries has a leasehold or sublease interest or other comparable
contract right, are free and clear of all Liens, except for Liens that
individually or in the aggregate have not materially interfered with, and
would not reasonably be expected to materially interfere with, the
ability of the Company or any of its Subsidiaries to conduct their
respective businesses as presently conducted and as currently proposed by
its management to be conducted.
(ii) Each of the Company and its Subsidiaries has complied in all
material respects with the terms of all material leases or subleases to
which it is a party and under which it is in occupancy, and all leases to
which the Company is a party and under which it is in occupancy are in
full force and effect, except for such failure to be in full force and
effect that individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. Each of the
Company and its Subsidiaries is in possession of the properties or assets
purported to be leased under all its material leases. Neither the Company
nor any of its Subsidiaries has received any
34
written notice of any event or occurrence that has resulted or could
result (with or without the giving of notice, the lapse of time or both)
in a default with respect to any material lease or sublease to which it
is a party.
(p) Intellectual Property. (i) Subject to Sections 3.01(p)(ii) and
3.01(p)(v), each of the Company and its Subsidiaries owns, or is validly
licensed or otherwise has the right to use (without any obligation to
make any fixed or contingent payments, including royalty payments) all
patents, patent applications, trademarks, trademark rights, trade names,
trade name rights, domain names, service marks, service xxxx rights,
copyrights, software, technical know-how and other proprietary
intellectual property rights and computer programs (collectively,
"Intellectual Property Rights") which are material to the conduct of the
business of the Company and its Subsidiaries, taken as a whole, in each
case free and clear of all Liens. The Company has the legal power to
convey the rights granted to it under any license for any Intellectual
Property Right taken by the Company and its Subsidiaries. The Company is
not subject to any contractual, legal or other restriction on the use of
any Intellectual Property Rights (including Intellectual Property Rights
with respect to the DiscoverWorks and Thermofluor technologies) which are
owned by or licensed to the Company.
(ii) No claims are pending or, to the Knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing
(including with respect to the manufacture, use or sale by the Company or
any of its Subsidiaries of their respective commercial products or of
their respective Intellectual Property Rights) the rights of any person
with regard to any Intellectual Property Right which individually or in
the aggregate have had or would reasonably be expected to have a Material
Adverse Effect. To the Knowledge of the Company, no person or persons are
infringing the rights of the Company or any of its Subsidiaries with
respect to any Intellectual Property Right in a manner which individually
or in the aggregate has had or would reasonably be expected to have a
Material Adverse Effect.
35
(iii) No claims are pending or, to the Knowledge of the Company,
threatened with regard to the ownership by the Company or any of its
Subsidiaries of any of their respective Intellectual Property Rights
which individually or in the aggregate have had or would reasonably be
expected to have a Material Adverse Effect.
(iv) Section 3.01(p)(iv) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
patents, registered trademarks and applications therefor, copyright
registrations (if any) and, to the Knowledge of the Company, domain name
registrations (if any), owned by or licensed to the Company or any of its
Subsidiaries. All patents and patent applications listed in Section
3.01(p)(iv) of the Company Disclosure Schedule are either (a) owned by,
or are subject to an obligation of assignment to, the Company or a
Subsidiary of the Company free and clear of all Liens or (b) licensed to
the Company or a Subsidiary of the Company free and clear (to the
Knowledge of the Company) of all Liens. The patent applications listed in
Section 3.01(p)(iv) of the Company Disclosure Schedule that are owned by
the Company or any of its Subsidiaries are (and such applications that
are licensed to the Company or any of its Subsidiaries are to the
Company's Knowledge) pending and have not been abandoned, and have been
and continue to be timely prosecuted. All patents, registered trademarks
and applications therefor owned by the Company or any of its Subsidiaries
have been (and all such patents, registered trademarks and applications
licensed to the Company or any of its Subsidiaries have been to the
Company's Knowledge) duly registered and/or filed with or issued by each
appropriate Governmental Entity in the jurisdiction indicated in Section
3.01(p)(iv) of the Company Disclosure Schedule, all necessary affidavits
of continuing use have been (or, with respect to licenses, to the
Company's Knowledge have been) timely filed, and all necessary
maintenance fees have been (or, with respect to licenses, to the
Company's Knowledge have been) timely paid to continue all such rights in
effect. None of the patents listed in Section 3.01(p)(iv) of the Company
Disclosure Schedule that are owned by the Company or any of its
Subsidiaries has (and no such patents that are licensed
36
to the Company or any of its Subsidiaries has to the Company's Knowledge)
expired or been declared invalid, in whole or in part, by any
Governmental Entity. There are no ongoing interferences, oppositions,
reissues, reexaminations or other proceedings involving any of the
patents or patent applications listed in Section 3.01(p)(iv) of the
Company Disclosure Schedule and owned by the Company or any of its
Subsidiaries (or to the Company's Knowledge, licensed to the Company or
any of its Subsidiaries), including ex parte and post- grant proceedings,
in the United States Patent and Trademark Office or in any foreign patent
office or similar administrative agency, other than as have not had or
would not reasonably be expected to have a Material Adverse Effect. In
the Company's opinion, there are no published patents, patent
applications, articles or other prior art references that could adversely
affect the validity of any patent listed in Section 3.01(p)(iv) of the
Company Disclosure Schedule in a material way. To the Knowledge of the
Company, each of the patents and patent applications listed in Section
3.01(p)(iv) of the Company Disclosure Schedule that are owned by the
Company or any of its Subsidiaries properly identifies (and to the
Knowledge of the Company such patents and applications licensed to the
Company or any of its Subsidiaries properly identify) each and every
inventor of the claims thereof as determined in accordance with the laws
of the jurisdiction in which such patent is issued or such patent
application is pending. Each inventor named on the patents and patent
applications listed in Section 3.01(p)(iv) of the Company Disclosure
Schedule that are owned by the Company or any of its Subsidiaries has
executed (and such inventors named on such patents and applications
licensed to the Company or any of its Subsidiaries to the Company's
Knowledge have executed) an agreement assigning his, her or its entire
right, title and interest in and to such patent or patent application,
and the inventions embodied and claimed therein, to the Company or a
Subsidiary of the Company, or in the case of licensed Patents, to the
appropriate owners. To the Knowledge of the Company, no such inventor has
any contractual or other obligation that would preclude any such
assignment or otherwise conflict with the obligations of such inventor to
the Company or such Subsidiary under such agreement with the Company or
such Subsidiary.
37
(v) Section 3.01(p)(v) of the Company Disclosure Schedule sets forth
a complete and accurate list of all options, rights, licenses or
interests of any kind relating to Intellectual Property Rights granted
(i) to the Company or any of its Subsidiaries (other than software
licenses for generally available software and except pursuant to employee
proprietary inventions agreements (or similar employee agreements),
non-dis closure agreements and consulting agreements entered into by the
Company or any of its Subsidiaries in the ordinary course of business),
or (ii) by the Company or any of its Subsidiaries to any other person.
(vi) The Company and its Subsidiaries have used reasonable efforts
to maintain their material trade secrets in confidence, including
entering into licenses and contracts that generally require licensees,
contractors and other third persons with access to such trade secrets to
keep such trade secrets confidential.
(q) Voting Requirements. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Stockholders' Meeting or any adjournment or postponement thereof to adopt
this
Agreement (the "Stockholder Approval") is the only vote of the holders of
any class or series of capital stock of the Company necessary to adopt
this Agreement and approve the transactions contemplated hereby.
(r) State Takeover Statutes. The Board of Directors of the Company
has unanimously approved the terms of this Agreement and the Stockholder
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement, and such
approval represents all the action necessary to render inapplicable to
this Agreement, the Stockholder Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement, the restrictions on "business combinations" (as defined in
Section 203 of the DGCL ("Section 203")) set forth in Section 203 to the
extent, if any, such restrictions would otherwise be applicable to this
Agreement, the Stockholder Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement. No other state takeover statute or similar statute or
regulation applies to this Agreement, the
38
Stockholder Agreement, the Merger or the other transactions contemplated
by this Agreement or the Stockholder Agreement.
(s) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than Lazard, Freres & Co. LLC
("Lazard")), the fees and expenses of which will be paid by the Company,
is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company. The Company has delivered to Parent complete and
accurate copies of all agreements under which any such fees or expenses
are payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable. The fees and
expenses of all accountants, brokers, financial advisors (including
Lazard), legal counsel (including Xxxxxx, Xxxxx & Xxxxxxx LLP, Xxxxxxxx,
Xxxxxx & Finger and Sterne, Kessler, Xxxxxxxxx & Fox P.L.L.C.), financial
printers and other persons retained by the Company in connection with
this Agreement or the Stockholder Agreement or the transactions
contemplated hereby or thereby incurred or to be incurred by the Company
will not exceed the fees and expenses set forth in Section 3.01(s) of the
Company Disclosure Schedule.
(t) Opinion of Financial Advisor. The Company has received the oral
opinion of Lazard, dated the date hereof, to the effect that, as of such
date, the Merger Consideration is fair, from a financial point of view,
to the holders of shares of Company Common Stock (other than Parent or
Sub). A signed copy of the written opinion confirming such oral opinion
will be delivered to Parent promptly after delivery thereof to the
Company.
(u) Development, Distribution, Marketing, Supply and Manufacturing
Agreements. (i) Section 3.01(u) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
Contracts to which the Company or any of its Subsidiaries is a party
relating to (x) research, development, distribution, training, sale,
supply, license, marketing or manufacturing that have a
39
remaining value of $60,000 or more individually (provided that the
aggregate obligations with respect to such Contracts not so scheduled
shall not exceed $300,000) and (y) the distribution, in each case, by
third parties of any product of the Company or any Subsidiary of the
Company or any product or patent or other Intellectual Property Right
licensed by the Company or any Subsidiary of the Company. Notwithstanding
the foregoing, no consulting agreement shall be required to be set forth
on Section 3.01(u) of the Company Disclosure Schedule pursuant to clause
(x) of the immediately preceding sentence unless such consulting
agreement has a remaining value of $75,000 or more individually (provided
that the aggregate obligations with respect to such consulting agreements
not so scheduled shall not exceed $1,000,000). The Company has made
available to Parent a complete and accurate copy of each such Contract.
(ii) Section 3.01(u)(ii) of the Company Disclosure Schedule sets
forth a complete and accurate list of all Contracts to which the Company
or any of its Subsidiaries is a party relating to the research,
development, distribution, training, sale, supply, license, marketing or
manufacturing by third parties of any product of the Company or any
Subsidiary of the Company or any product, patent or other Intellectual
Property Right licensed by the Company or any Subsidiary of the Company,
which grant an exclusive right to such third party for the research,
develop ment, distribution, supply, license, marketing or manufacturing
of any such product, patent or other Intellectual Property Right.
(v) Regulatory Compliance. (i) As to each product subject to the
FDCA and the FDA regulations promulgated thereunder or similar Legal
Provisions in any foreign jurisdiction that are developed, manufactured,
tested, distributed and/or marketed by the Company or any of its
Subsidiaries (each such product, a "Medical Device", a "Biologic" or a
"Drug", as the case may be), each such Medical Device, Biologic or Drug
is being developed, manufactured, tested, distributed and/or marketed in
compliance with all applicable requirements under the FDCA and similar
Legal Provisions, including those relating to investigational use,
premarket clearance or marketing
40
approval to market a Medical Device, and applications or abbreviated
applications to market a new Biologic or a new Drug, good manufacturing
practices, labeling, advertising, record keeping, filing of reports and
security, except for failures in compliance that individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any material notice or other material communication from the
FDA or any other Governmental Entity (A) contesting the premarket
clearance or approval of, the uses of or the labeling and promotion of
any products of the Company or any of its Subsidiaries or (B) otherwise
alleging any violation applicable to any Medical Device, Biologic or Drug
by the Company or any of its Subsidiaries of any Legal Provision.
(ii) No Medical Device, Biologic or Drug has been recalled,
withdrawn, suspended or discontinued by the Company or any of its
Subsidiaries in the United States or outside the United States (whether
voluntarily or otherwise). No proceedings in the United States or outside
of the United States of which the Company has Knowledge (whether
completed or pending) seeking the recall, withdrawal, suspension or
seizure of any Medical Device, Biologic or Drug are pending against the
Company or any of its Subsidiaries nor have any such proceedings been
pending at any prior time.
(iii) As to each Biologic or Drug of the Company or any of its
Subsidiaries for which a biological license application, new drug
application, investigational new drug application or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in compliance with 21 U.S.C. xx.xx. 355, Section 626 of
the Public Health Service Act or 21 C.F.R. Parts 312, 314, 600 or 601 et
seq., respectively, and similar Legal Provisions and all terms and
conditions of such applications, except for any such failure or failures
to be in compliance which individually or in the aggregate has not had
and would not reasonably be expected to have a Material Adverse Effect.
As to each such drug, the Company and any relevant Subsidiary of the
Company, and the officers, employees or agents of the Company or such
Subsidiary, have included in the application for such drug, where
41
required, the certification described in 21 U.S.C. ss. 335a(k)(1) or any
similar Legal Provision and the list described in 21 U.S.C. ss.
335a(k)(2) or any similar Legal Provision, and each such certification
and list was true, complete and correct in all material respects when
made. In addition, the Company and its Subsidiaries are in substantial
compliance with all applicable registration and listing requirements set
forth in 21 U.S.C. ss. 360 and 21 C.F.R. Part 207 and all similar Legal
Provisions.
(iv) No article of any Biologic or Drug manufactured and/or
distributed by the Company or any of its Subsidiaries is (A) adulterated
within the meaning of 21 U.S.C. ss. 351 (or similar Legal Provisions),
(B) misbranded within the meaning of 21 U.S.C. ss. 352 (or similar Legal
Provisions) or (C) a product that is in violation of 21 U.S.C. ss. 355
(or similar Legal Provisions), except for failures to be in compliance
with the foregoing that individually or in the aggregate have not had and
would not reasonably be expected to have a Material Adverse Effect.
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
would reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C. ss. 335a(a) or any similar
Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any officer, employee
42
or agent of the Company or any of its Subsidiaries, has been convicted of
any crime or engaged in any conduct for which such person or entity could
be excluded from participating in the federal health care programs under
Section 1128 of the Social Security Act or any similar Legal Provision.
(vi) Neither the Company nor any of its Subsidiaries has received
any written notice that the FDA or any other Governmental Entity has (a)
commenced, or threatened to initiate, any action to withdraw its approval
or request the recall of any Medical Device, Biologic or Drug, (b)
commenced, or threatened to initiate, any action to enjoin production of
any Medical Device, Biologic or Drug or (c) to the Company's Knowledge,
commenced, or threatened to initiate, any action to enjoin the production
of any medical device, biologic or drug produced at any facility where
any Medical Device, Biologic or Drug is manufactured, tested or packaged,
except for any such action that individually or in the aggregate has not
had and would not reasonably be expected to have a Material Adverse
Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any investigation, suit, claim, action or proceeding against or
affecting the Company or any of its Subsidiaries relating to or arising
under (a) the FDCA or the regulations of the FDA promulgated thereunder
or (b) the Social Security Act or regulations of the Office of the
Inspector General of the Department of Health and Human Services.
(w) Insurance. Section 3.01(w) of the Company Disclosure Schedule
contains a complete and accurate list of all policies of fire, liability,
workers' compensation, title and other forms of insurance owned, held by
or applicable to the Company (or its assets or business) as of the date
hereof, and the Company has heretofore made available to Parent a
complete and accurate copy of all such policies, including all
occurrence-based policies applicable to the Company (or its assets or
business) for all periods prior to the Closing Date. All such policies
(or substitute policies with substantially similar terms and
43
underwritten by insurance carriers with substantially similar or higher
ratings) are in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been paid,
and no notice of cancellation or termination has been received with
respect to any such policy except for such policies, premiums,
cancellations or terminations that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect. Such policies are sufficient, in the reasonable opinion of the
Company, for compliance by the Company with (i) all requirements of
applicable laws and (ii) all Contracts to which the Company is a party,
and each of the Company and its Subsidiaries has complied in all material
respects with the provisions of each such policy under which it is an
insured party. The Company has not been refused any insurance with
respect to its assets or operations by any insurance carrier to which it
has applied for any such insurance or with which it has carried
insurance, during the last five (5) years. There are no pending or, to
the Knowledge of the Company, threatened claims under any insurance
policy that individually or in the aggregate have had or would reasonably
be expected to have a Material Adverse Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and Sub is duly qualified
or licensed to do business and is in good standing in each material
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
44
consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of Parent
and Sub and no other corporate proceedings on the part of Parent or Sub
are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby do not require approval of the holders of any shares
of capital stock of Parent. This Agreement has been duly executed and
delivered by each of Parent and Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and
binding obligation of Parent and Sub, as applicable, enforce able against
Parent and Sub, as applicable, in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of
equitable remedies. The execution and delivery of this Agreement do not,
and the consummation of the Merger and the other transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation or breach
of, or default (with or without notice or lapse of time, or both) under,
or give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties or
other assets of Parent or Sub under (x) the Restated Certificate of
Incorporation or By-laws of Parent or the Certificate of Incorporation or
By-laws of Sub, (y) any Contract to which Parent or Sub is a party or any
of their respective properties or other assets is subject, in any way
that would prevent, materially impede or materially delay the
consummation by Parent of the Merger (including the payments required to
be made pursuant to Article II) or the other transactions contemplated
hereby or (z) subject to the governmental filings and other matters
referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation applicable to Parent or Sub or their respective
properties or other assets or (B) order, writ, injunction, decree,
judgment or stipulation, in each case applicable to Parent or Sub or
their respective properties or other assets, and in each case, in any way
that would prevent, materially impede or materially delay the
consummation by Parent of the
45
Merger (including the payments required to be made pursuant to Article
II) or the other transactions contemplated hereby. No material consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by Parent and Sub or the
consummation by Parent and Sub of the Merger or the other transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form by Parent under the HSR Act and the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under the HSR Act or any other applicable competition, merger
control, antitrust or similar law or regulation and (2) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware.
(c) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the stockholders of the Company and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
(e) Capital Resources. Parent has sufficient cash to pay the
aggregate Merger Consideration.
46
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as otherwise
permitted pursuant to this Section 4.01(a)(i) through (xvi), the Company
shall, and shall cause each of its Subsidiaries to, carry on its business in
the ordinary course consistent with past practice and as currently proposed by
the Company to be conducted prior to the Closing (including in respect of
research and development activities and programs) and in compliance in all
material respects with all applicable laws, rules, regulations and treaties
and, to the extent consistent therewith, use all commercially reasonable
efforts to preserve intact its current business organiza tions, keep available
the services of its current officers, employees and consultants and preserve
its relationships with customers, suppliers, licensors, licensees, distribu
tors and others having business dealings with it with the intention that its
goodwill and ongoing business shall be unimpaired at the Effective Time. In
addition to and without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, except as
otherwise set forth in Section 4.01(a) of the Company Disclosure Schedule, the
Company shall not, and shall not permit any of its Subsidiaries to, without
Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, other than dividends or distributions by a
direct or indirect wholly owned Subsidiary of the Company to its
shareholders, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (z)
purchase, redeem or otherwise acquire any shares of its capital stock or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities, except for purchases,
redemptions or other acquisitions of capital stock or other securities
required under the
47
terms of any plans, arrangements or agreements existing on the date
hereof between the Company or any of its Subsidiaries and any director or
employee of the Company or any of its Subsidiaries (complete and accurate
copies of which have been heretofore delivered to Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units, including pursuant
to Contracts as in effect on the date hereof (other than the issuance of
shares of Company Common Stock upon the exercise of Company Stock Options
or Warrants, in each case outstanding on the date hereof in accordance
with their terms on the date hereof);
(iii) amend the Company Certificate or the Company By-laws or other
comparable charter or organizational documents of any of the Company's
Subsidiaries, except as may be required by law or the rules and
regulations of the SEC or The Nasdaq Stock Market, Inc.;
(iv) directly or indirectly acquire (x) by merging or consolidating
with, or by purchasing assets of, or by any other manner, any person or
division, business or equity interest of any person or (y) any asset or
assets that, individually, has a purchase price in excess of $60,000 or,
in the aggregate, have a purchase price in excess of $300,000, except for
new capital expenditures, which shall be subject to the limitations of
clause (vii) below, and except for purchases of components, raw materials
or supplies in the ordinary course of business consistent with past
practice;
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or other assets or any interests therein (including
securitizations), except for sales of inventory and used equipment in the
ordinary course of business consistent with past practice; or (y) enter
into, modify or amend any lease of property, except for
48
modifications or amendments that are not materially adverse to the
Company and its Subsidiaries taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
calls, options, warrants or other rights to acquire any debt securities
of the Company or any of its Subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing
or (y) make any loans, advances or capital contributions to, or
investments in, any other person, other than to employees in respect of
travel expenses in the ordinary course of business consistent with past
practice;
(vii) make any new capital expenditure or expenditures which,
individually, is in excess of $50,000 or, (x) during the period beginning
on the date hereof and ending on April 30, 2003, in the aggregate, are in
excess of $1,000,000, or (y) during the period beginning on May 1, 2003,
in the aggregate, are in excess of $300,000 during any calendar month;
(viii) except as required by law or any judgment, (v) pay,
discharge, settle or satisfy any claims, liabilities, obligations or
litigation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction
in the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities disclosed, reflected or
reserved against in the most recent financial statements (or, if
applicable, the notes thereto) of the Company included in the Filed
Company SEC Documents (for amounts not in excess of such reserves) or
incurred since the date of such financial statements in the ordinary
course of business consistent with past practice, (w) cancel any
indebtedness, (x) waive or assign any claims or rights of substantial
value or (y) waive any benefits of, or agree to modify in any respect,
or, subject to the terms hereof, fail to enforce, or consent to any
matter with respect to which consent is required under, any standstill or
similar
49
agreement to which the Company or any of its Subsidiaries is a party or
(z) waive any material benefits of, or agree to modify in any material
respect, or, subject to the terms hereof, fail to enforce in any material
respect, or consent to any matter with respect to which consent is
required under, any material confidentiality or similar agreement to
which the Company or any of its Subsidiaries is a party;
(ix) enter into any Contracts relating to the research, clinical
trial, development, distribution, training, sale, supply, license,
marketing, co-promotion or manufacturing by third parties of products of
the Company or any Subsidiary of the Company or products licensed by the
Company or any Subsidiary of the Company, or the Intellectual Property
Rights of the Company or any Subsidiary of the Company, which,
individually, has a value in excess of $60,000 or, in the aggregate, have
a value in excess of $300,000;
(x) enter into, modify, amend or terminate any Contract or waive,
release or assign any material rights or claims thereunder, which if so
entered into, modified, amended, terminated, waived, released or assigned
would reasonably be expected to (A) adversely affect in any material
respect the Company, (B) impair in any material respect the ability of
the Company to perform its obligations under this Agreement or (C)
prevent or materially delay the consummation of the transactions
contemplated by this Agreement;
(xi) enter into any Contract to the extent consummation of the
transactions contemplated by this Agreement or compliance by the Company
with the provisions of this Agreement would reasonably be expected to
conflict with, or result in a violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of, or result in, termination, cancellation or acceleration of any
obligation or to the loss of a benefit under, or result in the creation
of any Lien in or upon any of the properties or other assets of the
Company or any of its Subsidiaries under, or give rise to any increased,
additional, accelerated, or guaranteed right or
50
entitlements of any third
party under, or result in any material alteration of, any provision of
such Contract;
(xii) enter into any Contract containing any restriction on the
ability of the Company or any of its Subsidiaries to assign its rights,
interests or obligations thereunder, unless such restriction expressly
excludes any assignment to Parent or any of its Subsidiaries in
connection with or following the consummation of the Merger and the other
transactions contemplated by this Agreement;
(xiii) sell, transfer or license to any person or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of the
Company or any of its Subsidiaries;
(xiv) except as otherwise contemplated by this Agreement or as
required to ensure that any Company Benefit Plan or Company Benefit
Agreement is not then out of compliance with applicable law or to comply
with any Contract or Company Benefit Agreement entered into prior to the
date hereof (complete and accurate copies of which have been heretofore
delivered to Parent), (A) adopt, enter into, terminate or amend (I) any
collective bargaining agreement or Company Benefit Plan or (II) any
Company Benefit Agreement or other agreement, plan or policy involving
the Company or any of its Subsidiaries and one or more of their
respective current or former directors, officers, employees or
consultants, (B) increase in any manner the compensation, bonus or fringe
or other benefits of, or pay any bonus of any kind or amount whatsoever
to, any current or former director, officer, employee or consultant,
except for planned salary increases and payment of bonuses, each as
described in Section 4.01(a)(xiv) of the Company Disclosure Schedule, (C)
pay any benefit or amount not required under any Company Benefit Plan or
Company Benefit Agreement or any other benefit plan or arrangement of the
Company or any of its Subsidiaries as in effect on the date of this
Agreement, other than as contemplated in clause (B), (D) grant or pay any
severance or termination pay or increase in any manner the severance or
termination pay of any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries, (E) grant any
awards under any
51
bonus, incentive, performance or other compensation plan or arrangement,
Company Benefit Agreement or Company Benefit Plan (including the grant of
Company Stock Options, Company Restricted Stock, "phantom" stock, stock
appreciation rights, "phantom" stock rights, stock based or stock related
awards, performance units or restricted stock or the removal of existing
restrictions in any Company Benefit Agreements, Company Benefit Plans or
agreements or awards made thereunder), other than as contemplated in
clause (B), (F) amend or modify any Stock Option or Warrant, (G) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement or
Company Benefit Plan or Company Benefit Agreement, (H) take any action to
accelerate the vesting or payment of any compensation or benefit under
any Company Benefit Plan or Company Benefit Agreement or (I) materially
change any actuarial or other assumption used to calculate funding
obligations with respect to any Company Pension Plan or change the manner
in which contributions to any Company Pension Plan are made or the basis
on which such contributions are determined;
(xv) except as required by GAAP, revalue any material assets of the
Company or any of its Subsidiaries or make any change in accounting
methods, principles or practices; or
(xvi) authorize any of, or commit, resolve, propose or agree to take
any of, the foregoing actions.
(b) Other Actions. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that
would, or that would reasonably be expected to, result in any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material respect
or (ii) the
52
failure of it (and, in the case of Parent, of Sub) to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants
or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement. The Company
and Parent shall, to the extent permitted by law, promptly provide the other
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, (i) timely file all tax returns ("Post-Signing Returns")
required to be filed by or on behalf of each such entity; (ii) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so
filed; (iii) accrue a reserve in the books and records and financial
statements of any such entity in accordance with past practice for all taxes
payable by such entity for which no Post-Signing Return is due prior to the
Effective Time; (iv) promptly notify Parent of any suit, claim, action,
investigation, proceeding or audit (collectively, "Actions") pending against
or with respect to the Company or any of its Subsidiaries in respect of any
material amount of tax and not settle or compromise any such Action without
Parent's consent; (v) not make any material tax election or settle or
compromise any material tax liability, other than with Parent's consent or
other than in the ordinary course of business; and (vi) cause all existing tax
sharing agreements, tax indemnity obligations and similar agreements,
arrangements or practices with respect to taxes to which the Company or any of
its Subsidiaries is or may be a party or by which the Company or any of its
Subsidiaries is or may otherwise be bound to be terminated as of the Closing
Date so that after such date neither the Company nor any of its Subsidiaries
shall have any further rights or liabilities thereunder. Any tax returns
described in this Section 4.01(d) shall be complete and correct in all
material respects and shall be prepared on a basis consistent with the past
practice of the Company and in a
53
manner that does not distort taxable income (e.g. by deferring income or
accelerating deductions), provided that no Post-Signing Returns shall be filed
with any taxing authority without Parent's prior written consent.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other advisor, agent or represen tative (collectively,
"Representatives") retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or knowingly
encourage, or take any other action designed to, or which would reasonably be
expected to, facilitate, any Takeover Proposal or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information, or otherwise cooperate in any way with, any
Takeover Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
Representative of the Company or any of its Subsidiaries shall be a breach of
this Section 4.02(a) by the Company. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Takeover Proposal and request the prompt return or destruction of all
confidential information previously furnished. Notwithstanding the foregoing,
at any time prior to obtaining the Stockholder Approval, in response to a bona
fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or would
reasonably be expected to lead to a Superior Proposal, and which Takeover
Proposal was not solicited after the date hereof and was made after the date
hereof and did not otherwise result from a breach of this Section 4.02(a), the
Company may, if its Board of Directors determines in good faith (after
consultation with outside counsel) that it is required to do so in order to
comply with its fiduciary duties to the stockholders of the Company under
applicable law, and subject to compliance with Section 4.02(c), (x) furnish
information with respect to the Company and its Subsidiaries to the person
making such Takeover Proposal (and its Representatives) pursuant to a
customary confidentiality agreement (which need not restrict
54
such person from making an unsolicited Takeover Proposal) not less restrictive
of such person than the Confidentiality Agreement, provided that all such
information has previously been provided to Parent or is provided to Parent
prior to or substantially concurrent with the time it is provided to such
person, and (y) participate in discussions or negotiations with the person
making such Takeover Proposal (and its Representatives) regarding such
Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that would reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or any of its Subsidiaries or of any resulting
parent company of the Company, other than the transactions contemplated by
this Agreement and the Stockholder Agreement.
The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
stockholders) owning, directly or indirectly, all or substantially all of the
shares of Company Common Stock then outstanding (or of the surviving entity in
a merger or the direct or indirect parent of the surviving entity in a merger)
or all or substantially all the assets of the Company, which the Board of
Directors of the Company determines in good faith (after consultation with a
financial advisor of nationally recognized reputation) to be (i) more
favorable to the stockholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably
55
capable of being completed, taking into account all financial, legal,
regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement, the Merger or the
other transactions contemplated by this Agreement or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (any action described in this clause (i) being referred to as a
"Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of its
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement constituting or related to, or that is intended to or
would reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement"). Notwithstanding the foregoing, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company may make a Company
Adverse Recommendation Change if such Board of Directors determines in good
faith (after consultation with outside counsel) that it is required to do so
in order to comply with its fiduciary duties to the stockholders of the
Company under applicable law; provided, however, that no Company Adverse
Recommendation Change may be made until after the fourth business day
following Parent's receipt of written notice (a "Notice of Adverse
Recommendation") from the Company advising Parent that the Board of Directors
of the Company intends to take such action and specifying the reasons
therefor, including the terms and conditions of any Superior Proposal that is
the basis of the proposed action by the Board of Directors (it being
understood and agreed that any amendment to the financial terms or any other
material term of such Superior Proposal shall require a new Notice of Adverse
Recommendation and a new four business day period). In determining whether to
make a Company Adverse Recommendation Change, the Board of Directors of the
Company shall take into account any changes to the financial terms
56
of this Agreement proposed by Parent in response to a Notice of Adverse
Recommendation or otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any Takeover Proposal, the material terms and
conditions of any such Takeover Proposal or inquiry (including any changes
thereto) and the identity of the person making any such Takeover Proposal or
inquiry. The Company shall (i) keep Parent fully informed of the status and
details (including any change to any material term thereof) of any such
Takeover Proposal or inquiry and (ii) provide to Parent as soon as practicable
after receipt or delivery thereof with copies of all correspondence and other
written material sent or provided to the Company or any of its Subsidiaries
from any person that describes any of the terms or conditions of any Takeover
Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or (y) making
any disclosure to the stockholders of the Company if, in the good faith
judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would be inconsistent with its
obligations under applicable law, including the Board of Directors' duty of
candor to the stockholders of the Company; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 4.02(b).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders'
Meeting. (a) As promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall file with the SEC
the Proxy Statement and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to any comments of the SEC with
respect thereto and to cause the Proxy Statement to be mailed to the
stockholders of the Company as promptly as practicable following the date of
57
this Agreement. The Company shall promptly notify Parent upon the receipt of
any comments from the SEC or the staff of the SEC or any request from the SEC
or the staff of the SEC for amendments or supplements to the Proxy Statement
and shall provide Parent with copies of all correspondence between the Company
and its Representatives, on the one hand, and the SEC and the staff of the
SEC, on the other hand. Notwithstanding the foregoing, prior to filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC or the staff of the SEC with respect
thereto, the Company (i) shall provide Parent an opportunity to review and
comment on such document or response and (ii) shall include in such document
or response all comments reasonably proposed by Parent; provided, that Parent
shall use commercially reasonable efforts to provide or cause to be provided
its comments to the Company as promptly as reasonably practicable after the
Proxy Statement is transmitted to Parent for its review.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
solely for the purpose of obtaining the Stockholder Approval. Subject to
Sections 4.02(b) and 4.02(d), the Company shall, through its Board of
Directors, recommend to its stockholders adoption of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, the Company's obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board of
Directors' or such committee's approval or recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement; provided,
however, that no breach of this Section 5.01(b) shall be deemed to have
occurred if the Company adjourns or postpones the Stockholders' Meeting for a
reasonable period of time, each such period of time not to exceed ten business
days, provided that (x) at the time of such adjournment or postponement the
Board of Directors shall be prohibited by the terms of this Agreement from
making a Company Adverse Recommendation Change, and the Stockholders' Meeting
is then scheduled to occur within four business days of the time of
58
such adjournment or postponement or (y) at the time the Board of Directors
announces a Company Adverse Recommendation Change, the Stockholders' Meeting
is then scheduled to occur no later than ten business days from the date of
such Company Adverse Recommendation Change; provided that the Company may not
adjourn or postpone the Stockholders' Meeting pursuant to this clause (ii)
more than two times or for more than fifteen business days in the aggregate.
SECTION 5.02. Access to Information; Confidentiality. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other Representatives, reasonable access
(including for the purpose of coordinating integration activities and
transition planning with the employees of the Company and its Subsidiaries)
during normal business hours and upon reasonable prior notice to the Company
during the period prior to the Effective Time or the termination of this
Agreement to all its and its Subsidiaries' properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its and its Subsidiaries' business, properties and personnel as
Parent may reasonably request. Except for disclosures expressly permitted by
the terms of the Confidentiality Agreement dated as of October 16, 2002, as
amended December 19, 2002, between Parent and the Company (as it may be
amended from time to time, the "Confidentiality Agreement"), Parent shall
hold, and shall cause its officers, employees, accountants, counsel, financial
advisors and other Representatives to hold, all information received from the
Company, directly or indirectly, in confidence in accordance with the
Confidentiality Agreement. No investigation pursuant to this Section 5.02 or
information provided or received by any party hereto pursuant to this
Agreement will affect any of the representations or warranties of the parties
hereto contained in this Agreement or the conditions hereunder to the
obligations of the parties hereto.
SECTION 5.03. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its
59
commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement and the Stockholder
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all acts necessary to cause the conditions to
Closing to be satisfied as promptly as practicable, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity and (iii) the obtaining of
all necessary consents, approvals or waivers from third parties; provided that
none of the Company, Parent or Sub shall be required to make any payment to
any such third parties or concede anything of value to obtain such consents.
In connection with and without limiting the foregoing, the Company and Parent
shall duly file with the U.S. Federal Trade Commission and the Antitrust
Division of the Department of Justice the notification and report form (the
"HSR Filing") required under the HSR Act with respect to the transactions
contemplated by this Agreement as promptly as practicable. The HSR Filing
shall be in substantial compliance with the requirements of the HSR Act. Each
party shall cooperate with the other party to the extent necessary to assist
the other party in the preparation of its HSR Filing, to request early
termination of the waiting period required by the HSR Act and, if requested,
to promptly amend or furnish additional information thereunder. The Company
and its Board of Directors shall (1) take all action necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Stockholder Agreement, the Merger or any of
the other transactions contemplated by this Agreement or the Stockholder
Agreement and (2) if any state takeover statute or similar statute becomes
applicable to this Agreement, the Stockholder Agreement, the Merger or any of
the other transactions contemplated by this Agreement or the Stockholder
Agreement, take all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement may
be consummated as promptly as practicable on the terms
60
contemplated by this Agreement and the Stockholder Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Stockholder Agreement, the Merger and the other transactions contemplated by
this Agreement and the Stockholder Agreement. Nothing in this Agreement shall
be deemed to require Parent to agree to, or proffer to, divest or hold
separate any assets or any portion of any business of Parent, the Company or
any of their respective Subsidiaries.
SECTION 5.04. Company Stock Options; Warrants. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) adjust the terms of all outstanding Company Stock Options and
Company Restricted Stock, whether vested or unvested, as necessary to
provide that the restrictions on outstanding Company Restricted Stock
shall lapse, so that the Company Restricted Stock shall become fully
vested, before the Effective Time, the Company Stock Options will become
fully exercisable and may be exercised before the Effective Time, and, at
the Effective Time, each Company Stock Option outstanding immediately
prior to the Effective Time shall be canceled and the holder thereof
shall then become entitled to receive, as soon as practicable following
the Effective Time, a single lump sum cash payment equal to the product
of (1) the number of shares of Company Common Stock for which such
Company Stock Option shall not theretofore have been exercised and (2)
the excess, if any, of the Merger Consideration over the exercise price
per share of such Company Stock Option; and
(ii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the
Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company shall adopt such resolutions or take such
other actions (if any) as may be required to provide that each Warrant
outstanding immediately prior to the Effective Time shall be canceled in
exchange for a lump sum cash payment equal to (i) the
61
product of (A) the number of shares of Company Common Stock subject to such
Warrant and (B) the Merger Consideration, minus (ii) the product of (A) the
number of shares of Company Common Stock subject to such Warrant and (B) the
per share exercise price of such Warrant (provided that if such calculation
results in a negative number, the lump sum cash payment shall be deemed to be
$0). Such payment shall be made promptly following the Effective Time. All
amounts payable pursuant to this Section 5.04(b) shall be subject to any
required withholding of taxes and shall be paid without interest. The Company
has obtained all consents of the holders of the Warrants necessary to
effectuate the foregoing.
(c) All amounts payable to holders of the Company Stock Options
pursuant to Section 5.04(a) shall be subject to any required withholding of
Taxes and shall be paid without interest as soon as practicable following the
Effective Time.
(d) The Company shall ensure that following the Effective Time, no
holder of a Company Stock Option (or former holder of a Company Stock Option)
or any participant in any Company Stock Plan, Company Benefit Plan or Company
Benefit Agreement shall have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation or any other equity interest
therein (including "phantom" stock or stock appreciation rights).
SECTION 5.05. Indemnification, Advancement of Expenses, Exculpation
and Insurance. (a) Parent shall cause the Surviving Corporation to assume the
obligations with respect to all rights to indemnification, advancement of
expenses and exculpation from liabilities for acts or omissions occurring at
or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company as provided in the Company Certificate,
the Company By-laws or any indemnification agreement between such directors or
officers and the Company (in each case, as in effect on the date hereof),
without further action, as of the Effective Time and such obligations shall
survive the Merger and shall continue in full force and effect in accordance
with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or
62
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and other
assets to any person, then, and in each such case, Parent shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation shall expressly assume the obligations set forth in this
Section 5.05.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and exclusions) and amount no less favorable
to such directors and officers or (ii) request that the Company obtain such
extended reporting period coverage under its existing insurance programs (to
be effective as of the Effective Time); provided further, however, that in
satisfying its obligation under this Section 5.05(c), neither the Company nor
Parent shall be obligated to pay more than $3,000,000 in the aggregate to
obtain such coverage. It is understood and agreed that in the event such
coverage cannot be obtained for $3,000,000 or less in the aggregate, Parent
shall be obligated to provide such coverage as may be obtained for such
$3,000,000 aggregate amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.06. Fees and Expenses. (a) Except as provided in paragraph
(b) of this Section 5.06, all fees and expenses incurred in connection with
this Agreement, the Merger and the other transactions contemplated by this
63
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e) or (ii) (A) prior to the obtaining of the
Stockholder Approval, a Takeover Proposal shall have been made to the Company
or shall have been made directly to the stockholders of the Company generally
or shall have otherwise become publicly known or any person shall have
publicly announced an intention (whether or not conditional) to make a
Takeover Proposal, (B) thereafter this Agreement is terminated by either
Parent or the Company pursuant to Section 7.01(b)(i) (but only if a vote to
obtain the Stockholder Approval or the Stockholders' Meeting has not been
held) or Section 7.01(b)(iii) and (C) within 12 months after such termination,
the Company enters into a definitive agreement to consummate, or consummates,
the transactions contemplated by any Takeover Proposal, then the Company shall
pay Parent a fee equal to $5,480,000 (the "Termination Fee") by wire transfer
of same-day funds on the first business day following (x) in the case of a
payment required by clause (i) above, the date of termination of this
Agreement and (y) in the case of a payment required by clause (ii) above, the
date of the first to occur of the events referred to in clause (ii)(C).
(c) The Company and Parent acknowledge and agree that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.06(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the Termination Fee, the Company shall pay to Parent
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the Termination Fee
from the date such payment was required to be made until the date of payment
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
SECTION 5.07. Public Announcements. Except with respect to any
Company Adverse Recommendation Change, Parent and the Company shall consult
with each other before issuing, and give each other the opportunity to review
and
64
comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as such party may reasonably conclude may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that all formal Company employee
communication programs or announcements with respect to the transactions
contemplated by this Agreement shall be in the forms mutually agreed to by the
parties (such agreement not to be unreasonably withheld or delayed). The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 5.08. Stockholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Stockholder Agreement, and
no such settlement shall be agreed to without Parent's prior written consent.
SECTION 5.09. Employee Matters. (a) Subject to applicable collective
bargaining agreements, for a period of not less than twelve months following
the Effective Time, the employees of the Company who remain in the employment
of the Surviving Corporation and its Subsidiaries (the "Continuing Employees")
shall receive employee benefits that are substantially comparable in the
aggregate to the employee benefits provided to the employees of the Company
immediately prior to the Effective Time; provided that neither Parent nor the
Surviving Corporation nor any of their Subsidiaries shall have any obligation
to issue, or adopt any plans or arrangements providing for the issuance of
shares of capital stock, warrants, options, stock appreciation rights or other
rights in respect of any shares of capital stock of any entity or any
securities convertible or exchangeable into such shares pursuant to any such
plans or arrangements; provided, further, that no plans or arrangements of the
Company or any of its Subsidiaries providing for such issuance shall be taken
into account in determining whether employee benefits are substantially
comparable in the aggregate.
65
(b) For a period of not less than twelve months following the
Effective Time, the Continuing Employees shall receive immigration benefits
that are generally comparable to the immigration benefits currently provided
to the employees of the Company pursuant to the program set forth on Section
5.09(b) of the Company Disclosure Schedule.
(c) Nothing contained herein shall be construed as requiring Parent
or the Surviving Corporation to continue any specific plans or to continue the
employment of any specific person.
(d) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program, (iii) for purposes of eligibility and
participation under any health or welfare plan maintained by Parent (other
than any post-employment health or post-employment welfare plan) and (iv)
unless covered under another arrangement with or of the Company, for benefit
accrual purposes under Parent's severance plan (in the case of each of clauses
(i), (ii), (iii) and (iv), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation), but not for
purposes of any other employee benefit plan of Parent.
(e) Subject to applicable collective bargaining agreements, with
respect to any welfare plan maintained by Parent in which Continuing Employees
are eligible to participate after the Effective Time, Parent shall, and shall
cause the Surviving Corporation to, (i) waive all limitations as to
preexisting conditions and exclusions with respect to participation and
coverage requirements applicable to such employees to the extent such
conditions and exclusions were satisfied or did not apply to such employees
under the welfare plans of the Company and its Subsidiaries prior to the
Effective Time and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.
SECTION 5.10. Stockholder Agreement Legend. The Company will
inscribe upon any Certificate representing
66
Subject Shares that may be tendered by a Stockholder (as such terms are
defined in the Stockholder Agreement) to the Company for such purpose the
following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE, OF
3-DIMENSIONAL PHARMACEUTICALS, INC. REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS OF JANUARY 15, 2003, AND ARE
SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF 3-DIMENSIONAL PHARMACEUTICALS, INC.".
SECTION 5.11. Consents and Other Action. The Company agrees to use
its commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
accomplish the items set forth on Section 5.11 of the Company Disclosure
Schedule.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by law) waiver on or
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) HSR Act. The waiting period (and any exten sion thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by
any court of competent jurisdiction or other statute, law, rule, legal
restraint or prohibition (collectively, "Restraints") shall be in effect
(i) preventing the consummation of the Merger or (ii) which otherwise has
had or would reasonably be expected to have a Material Adverse Effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the
67
Merger are further subject to the satisfaction or (to the extent permitted by
law) waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of the Company contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date. Parent shall have received a
certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and the chief financial officer of the
Company to such effect.
(c) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity, or by any other
person having a reasonable likelihood of prevailing in a manner
contemplated in clauses (i), (ii) or (iii) below, (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or
seeking to place limitations on the ownership of shares of Company Common
Stock (or shares of common stock of the Surviving Corporation) by Parent
or Sub or seeking to obtain from the Company, Parent or Sub any damages
that are material in relation to the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective Subsidiaries of any portion of any business or of any
assets of the Company, Parent or any of their respective Subsidiaries, or
to compel the Company,
68
Parent or any of their respective Subsidiaries to divest or hold separate
any portion of any business or of any assets of the Company, Parent or
any of their respective Subsidiaries, as a result of the Merger, (iii)
seeking to prohibit Parent or any of its Subsidiaries from effectively
controlling in any material respect the business or operations of the
Company or any of its Subsidiaries or (iv) otherwise having, or being
reasonably expected to have, a Material Adverse Effect.
(d) Restraints. No Restraint that would reasonably be expected to
result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of paragraph (c) of this Section 6.02 shall be
in effect.
(e) Certain Employees. No fewer than 80% of the employees of the
Company listed in Section 6.02(e) of the Company Disclosure Schedule
shall be actively employed in scientific and/or technical capacities by
the Company on the Closing Date.
(f) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent or the Company shall
have obtained all consents, approvals, authorizations, qualifications and
orders of third parties required in connection with this Agreement and
the transactions contemplated by this Agreement including (i) those
consents specifically identified on Section 6.02(f) of the Company
Disclosure Schedule and (ii) those consents to assignments of material
Contracts and material Intellectual Property Rights except for those the
failure of which to be obtained individually or in the aggregate would
not reasonably be expected to (A) restrain or prohibit the consummation
of the Merger or (B) prohibit or limit in any material respect the
ownership or operation or effective control by Parent of any portion of
the business or assets of the Company and its Subsidiaries, taken as a
whole.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger
69
is further subject to the satisfaction or (to the extent permitted by law)
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Sub contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier
date, in which case as of such earlier date. The Company shall have
received a certificate signed on behalf of Parent by an executive officer
of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to such effect.
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by and subject to
Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
70
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
June 15, 2003; provided, however, that the right to terminate this
Agreement under this Section 7.01(b)(i) shall not be available to
any party whose breach of a representation or warranty in this
Agreement or whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to be consummated
on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final and
nonappealable; or
(iii) if the Stockholder Approval shall not have been obtained
at the Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representa tions, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.02(a) or
6.02(b) and (B) is incapable of being cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent or (ii) if any Restraint having the
effects referred to in clauses (i) through (iv) of Section 6.02(c) shall
be in effect and shall have become final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.03(a) or
6.03(b) and (B) is incapable of being cured by Parent within 30 calendar
days following receipt of written notice of such breach or failure to
perform from the Company; or
71
(e) by Parent, in the event that prior to the obtaining of the
Stockholder Approval (i) a Company Adverse Recommendation Change shall
have occurred or (ii) the Board of Directors of the Company fails
publicly to reaffirm its recommendation of this Agreement, the Merger or
the other transactions contemplated by this Agreement within ten business
days of receipt of a written request by Parent to provide such
reaffirmation following a Takeover Proposal.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.01(s), the penultimate sentence of Section 5.02,
Section 5.06, this Section 7.02 and Article VIII, which provisions shall
survive such termination, and except to the extent that such termination
results from the willful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
law, waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) subject to the
proviso to the first sentence of Section 7.03 and to the extent permitted by
law, waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party. The failure of any party to this Agreement to assert
72
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
SECTION 7.05. Procedure for Termination or Amendment. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agree ment pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by law.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to Parent or Sub, to:
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
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with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
if to the Company, to:
3-Dimensional Pharmaceuticals, Inc.
Three Lower Makefield Corporate Center
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. U'Xxxxxxxx
Xxxxxxx Xxxxxxx
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of such person's
executive officers (which in the case of the Company shall be deemed to
include, for purposes of this definition, solely those persons listed in
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Section 8.03(b) of the Company Disclosure Schedule) after making due
inquiry of the other executives and managers having primary
responsibility for such matter;
(c) "Material Adverse Change" or "Material Adverse Effect" means any
(i) change, (ii) effect, (iii) event, (iv) occurrence, (v) state of facts
or (vi) development or developments which individually or in the
aggregate would reasonably be expected to result in any change or effect,
that (A) is materially adverse to the business, financial condition,
properties, assets, liabilities (contingent or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, or (B)
would reasonably be expected to prevent or materially impede, interfere
with, hinder or delay the consummation by the Company of the Merger or
the other transactions contemplated by this Agreement; provided, that for
purposes of analyzing whether any change, effect, event, occurrence,
state of facts or development constitutes a "Material Adverse Change" or
"Material Adverse Effect" under this definition, the parties agree that
(x) materiality shall be analyzed from the viewpoint of whether there is
a significant likelihood that the disclosure of such state of facts,
change, development, effect, condition or occurrence would be viewed by a
reasonable investor as having significantly altered the total mix of
information about the Company and its Subsidiaries available to such
investor if the total mix of such information consisted solely of (I) the
representations and warranties of the Company contained in this
Agreement, (II) the Filed Company SEC Documents and (III) the Company
Disclosure Schedule to the extent readily apparent on its face to be
applicable to the analysis of whether a Material Adverse Change or a
Material Adverse Effect has occurred or would reasonably be expected to
occur, and (y) the analysis of materiality shall not be limited solely to
the standpoint of a long-term investor; provided, further, that none of
the following shall be deemed, either alone or in combination, to
constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect
or a Material Adverse Change: (a) any change relating to the United
States economy or securities markets in general, (b) any failure, in and
of its itself, by the Company to meet any internal or published
projections,
75
forecasts, or revenue or earnings predictions for any period ending on or
after the date of this Agreement (it being understood that the facts or
occurrences giving rise or contributing to such failure may be deemed to
constitute, or be taken into account in determining whether there has
been or will be, a Material Adverse Effect or a Material Adverse Change)
and (c) any adverse change, effect, event, occurrence, state of facts or
development reasonably attributable to conditions affecting the industry
in which the Company participates (other than as may arise or result from
regulatory action by a Governmental Entity), so long as the effects do
not disproportionately impact the Company;
(d) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(e) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting partnership
interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise
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defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and references to
all attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.
SECTION 8.05. Consents and Approvals. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
SECTION 8.06. Counterparts. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Stockholder Agreement and the Confidentiality Agreement (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, the Stockholder Agreement and the
Confidentiality Agreement and (b) except for the provisions of Article II and
Section 5.05, are not intended to confer upon any person other than the
parties any legal or equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder
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shall be assigned, in whole or in part, by operation of law or otherwise by
any of the parties without the prior written consent of the other parties, and
any assignment without such consent shall be null and void, except that Sub,
upon prior written notice to the Company, may assign, in its sole discretion,
any of or all its rights, interests and obligations under this Agreement to
Parent or to any direct or indirect wholly owned Subsidiary of Parent, but no
such assignment shall relieve Parent or Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
Federal court located in the State of Delaware or in any state court in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or of any state court located in the State of
Delaware in the event any dispute arises out of this Agreement or the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than a Federal court located in the State of
Delaware or a state court located in the State of Delaware.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto
78
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
79
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
XXXXXXX & XXXXXXX,
by
--------------------------------------
Name:
Title:
LONGBOW MERGER SUB, INC.,
by
--------------------------------------
Name:
Title:
3-DIMENSIONAL PHARMACEUTICALS,
INC.,
by
--------------------------------------
Name:
Title:
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term
Acquisition Agreement..........................................Section 4.02(b)
Actions........................................................Section 4.01(d)
Affiliate......................................................Section 8.03(a)
Agreement.............................................................Preamble
Appraisal Shares...............................................Section 2.01(d)
Biologic....................................................Section 3.01(v)(i)
Certificate....................................................Section 2.01(c)
Certificate of Merger.............................................Section 1.03
Class Action Suit..............................................Section 3.01(h)
Closing...........................................................Section 1.02
Closing Date......................................................Section 1.02
Code...........................................................Section 2.02(h)
Commonly Controlled Entity.....................................Section 3.01(k)
Company...............................................................Preamble
Company Adverse Recommendation Change..........................Section 4.02(b)
Company Benefit Agreements.....................................Section 3.01(g)
Company Benefit Plans..........................................Section 3.01(k)
Company By-laws................................................Section 3.01(a)
Company Certificate............................................Section 1.05(a)
Company Common Stock..................................................Preamble
Company Consolidated Group.....................................Section 3.01(n)
Company Disclosure Schedule.......................................Section 3.01
Company Pension Plan...........................................Section 3.01(l)
Company Preferred Stock........................................Section 3.01(c)
Company Restricted Stock.......................................Section 3.01(c)
Company SEC Documents..........................................Section 3.01(e)
Company Stock-Based Awards.....................................Section 3.01(c)
Company Stock Options..........................................Section 3.01(c)
Company Stock Plans............................................Section 3.01(c)
Confidentiality Agreement.........................................Section 5.02
Continuing Employees...........................................Section 5.09(a)
Contract.......................................................Section 3.01(d)
Covered Reports................................................Section 3.01(e)
DGCL..............................................................Section 1.01
Drug...........................................................Section 3.01(v)
Effective Time....................................................Section 1.03
Environmental Laws.............................................Section 3.01(j)
ERISA..........................................................Section 3.01(j)
Exchange Act...................................................Section 3.01(d)
Exchange Fund..................................................Section 2.02(a)
FDA............................................................Section 3.01(j)
FDCA...........................................................Section 3.01(j)
Filed Company SEC Documents....................................Section 3.01(e)
GAAP...........................................................Section 3.01(e)
Governmental Entity............................................Section 3.01(d)
Hazardous Materials............................................Section 3.01(j)
HSR Act........................................................Section 3.01(d)
HSR Filing........................................................Section 5.03
Intellectual Property Rights...................................Section 3.01(p)
IRS............................................................Section 3.01(l)
Knowledge......................................................Section 8.03(b)
Lazard.........................................................Section 3.01(s)
Legal Provisions...............................................Section 3.01(j)
Liens..........................................................Section 3.01(b)
2
ANNEX I
TO THE MERGER AGREEMENT
3
ANNEX I
TO THE MERGER AGREEMENT
Term
Material Adverse Change........................................Section 8.03(c)
Material Adverse Effect........................................Section 8.03(c)
Medical Device.................................................Section 3.01(v)
Merger................................................................Preamble
Merger Consideration...........................................Section 2.01(c)
Notice of Adverse Recommendation...............................Section 4.02(b)
Parachute Grass Up Payment.....................................Section 3.01(m)
Parent................................................................Preamble
Paying Agent...................................................Section 2.02(a)
Permits........................................................Section 3.01(j)
person.........................................................Section 8.03(d)
Post-Signing Returns...........................................Section 4.01(d)
Primary Company Executives.....................................Section 3.01(m)
Principal Stockholders................................................Preamble
Proxy Statement................................................Section 3.01(d)
Representatives................................................Section 4.02(a)
Release........................................................Section 3.01(j)
Restraints.....................................................Section 6.01(c)
SEC............................................................Section 3.01(d)
Section 203....................................................Section 3.01(r)
Section 262....................................................Section 2.01(d)
Securities Act.................................................Section 3.01(e)
Stockholder Agreement.................................................Preamble
Stockholder Approval...........................................Section 3.01(q)
Stockholders' Meeting..........................................Section 5.01(b)
Sub...................................................................Preamble
Subsidiary.....................................................Section 8.03(e)
Superior Proposal..............................................Section 4.02(a)
Surviving Corporation.............................................Section 1.01
Takeover Proposal..............................................Section 4.02(a)
taxes..........................................................Section 3.01(n)
taxing authority...............................................Section 3.01(n)
tax returns....................................................Section 3.01(n)
Termination Fee................................................Section 5.06(b)
Warrants.......................................................Section 3.01(c)
EXHIBIT A
TO THE MERGER AGREEMENT
Restated Certificate of Incorporation
of the Surviving Corporation
FIRST: The name of the corporation (hereinafter called the
"Corporation") is 3-Dimensional Pharmaceuticals, Inc.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is Corporate
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, County of New
Castle; and the name of the registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, par value $0.01 per
share.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) pursuant to Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director or
officer derived an improper personal benefit. No amendment to or repeal of
this Article SIXTH shall apply to or have any effect on the liability or
alleged liability of any director or officer of the
2
Corporation for or with respect to any acts or omissions of such director or
officer occurring prior to such amendment or repeal.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.
The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
3
Corporation shall have the right to approve the party making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
