Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
GENZYME CORPORATION,
RODEO MERGER CORP.,
AND NOVAZYME PHARMACEUTICALS, INC.
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Dated as of August 6, 2001
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August
6, 2001 is among Genzyme Corporation ("Parent"), a Massachusetts corporation,
Rodeo Merger Corp. ("Merger Sub"), a Delaware corporation, and Novazyme
Pharmaceuticals, Inc. (the "Company"), a Delaware corporation. The parties wish
to effect the acquisition of the Company by Parent through a merger (the
"Merger") of Merger Sub with and into the Company on the terms and conditions
set forth herein.
R E C I T A L S
A. The Board of Directors of the Company has approved and deems it
advisable and in the best interests of its stockholders to consummate a
strategic business combination between the Company and Parent upon the terms and
subject to the conditions set forth herein.
B. The Boards of Directors of Parent and Merger Sub, having determined
that such combination is desirable, have approved the transactions contemplated
by this Agreement, and Parent, as the sole stockholder of Merger Sub, has voted
to adopt this Agreement
C. For United States Federal income tax purposes, it is intended that
the Merger qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement constitute a plan of reorganization within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. For
financial accounting purposes, it is intended that the Merger be accounted for
using the purchase method of accounting.
D. As a condition to, and concurrently with the execution of, this
Agreement certain Company stockholders have executed and delivered to Parent a
Stockholders Voting Agreement (the "Voting Agreement") in the form of EXHIBIT A
attached hereto, pursuant to which such stockholders have, among other things,
agreed to vote all shares of capital stock of the Company held by them in favor
of adoption of this Agreement and matters related thereto and to grant Parent's
designees an irrevocable proxy to vote all such shares.
In consideration of the mutual representations, warranties and
covenants contained herein, the parties hereto agree as follows:
SECTION 1 - THE MERGER
1.1 THE MERGER.
(a) Upon the terms and subject to the conditions hereof, and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Merger Sub shall be merged with and into the Company. The Merger shall
occur at the Effective Time (as defined herein). Following the Merger, the
Company shall continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation") and the separate corporate existence of
Merger Sub shall cease.
(b) The name of the Surviving Corporation shall be "Novazyme
Pharmaceuticals, Inc."
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver of all
conditions to the Merger, the parties shall cause a certificate of merger (the
"Certificate of Merger") with respect to the Merger to be filed and recorded in
accordance with the DGCL, and shall take all such further actions as may be
required by law to make the Merger effective. The Merger shall be effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of Delaware in accordance with the DGCL, or at such later time as is specified
in the Certificate of Merger (the "Effective Time"). Immediately prior to the
filing of the Certificate of Merger, a closing (the "Closing") will be held at
the offices of Xxxxxx & Dodge LLP (or such other place as the parties may agree)
for the purpose of confirming the foregoing. The date on which the Closing
occurs is referred to herein as the "Closing Date" and, unless the parties
otherwise agree or the Closing is delayed pursuant to SECTION 8.1(e), shall be
no later than the fifth business day after the satisfaction or waiver of the
conditions set forth in SECTIONS 5, 6 and 7 (other than delivery of items to be
delivered at the Closing).
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Sections 259, 260 and 261 of the DGCL.
1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of Incorporation
and By-Laws of Merger Sub, in each case as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation until thereafter changed as provided therein or by
applicable law.
1.5 DIRECTORS AND OFFICERS.
(a) The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
in each case, until the earlier of his or her resignation or removal or
otherwise ceasing to be a director or officer, as the case may be, or until his
or her respective successor is duly elected and qualified in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation.
(b) Each current director of the Company shall submit his or her
resignation at the Closing to be effective at the Effective Time.
1.6 CONVERSION OF COMMON STOCK.
(a) MERGER CONSIDERATION. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub or the Company:
(i) Subject to payment of cash in lieu of fractional shares as
provided in SECTION 1.6(c) and to SECTION 8.1(e), all shares of Company common
stock, $0.01 par value per share ("Company Common Stock"), including shares of
Company Common Stock issued upon conversion, immediately prior to the Effective
Time, of the Convertible Debentures (as defined in SECTION 1.7(c)) and shares of
Company Preferred Stock (as defined in SECTION 1.7(d)), but excluding shares
held by the Company as treasury stock, shares held by any Company
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Subsidiary (as defined in SECTION 2.4(a)) and Dissenting Shares (as defined in
SECTION 1.6(f)), shall be cancelled and extinguished and automatically converted
into and become the right to receive: (A) shares of Genzyme General Division
common stock, $0.01 par value per share ("Parent Common Stock") (together with
the associated Genzyme General Division Common Stock Purchase Rights under
Parent's Second Amended and Restated Renewed Rights Agreement (the "Parent
Rights Plan")), equal to the Initial Merger Consideration (as defined below) and
(B) such additional shares of Parent Common Stock (together with the associated
Genzyme General Division Common Stock Purchase Rights under the Parent Rights
Plan) (the "Contingent Merger Consideration") as are payable pursuant to SECTION
1.6(b). The Initial Merger Consideration and the Contingent Merger
Consideration, together with cash payments in lieu of fractional shares pursuant
to SECTION 1.6(c), are referred to collectively as the "Merger Consideration."
(ii) The "Initial Merger Consideration" shall equal the number of
shares of Parent Common Stock determined by dividing (x) $137,500,000 (the
"Upfront Payment") less the Convertible Deduction (as defined below) by (y) the
Closing Parent Price (as defined below). The Upfront Payment shall also be
decreased by amounts, other than the Merger Consideration, paid or payable with
respect to Company Preferred Stock (including any redemption payment) or
Convertible Debentures; the consideration that would otherwise be allocable to
Dissenting Shares if the holders thereof had not exercised dissenters' rights
under the DGCL; and any amount by which the Transaction Expenses exceed
$2,250,000. The "Transaction Expenses" shall equal fees and expenses of the
Company's attorneys, accountants, financial advisors and other outside advisors
relating to this Agreement or the transactions contemplated hereby. If prior to
the Effective Time there is a change in the number of issued and outstanding
shares of Parent Common Stock as the result of a reclassification, subdivision,
recapitalization, combination, exchange, stock split (including reverse stock
split), stock dividend or distribution or other similar transaction (other than
the Merger), the number of shares of Parent Common Stock included in the Initial
Merger Consideration shall be equitably adjusted to give effect to such event.
If, prior to the Effective Time, Parent Common Stock is changed into shares of
another class or series of stock, or into the right to receive other assets,
whether by a reorganization, reclassification, merger, consolidation, sale of
assets or other otherwise, then the Initial Merger Consideration shall consist
of the amount of shares of stock and other assets receivable upon such event by
holders of the number of shares of Parent Common Stock that would have
constituted the Initial Merger Consideration immediately prior to such event.
(iii) The "Convertible Deduction" shall equal (A) the product of
(x) the quotient of (I) the sum of the number of Company Vested Option Shares
(as such term is defined below), the number of shares underlying the Company
Warrants (as defined in SECTION 1.7(b)) outstanding immediately prior to the
Effective Time and the number of shares of Company Common Stock that would be
issuable immediately prior to the Effective Time upon conversion of the shares
of Series B Stock (as defined in SECTION 1.7(d) underlying the Company Preferred
Stock Purchase Rights (as defined below) outstanding immediately prior to the
Effective Time divided by (II) the sum of the total number of shares of Company
Common Stock outstanding immediately prior to the Effective Time, plus the
number of Company Vested Option Shares, the number of shares of Company Common
Stock issuable immediately prior to the Effective Time upon exercise of all
Company Warrants outstanding immediately prior to the Effective Time and
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the number of shares of Company Common Stock that would be issuable immediately
prior the Effective Time upon conversion of the shares of Series B Stock
underlying the Company Preferred Stock Purchase Rights outstanding immediately
prior to the Effective Time (the result obtained from the sum contemplated under
this clause (II) being hereinafter referred to as the "Diluted Number")
multiplied by (y) the sum of (I) the Upfront Payment and (II) the Aggregate
Exercise Price (as defined below), less (B) the Aggregate Exercise Price.
(iv) The "Closing Parent Price" shall equal the average of the per
share closing prices of Parent Common Stock as reported by The Nasdaq National
Market for the 20 trading days ending three trading days prior to the Closing
Date, rounded to the fourth decimal place; PROVIDED, HOWEVER, subject to SECTION
8.1(e), in no event shall the Closing Parent Price be less than $37.80 or
greater than $70.20 (in either case, subject to adjustment for any
reclassification, subdivision, recapitalization, combination, exchange, stock
split (including reverse stock split), stock dividend or distribution or other
similar transaction (other than the Merger) affecting the shares of Parent
Common Stock).
(v) The term "Company Vested Option Shares" shall mean all shares
of Company Common Stock that may be purchased immediately prior to the Effective
Time (after giving effect to any applicable acceleration of exercise provisions)
upon exercise of Company Options (as defined in SECTION 1.7(a)) outstanding
immediately prior to the Effective Time.
(vi) The term "Company Preferred Stock Purchase Rights" shall mean
the rights to purchase shares of Series B Stock pursuant to the Series B
Purchase Agreement.
(vii) The term "Aggregate Exercise Price" shall mean the aggregate
exercise price payable to the Company with respect to all Company Vested Option
Shares and all shares of Company Common Stock issuable upon exercise of all
Company Warrants outstanding immediately prior to the Effective Time plus (A)
the aggregate exercise price paid to the Company with respect to any Company
Vested Options Shares issued upon exercise of Company Options exercised between
August 2, 2001 and the Effective Time, and (B) the aggregate exercise price paid
to the Company with respect shares of Company Common Stock issued upon exercise
of Company Warrants exercised between August 2, 2001 and the Effective Time.
(viii) The term "Series B Purchase Agreement" shall mean that
certain Securities Purchase Agreement dated April 17, 2001 by and among the
Company and the other parties thereto, as amended and in effect immediately
prior to the Effective Time, including any additional purchaser agreements that
the Company enters into prior to the Effective Time pursuant to Section 2.1(b)
thereto.
(ix) The Initial Merger Consideration shall be allocated among the
shares of Company Common Stock outstanding immediately prior the Effective Time
based on the "Exchange Ratio," which shall equal the quotient, rounded to the
fourth decimal place, determined by dividing the Initial Merger Consideration by
the number of shares of Company Common Stock outstanding immediately prior to
the Effective Time (less the number of shares cancelled pursuant to SECTION
1.6(d) to the extent outstanding). SCHEDULE I hereto indicates the
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percentage allocation among holders of Company capital stock as if the Effective
Time occurred on the date of this Agreement. The Company will update SCHEDULE I
immediately prior to the Closing in accordance with SECTION 4.21.
(b) CONTINGENT MERGER CONSIDERATION. Each holder (together with all of
such holder's permitted transferees, a "Holder") of shares Company Common Stock
outstanding immediately prior to the Effective Time shall be entitled to
receive, subject to payment of cash in lieu of fractional shares, the following
Contingent Merger Consideration:
(i) Each Holder on the date, if any, on which the First Milestone
(as defined in clause (iii) below) occurs (the "First Milestone Date") shall be
entitled to receive the number of shares of Parent Common Stock, rounded to four
decimal places, equal to the product of (x) the First Contingent Exchange Ratio
multiplied by (y) the number of shares of Company Common Stock held by such
Holder immediately prior to the Effective Time. The "First Contingent Exchange
Ratio" shall equal the quotient, rounded to four decimal places, of (x) the
quotient of (A) $37,500,000 (the "First Contingent Merger Consideration")
divided by (B) the First Milestone Closing Parent Price, divided by (y) the
Diluted Number. The "First Milestone Closing Parent Price" shall equal the
average for the 20 trading days ending three trading days prior to the First
Milestone Date, rounded to the fourth decimal place, of the last sale prices or,
in case no sales take place on any such day, the average of the closing bid and
ask prices, in either case, at 4:00 p.m. (or such earlier time as the last sale
prior to 4:00 p.m.), New York City time, as reported by The Nasdaq National
Market (or, if the Parent Common Stock is not then quoted on The Nasdaq National
Market, on the New York Stock Exchange Composite Tape), or, if the Parent Common
Stock is not then quoted on The Nasdaq National Market (or listed or admitted to
trading on the New York Stock Exchange), on the primary securities exchange on
which the Parent Common Stock is then traded, or if the Parent Common Stock is
not listed or admitted to trading on any securities exchange, the last sale
prices or, in case no such sales takes place on such days, the average of the
highest reported bid and lowest reported ask prices as furnished by the National
Association of Securities Dealers, Inc. or, if the National Association of
Securities Dealers, Inc. is not then furnishing such information, the average of
the highest reported bid and lowest reported ask prices as available from any
other over-the-counter market, or if on such trading days the Parent Common
Stock is not reported in any such market, the fair value of a share of Parent
Common Stock on such days, as determined in good faith by, and evidenced by a
resolution of, Parent's Board of Directors (the "Quoted Price").
(ii) Each Holder on the date, if any, on which the Second Milestone
(as defined in clause (iii) below) occurs (the "Second Milestone Date"), shall
be entitled to receive the number of shares of Parent Common Stock, rounded to
four decimal places, equal to the product of (x) the Second Contingent Exchange
Ratio multiplied by (y) the number of shares of Company Common Stock held by
such Holder immediately prior to the Effective Time. The "Second Contingent
Exchange Ratio" shall equal the quotient, rounded to four decimal places, of (x)
the quotient of (A) $50,000,000 (the "Second Contingent Merger Consideration")
divided by (B) the Second Milestone Closing Parent Price, divided by (y) the
Diluted Number. The "Second Milestone Closing Parent Price" shall equal the
average for the 20 trading days ending three trading days prior to the Second
Milestone Date, rounded to the fourth decimal place, of the Quoted Price.
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(iii) For purposes of this SECTION 1.6(b), the "First Milestone"
shall mean the grant to Parent or a Related Person (as defined below) of final
approval by the United States Food and Drug Administration, or any successor
agency thereto (the "FDA"), of a Biologics License Application (or a similar
application filed with the FDA after completion of clinical trials to obtain
marketing approval for a product in the United States) (a "BLA") on or before
June 1, 2006 for a product
(A) that is approved for treatment of patients with a
lysosomal storage disorder and either (I) whose manufacture,
use, sale or importation by a third party would, absent a
license granted to such third party by Parent or the Surviving
Corporation, infringe one or more Valid Claims or (II) which
uses any of the Company's proprietary phosphorylation and/or
glycosylation technologies, methods and know how (including,
without limitation, the method of use of mannosidase
inhibitors) for the production of lysosomal enzymes using
human recombinant phosphotransferase enzyme and/or human
recombinant phosphodiester A-GlcNAcase (UCE) (the "COMPANY
PROPRIETARY TECHNOLOGY"), or
(B) that is approved for treatment of patients with
Pompe disease, Fabry disease or mucopolysaccharidosis I
disease ("MPS I") and uses lectin-resistant cell lines for the
production of lysosomal enzymes
(a product meeting the requirements of either clause (A) or (B) above being
hereinafter referred to as an "Approved Product"), and the "Second Milestone"
shall mean the grant to Parent of final approval by the FDA of a BLA on or
before June 1, 2008 for a second Approved Product. The First Milestone and the
Second Milestone are each a "Milestone" and together, the "Milestones." For
purposes of this SECTION 1.6(b)(iii), the term (A) "Related Person" means any
(1) subsidiary or affiliate of Parent, (2) joint venture in which Parent has an
equity interest or sublicensee of Parent that has or acquires (x) rights to use
the Company Proprietary Technology, (y) rights under any patent or patent
application listed on Section 1.6(b)(iii) or 2.12 of the Company Disclosure
Schedule or (z) rights to use the Company's technologies, methods and know how
for the use of lectin-resistant cell lines for the production of lysosomal
enzymes for therapies to treat patients with Pompe disease, Fabry disease or MPS
I, or (3) successor, assign or transferee of Parent or of the foregoing persons
or entities, and (B) "Valid Claim" means an issued claim of an unexpired patent,
or a claim of a pending patent application, listed on SECTION 2.12 of the
Company Disclosure Schedule (as defined below), or a claim of a patent
application filed on or prior to the Effective Time or within 90 days of the
Effective Time (but at the latest by December 31, 2001) but that was in the
process of being drafted prior to the Effective Time, and is listed on SECTION
1.6(b)(iii) of the Company Disclosure Schedule, and, in the case of applications
filed after the Effective Time, the filing of the application has been approved,
in the exercise of good faith judgment, as to patentable subject matter by
Parent's Chief Patent Counsel (or a claim of any divisional, continuation, or
continuation-in-part of any of such patent application to the extent such claim
is directed to the subject matter specifically described in the aforementioned
patent applications), directed to subject matter which shall not have been
withdrawn, canceled or disclaimed or held permanently revoked, invalid or
unenforceable by a court of competent jurisdiction in an unappealed or
unappealable decision, and which has not
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been admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise. Notwithstanding the foregoing, a claim directed to subject matter of
a pending patent application, divisional application, or continuation-in-part
application or the foreign equivalent thereof shall cease to be a Valid Claim if
no patent has issued on such claim on or prior to the seventh anniversary of the
date of filing such patent application (or, in the case of a continuation
application or foreign equivalent thereof, the date of filing of the earliest
patent application).
(iv) Within 10 business days of each Milestone Date, Parent shall
send to each Holder listed on SCHEDULE I as updated through the applicable
Milestone Date (A) a certificate representing that number of whole shares of
Parent Common Stock issuable as Contingent Merger Consideration and (B) a check
in the amount of any cash due pursuant to SECTION 1.6(c). No interest shall be
paid or shall accrue on any such amounts.
(v) If, prior to a Milestone Date, Parent Common Stock is changed
into shares of another class or series of stock, or into the right to receive
other assets, whether by a reorganization, reclassification, merger,
consolidation, sale of assets or otherwise, then the Contingent Merger
Consideration shall consist of the amount of shares of stock and other assets
receivable upon such event by holders of the number of shares of Parent Common
Stock that would have constituted the Contingent Merger Consideration
immediately prior to such event. In addition, if within the period beginning 23
trading days prior to the applicable Milestone Date and ending on such Milestone
Date, there is a change in the number of issued and outstanding shares of Parent
Common Stock as the result of a reclassification, subdivision, recapitalization,
combination, exchange, stock split (including reverse stock split), stock
dividend or distribution or other similar transaction (other than the Merger),
the number of shares of Parent Common Stock payable upon achievement of such
Milestone and/or the First Milestone Closing Parent Price or Second Milestone
Closing Parent Price, as applicable, shall be equitably adjusted to give effect
to such event.
(vi) The right of a Holder to receive Contingent Merger
Consideration, if any: (A) shall be personal to such Holder; (B) shall not be
transferable by such Holder or any person claiming under such Holder, whether by
sale, assignment, pledge or otherwise, except as set forth below, and any other
purported transfer shall be void and of no force or effect; (C) shall not
constitute or represent any equity or ownership interest in Parent or the
Surviving Corporation; and (D) shall not entitle the Holder of such right to any
voting or dividend rights, rights to any other distributions or other rights
common to stockholders. Notwithstanding the foregoing, this Agreement shall not
restrict any Holder from transferring the right to receive Contingent Merger
Consideration to other entities controlled by such Holder or, in the case of any
Holder that is a corporation, general partnership, limited partnership, limited
liability company or venture capital firm, to such Holder's stockholders,
partners, members or other holders of equity securities in such Holder, as
applicable, or in connection with tax, estate or financial planning, or the
transfer of such right upon the death of the Holder by operation of law or
otherwise, PROVIDED THAT, the Holder provides to Parent prompt written notice of
such transfer.
(vii) After the Effective Time, this SECTION 1.6(b) may be amended,
and any obligation of Parent hereunder waived, only by means of a written
instrument executed by Parent and Holders with the right to receive at least
two-thirds of the Contingent Merger Consideration.
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(c) NO FRACTIONAL SHARES. No fractional shares of Parent Common Stock
shall be issued pursuant to this Agreement. In lieu of fractional shares, each
stockholder who would otherwise have been entitled to a fraction of a share of
Parent Common Stock hereunder (after aggregating all fractional shares to be
received by such stockholder at such time) shall receive, without interest, an
amount in cash (rounded to the nearest whole cent) determined by multiplying
such fraction by the average of the high and low per share trading prices of
Parent Common Stock as reported by The Nasdaq National Market (or such other
market on which such shares are then primarily traded) on the trading day on
which the Effective Time, the First Milestone Date or the Second Milestone Date,
as applicable, occurs (or, if the Effective Time or a Milestone Date occurs on a
date that is not a trading day, on the immediately preceding trading day).
(d) CANCELLED STOCK. All shares of Company Common Stock held at the
Effective Time by the Company as treasury stock or by a Company Subsidiary shall
be cancelled and extinguished and no payment shall be made with respect thereto.
(e) MERGER SUB STOCK. At the Effective Time, each issued and
outstanding share of the capital stock of Merger Sub shall be converted into and
become one fully paid and nonassessable share of common stock, $0.01 par value,
of the Surviving Corporation.
(f) DISSENTING SHARES.
(i) Shares of Company Common Stock held by a stockholder who has
properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (collectively, the "Dissenting Shares") shall not be
converted into Merger Consideration. From and after the Effective Time, a
stockholder who has properly exercised such appraisal rights shall not have any
rights of a stockholder of the Company, Parent or the Surviving Corporation with
respect to such shares, except those provided under Section 262 of the DGCL. If,
after the Effective Time of the Merger, any such stockholder fails to perfect or
loses any such right to appraisal, such shares shall be treated as if they had
been converted as of the Effective Time into the right to receive the Merger
Consideration.
(ii) The Company shall give Parent (A) prompt notice of any written
demands under Section 262 of the DGCL with respect to any shares of Company
Common Stock, any withdrawal of any such demand and any other instruments served
pursuant to the DGCL and received by the Company and (B) the right to
participate in all negotiations and proceedings with respect to any such
demands. The Company shall cooperate with Parent concerning, and shall not,
except with the prior written consent of Parent (which such consent shall not be
unreasonably withheld or delayed), voluntarily make any payment with respect to,
or offer to settle or settle, any such demands.
(g) Notwithstanding anything in this SECTION 1.6 to the contrary, in no
event shall the number of shares of Parent Common Stock issued pursuant to the
terms of this
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Agreement and the transactions contemplated hereby exceed the number of shares,
subject to equitable adjustment, equal to 19.9% of the number of shares of
common stock of Parent outstanding on the date hereof.
1.7 COMPANY OPTIONS, WARRANTS, CONVERTIBLE DEBENTURES, PREFERRED STOCK AND
COMPANY PREFERRED STOCK PURCHASE RIGHTS.
(a) COMPANY OPTIONS. At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (the "Company Options") under the
Company's 2000 Stock Option Plan and 2001 Stock Option Plan (collectively, the
"Company Stock Option Plans"), whether or not then exercisable, shall be assumed
by Parent. Each Company Option so assumed by Parent under this Agreement (each
an "Assumed Option") shall continue to have, and be subject to, the same terms
and conditions set forth in the applicable Company Stock Option Plan immediately
prior to the Effective Time (including, without limitation, any repurchase
rights), except that (i) each Assumed Option shall be exercisable (or shall
become exercisable in accordance with its terms) for (A) that number of shares
of Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were subject to such Assumed Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (B) in addition (I) if the
First Milestone is achieved, an additional number of shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were subject to such Assumed Option immediately prior to the Effective Time
multiplied by the First Contingent Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock, (II) if the Second Milestone is
achieved, an additional number of shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were subject to
such Assumed Option immediately prior to the Effective Time multiplied by the
Second Contingent Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock, and (ii) the per share exercise price for the
shares of Parent Common Stock issuable only pursuant to clause (A) above upon
exercise of such Assumed Option shall be equal to the quotient determined by
dividing the exercise price per share of Company Common Stock at which such
Assumed Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded up to the nearest whole cent, and (iii) other than as
set forth in the foregoing clause (ii), no additional exercise price shall be
due or payable with respect to any shares of Parent Common Stock issued or
issuable upon or on account of the exercise of such Assumed Option. In the event
that any Assumed Option is exercised, in whole or in part, prior to the
achievement of the First Milestone and/or the Second Milestone, as the case may
be, then, in the event that the First Milestone and/or the Second Milestone, as
the case may be, is or are achieved following such exercise, Parent shall issue
to the holder of such Assumed Option (for no additional consideration) that
number of shares of Parent Common Stock that such holder of such Assumed Option
would have been entitled to receive pursuant to clauses (B)(I) and/or (B)(II)
above, as the case may be, if the portion of such Assumed Option that was
exercised prior to the First Milestone Date and/or the Second Milestone Date, as
the case may be, were exercised on the First Milestone Date and/or the Second
Milestone Date, as the case may be. After the Effective Time, Parent shall issue
to each holder of an outstanding Assumed Option a notice describing the
foregoing assumption of such Assumed Options by Parent. The adjustments provided
herein with respect to any Assumed Options that are "incentive stock options" as
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defined in Section 422 of the Code shall be and are intended to be effected in a
manner which is consistent with Section 424(a) of the Code so as to preserve the
benefits of such "incentive stock options."
(b) COMPANY WARRANTS. At the Effective Time, each outstanding warrant
to purchase shares of Company Common Stock (the "Company Warrants"), whether or
not then exercisable, shall be assumed by Parent. Each Company Warrant so
assumed by Parent under this Agreement (each an "Assumed Warrant") shall
continue to have, and be subject to, the same terms and conditions set forth in
the applicable warrant immediately prior to the Effective Time (including,
without limitation, any repurchase rights), except that (i) each Assumed Warrant
shall be exercisable (or shall become exercisable in accordance with its terms)
for (A) that number of shares of Parent Common Stock equal to the product of the
number of shares of Company Common Stock that were issuable upon exercise of
such Assumed Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (B) in addition (I) if the First Milestone is achieved, an
additional number of shares of Parent Common Stock equal to the product of the
number of shares of Company Common Stock that were subject to such Assumed
Warrant immediately prior to the Effective Time multiplied by the First
Contingent Exchange Ratio, rounded down to the nearest whole number of shares of
Parent Common Stock, and (II) if the Second Milestone is achieved, an additional
number of shares of Parent Common Stock equal to the product of the number of
shares of Company Common Stock that were subject to such Assumed Warrant
immediately prior to the Effective Time multiplied by the Second Contingent
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock, (ii) the per share exercise price for the shares of Parent Common
Stock issuable only pursuant to clause (A) above upon exercise of such Assumed
Warrant shall be equal to the quotient determined by dividing the exercise price
per share of Company Common Stock at which such Assumed Warrant was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent, and (iii) other than as set forth in the foregoing clause
(ii), no additional exercise price shall be due or payable with respect to any
shares of Parent Common Stock issued or issuable upon or on account of the
exercise of such Assumed Warrant. In the event that any Assumed Warrant is
exercised, in whole or in part, prior to the achievement of the First Milestone
and/or the Second Milestone, as the case may be, then, in the event that the
First Milestone and/or the Second Milestone, as the case may be, is or are
achieved following such exercise, Parent shall issue to the holder of such
Assumed Warrant (for no additional consideration) that number of shares of
Parent Common Stock that such holder of such Assumed Warrant would have been
entitled to receive pursuant to clauses (B)(I) and/or (B)(II) above, as the case
may be, if the portion of such Assumed Warrant that was exercised prior to the
First Milestone Date and/or the Second Milestone Date, as the case may be, were
exercised on the First Milestone Date and/or the Second Milestone Date, as the
case may be. After the Effective Time, Parent shall issue to each holder of an
outstanding Assumed Warrant a notice describing the foregoing assumption of such
Assumed Warrants by Parent.
(c) CONVERTIBLE DEBENTURES. Prior to the Effective Time, Neose
Technologies, Inc. ("Neose") shall have elected to convert those certain
outstanding 8% Convertible Debentures issued on May 18, 2000 in the aggregate
principal amount of $562,500 (the
10
"Convertible Debentures"), into shares of Company Common Stock, and the Company
shall have effected such conversion, in accordance with the terms of the
Convertible Debentures.
(d) COMPANY PREFERRED STOCK. Prior to the Effective Time, the Company
shall have amended its Certificate of Designation of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock, as amended (the
"Certificate of Designation"), such that immediately prior to the Effective
Time, without any action on the part of Parent, the Company, Merger Sub or any
holder of Company Preferred Stock, each outstanding share of the Company's
Series A Convertible Preferred Stock, $0.01 par value per share (the "Series A
Stock"), and Series B Convertible Preferred Stock, $0.01 par value per share
(the "Series B Stock" and together with the Series A Stock, the "Company
Preferred Stock"), other than shares held by the Company or any Company
Subsidiary which shall be cancelled and extinguished and no payment will be made
with respect thereto, shall automatically be converted into shares of Company
Common Stock in accordance with such amended Certificate of Designation and
shall thereafter be converted into Merger Consideration as provided in SECTION
1.6 hereto.
(e) COMPANY PREFERRED STOCK PURCHASE RIGHTS. At the Effective Time, (i)
each outstanding Company Preferred Stock Purchase Right shall become the right
(the "Assumed Preferred Stock Purchase Right") to purchase, and, upon exercise
of such Assumed Preferred Stock Purchase Right, Parent shall be obligated to
issue, (A) that number of shares of Parent Common Stock equal to the product of
the number of shares of Company Common Stock (the "Purchase Right Conversion
Shares") issuable immediately prior to the Effective Time upon the assumed
conversion of the shares of Series B Stock issuable upon the assumed exercise of
such Company Preferred Stock Purchase Right immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounded down to the nearest whole number
of shares of Parent Common Stock and (B) in addition (I) if the First Milestone
is achieved, an additional number of shares of Parent Common Stock equal to the
product of the number of Purchase Right Conversion Shares multiplied by the
First Contingent Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock, and (II) if the Second Milestone is achieved, an
additional number of shares of Parent Common Stock equal to the product of the
number of Purchase Right Conversion Shares multiplied by the Second Contingent
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock, and (ii) the per share purchase price for the shares of Parent
Common Stock issuable only pursuant to clause (A) above upon exercise of such
Assumed Preferred Stock Purchase Right shall be equal to the quotient determined
by dividing (1) the quotient determined by dividing (a) the aggregate purchase
price for all of the shares of Series B Stock for which the Assumed Preferred
Stock Purchase Right was exercisable immediately prior to the Effective Time by
(b) the number of shares of Company Common Stock issuable upon the assumed
conversion of all shares of Series B Stock described in the preceding clause (a)
immediately prior to the Effective Time by (2) the Exchange Ratio, rounded up to
the nearest whole cent and (iii) other than as set forth in the foregoing clause
(ii), no additional purchase price shall be due or payable with respect to any
shares of Parent Common Stock issued or issuable upon or on account of the
exercise of such Assumed Preferred Stock Purchase Right. In the event that any
Assumed Preferred Stock Purchase Right is exercised, in whole or in part, prior
to the achievement of the First Milestone and/or the Second Milestone, as the
case may be, then, in the event that the First Milestone and/or the Second
Milestone, as the case may be, is or are achieved following such exercise,
Parent shall issue to the holder of such Assumed Preferred
11
Stock Purchase Right (for no additional consideration) that number of shares of
Parent Common Stock that such holder of such Assumed Preferred Stock Purchase
Right would have been entitled to receive pursuant to clauses (B)(I) and/or
(B)(II) above, as the case may be, if the portion of such Assumed Preferred
Stock Purchase Right that was exercised prior to the First Milestone Date and/or
the Second Milestone Date, as the case may be, were exercised on the First
Milestone Date and/or the Second Milestone Date, as the case may be. Prior to
the Effective Time, the Company and the other parties to the Series B Purchase
Agreement may amend the Series B Purchase Agreement to provide for the cashless
exercise and/or net issue exercise of the Assumed Preferred Stock Purchase
Rights, PROVIDED that any such cashless exercise and/or net issue exercise
provisions shall become effective only from and after the Effective Time and,
provided, further, that no such amendment shall decrease the number of shares
included in the Diluted Number. Except as modified or changed in the manner
contemplated in this Section 1.7(e), each Assumed Preferred Stock Purchase Right
shall continue to have, and be subject to, the terms and conditions set forth in
the Series B Purchase Agreement as amended and in effect immediately prior to
the Effective Time.
1.8 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed and no further registration of transfers of
shares of Company Common Stock or Company Preferred Stock shall thereafter be
made. On or after the Effective Time, any Certificates presented to the Exchange
Agent (as defined in SECTION 1.9) or Parent for any reason shall be converted
into the right to receive the Merger Consideration with respect to the shares of
Company Common Stock or Company Preferred Stock formerly represented thereby and
any dividends or other distributions to which the holders thereof are entitled
pursuant to SECTION 1.13. For purposes of this Agreement, a "Certificate" is a
stock certificate that immediately prior to the Effective Time represented
outstanding shares of (i) Company Common Stock or (ii) Company Preferred Stock
that automatically converted into Company Common Stock immediately prior to the
Effective Time pursuant to the Certificate of Designation, but for which no new
stock certificate representing the shares of Company Common Stock into which
such Company Preferred Stock converted has been issued, that were converted into
the right to receive the Merger Consideration.
1.9 EXCHANGE OF CERTIFICATES.
(a) Parent shall authorize one or more persons to act as Exchange Agent
hereunder (the "Exchange Agent") for at least (i) the period commencing on the
date hereof and ending six months after the Effective Time, (ii) the period
commencing on the First Milestone Date and ending six months after such date,
and (iii) the period commencing on the Second Milestone Date and ending six
months after such date. At least seven business days prior to the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record of
Company Common Stock that will be converted into the right to receive the Merger
Consideration (i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify, (ii) such other customary documents
as may be required including without limitation, a Form W-9, and (iii)
instructions for surrendering their Certificates in exchange for the Initial
Merger Consideration (the "Transmittal Materials"). Promptly after the Effective
Time, the Exchange Agent will deliver to each Company stockholder who has
properly completed and returned such Transmittal Materials to the Exchange Agent
at or prior to
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the Closing, together with the Certificate or Certificates which immediately
prior to the Effective Time represented such holder's outstanding shares of
Company Common Stock, (i) a certificate representing that number of whole shares
of Parent Common Stock into which the shares of Company Common Stock theretofore
represented by the Certificates so surrendered shall have been converted
pursuant to SECTION 1.6(a) and (ii) a check in the amount of any cash due with
respect to such shares pursuant to SECTION 1.6(c) or SECTION 1.13. No interest
shall be paid or shall accrue on any such amounts. At the Effective Time, Parent
shall deliver to the Exchange Agent sufficient shares of Parent Common Stock and
cash for any fractional shares to satisfy the Initial Merger Consideration.
(b) Promptly after the Effective Time, but in no event later than five
business days following the Effective Time, Parent or the Exchange Agent will
send to each former holder of record of shares of Company Common Stock that were
converted into the right to receive the Merger Consideration who has not
previously submitted properly completed Transmittal Materials with Certificates
to the Exchange Agent at or before the Closing, as permitted by SECTION 1.9(a)
above, instructions for exchanging his, her or its Certificates for the
applicable portion of the Initial Merger Consideration into which such shares of
Company Common Stock (other than any Dissenting Shares) have been converted.
Upon surrender of Certificates for cancellation to the Exchange Agent, together
with a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss of, and title to, the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent) and other requested
documents and in accordance with the instructions thereon, the holder of such
Certificates shall be entitled to receive in exchange therefor (i) a certificate
representing that number of whole shares of Parent Common Stock into which the
shares of Company Common Stock and Company Preferred Stock theretofore
represented by the Certificates so surrendered shall have been converted
pursuant to SECTION 1.6(a) and (ii) a check in the amount of any cash due with
respect to such shares pursuant to SECTION 1.6(c) or SECTION 1.13. No interest
shall be paid or shall accrue on any such amounts.
(c) Until surrendered in accordance with the provisions of this SECTION
1.9, each Certificate shall represent for all purposes only the right to receive
the Merger Consideration and, if applicable, amounts under SECTION 1.13. Shares
of Parent Common Stock into which shares of Company Common Stock and Company
Preferred Stock shall be converted in the Merger at the Effective Time shall be
deemed to have been issued at the Effective Time. If any certificates
representing shares of Parent Common Stock are to be issued in a name other than
that in which the Certificate surrendered is registered, it shall be a condition
of such exchange that the person requesting such exchange shall deliver to the
Exchange Agent all documents necessary to evidence and effect such transfer and
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Parent Common Stock in a
name other than that of the registered holder of the Certificate surrendered, or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. Beginning the date which is six months following the
Closing Date, Parent shall act as the Exchange Agent with respect to the Initial
Merger Consideration and thereafter any holder of an unsurrendered Certificate
shall look solely to Parent for any Initial Merger Consideration to which such
Holder may be due, subject to applicable law. Beginning on the date that is six
months following each of the First Milestone Date and the Second Milestone
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Date, Parent shall act as the Exchange Agent with respect to the portion of the
Contingent Merger Consideration that is payable with respect to the First
Milestone or Second Milestone, as the case may be, and thereafter any Holder
shall look solely to Parent for any Contingent Merger Consideration to which
such Holder may be due, subject to applicable law. Notwithstanding any other
provisions of this Agreement, any portion of the Initial Merger Consideration or
the Contingent Merger Consideration remaining unclaimed five years after the
Effective Time, the First Milestone Date or the Second Milestone Date, as the
case may be, (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to, or become property of, any Governmental
Entity) shall, to the extent permitted by law, become the property of Parent
free and clear of any claims or interest of any person previously entitled
thereto.
(d) Notwithstanding the foregoing, no amounts shall be payable at the
Effective Time with respect to any Dissenting Shares or any shares of Company
Common Stock with respect to which dissenters' rights have not terminated. In
the case of Dissenting Shares, payment shall be made in accordance with SECTION
1.6(f) and the DGCL. In the case of any shares of Company Common Stock with
respect to which dissenters' rights have not terminated as of the Effective
Time, if such shares of Company Common Stock become Dissenting Shares, payment
shall be made in accordance with SECTION 1.6(f) and the DGCL, and if, instead,
the dissenters' rights with respect to such Dissenting Shares irrevocably
terminate after the Effective Time, such Dissenting Shares shall be entitled to
receive the Merger Consideration, subject to the other provisions of this
Agreement.
1.10 NO LIABILITY. None of Parent, the Surviving Corporation or the Exchange
Agent shall be liable to any person in respect of any shares (or dividends or
distributions with respect thereto) or cash payments delivered to a public
official pursuant to any applicable escheat, abandoned property or similar law.
1.11 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 reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall deliver in exchange for such lost, stolen
or destroyed Certificate, applicable certificates representing shares of Parent
Common Stock, cash in lieu of fractional shares and any amounts due pursuant to
SECTION 1.13.
1.12 WITHHOLDING RIGHTS. Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock, Company Options, Company Warrants or Company
Preferred Stock Purchase Rights such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any other
provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by Parent, 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, or Company Options, Company Warrants or Company
Preferred Stock Purchase Rights in respect of which such deduction and
withholding was made.
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1.13 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividend or other
distribution declared with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to holders of unsurrendered Certificates
until such holders surrender such Certificates. Upon the surrender of such
Certificates in accordance with SECTION 1.9, there shall be paid to such
holders, promptly after such surrender, the amount of dividends or other
distributions, without interest, declared with a record date after the Effective
Time and not paid because of the failure to surrender such Certificates for
exchange.
1.14 RESTRICTIONS ON TRANSFER; LEGENDS.
(a) The shares of Parent Common Stock comprising the Merger
Consideration have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under the securities laws of any state or
other jurisdiction in reliance upon exemptions thereunder. Such shares of Parent
Common Stock shall be characterized as "restricted securities" and cannot be
resold unless and until they are registered by Parent under the Securities Act
pursuant to SECTION 4.8 and any applicable securities law of any state or other
jurisdiction, or an exemption from registration is available.
(b) Subject to the provisions set forth in this SECTION 1.14(b), each
certificate representing the shares of Parent Common Stock shall bear a legend
identical or similar in effect to the following legend (together with any other
legend or legends required by applicable state securities laws or otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR (ii) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF
REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER
IS EXEMPT FROM SAID ACT.
Parent shall issue a certificate without the foregoing legend, if,
unless otherwise required by state securities law, prior to such issuance (i)
such shares of Parent Common Stock are registered for sale under the Securities
Act pursuant to SECTION 4.8 and (ii) the stockholder has delivered to Parent the
documents contemplated by SECTION 4.8(g), including an undertaking to comply
with the Securities Act prospectus delivery requirements. The legend set forth
above shall be removed and Parent shall issue a certificate without such legend
to the holder of shares of Parent Common Stock upon which it is stamped, if,
unless otherwise required by state securities laws, (i) such shares of Parent
Common Stock are registered for sale under the Securities Act pursuant to
SECTION 4.8 and the stockholder has delivered to Parent the documents
contemplated by SECTION 4.8(g), including an undertaking to comply with the
Securities Act prospectus delivery requirements, (ii) in connection with a sale
transaction, such holder provides
15
Parent with an opinion of counsel, in a generally acceptable form, to the effect
that a public sale, assignment or transfer of the shares of Parent Common Stock
may be made without registration under the Securities Act, or (iii) such shares
are eligible for resale by non-affiliates of Parent pursuant to Rule 144(k)
promulgated under the Securities Act or a successor rule.
1.15 FURTHER ASSURANCES. At and after the Effective Time, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule prepared and signed by
the Company and delivered by the Company to Parent on the date hereof (the
"Company Disclosure Schedule"), the Company hereby makes the following
representations and warranties to Parent and Merger Sub. Notwithstanding any
other provision of this Agreement or the Company Disclosure Schedule, each
exception set forth in the Company Disclosure Schedule will be deemed to qualify
each representation and warranty set forth in this Agreement (i) that is
specifically identified (by cross-reference or otherwise) in the Company
Disclosure Schedule as being qualified by such exception, or (ii) with respect
to which the relevance of such exception is reasonably apparent on the face of
the disclosure of such exception set forth in the Company Disclosure Schedule.
2.1 ORGANIZATION AND QUALIFICATION.
(a) The Company and each Company Subsidiary (as defined in SECTION
2.4(a)) is a corporation or other legal entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
corporate or similar power and authority to own, lease and operate its assets
and to carry on its business as now being and as heretofore conducted. The
Company and each Company Subsidiary is qualified or otherwise authorized to
transact business as a foreign corporation or other organization in all
jurisdictions in which such qualification or authorization is required by law,
except for jurisdictions in which the failure to be so qualified or authorized
could not reasonably be expected to have a material adverse effect on the
assets, properties, business, results of operations or financial condition of
the Company and the Company Subsidiaries, taken as a whole (a "Company Material
Adverse Effect"). SECTION 2.1 of the Company Disclosure Schedule sets forth a
true and complete list of the jurisdictions in which the Company and each
Company Subsidiary is qualified or otherwise authorized to transact business.
(b) The Company previously has provided to Parent true and complete
copies of the charter and bylaws or other organizational documents of the
Company and each Company Subsidiary as presently in effect, and neither the
Company nor any Company Subsidiary is in default in the performance, observation
or fulfillment of such documents. The minute books of
16
the Company, copies of which the Company previously has provided to Parent,
contain true and complete records of all meetings and consents in lieu of
meetings of the Board of Directors (and any committees thereof) and of the
stockholders of the Company since the time of the Company's incorporation and
accurately reflect all transactions referred to in such minutes and consents in
lieu of meetings. The stock record books of the Company, copies of which the
Company previously has provided to Parent, are true and complete.
2.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. The Company has the corporate
power and authority to enter into, execute and deliver this Agreement and, in
the case of consummation of the Merger, subject to the adoption of this
Agreement by the requisite vote of the holders of the Company's outstanding
capital stock entitled to vote thereon, to perform fully its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company. No other action on the part of the Company is
necessary to consummate the transactions contemplated hereby (other than
adoption of this Agreement by the requisite vote of the holders of the
outstanding shares of capital stock of the Company). This Agreement has been
duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights and remedies of creditors generally and general principles
of equity. The only votes of the Company's stockholders required in connection
with this Agreement and the amendment to the Certificate of Designation as
provided in SECTION 1.7(d) are (i) with respect to the adoption of this
Agreement, (A) the affirmative vote of a majority of the outstanding shares of
Company Common Stock (voting as a single class) and (B) the affirmative vote of
75% of the outstanding shares of the Company's Series A Stock and Series B Stock
(voting together as a single class) and (ii) with respect to the amendment of
the Certificate of Designation, the affirmative vote of 75% of the outstanding
shares of the Company's Series A Stock and Series B Stock (voting together as a
single class). The persons and entities set forth in SECTION 2.2 of the
Company's Disclosure Schedule who have delivered a Voting Agreement in
connection with the execution of this Agreement hold as of August 6, 2001 a
number of affirmative votes of (i) Company Common Stock equal to at least 75% of
the aggregate number of outstanding shares of Company Common Stock and (ii)
Company Preferred Stock (on an as-converted basis) equal to at least 75% of the
aggregate number of outstanding shares of Company Preferred Stock (on an
as-converted basis).
2.3 CAPITALIZATION AND TITLE TO SHARES.
(a) The Company is authorized to issue 5,595,000 shares of Company
Common Stock, of which 1,759,896 shares were issued and outstanding as of August
3, 2001. All of the issued and outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid, nonassessable and free of
pre-emptive rights. SECTION 2.3(a) of the Company Disclosure Schedule includes a
true and complete list of all outstanding shares of Company Common Stock and
Company Preferred Stock.
(b) The Company has reserved 871,675 shares of Company Common Stock for
issuance pursuant to the Company Options. Company Options to purchase 279,484
shares of Company Common Stock were outstanding as of August 3, 2001. SECTION
2.3(b) of the
17
Company Disclosure Schedule includes a true and complete list of all Company
Options with grant dates, expiration dates, vesting schedules and exercise
prices. True and complete copies of all instruments (or the forms of such
instruments) referred to in this section have been furnished previously to
Parent. Except as indicated in SECTION 2.3(b) of the Company Disclosure
Schedule, the Company is not obligated to accelerate the vesting of any Company
Options as a result of the Merger.
(c) The Company has reserved 44,344 shares of Company Common Stock for
issuance pursuant to the Company Warrants. Company Warrants to purchase 44,344
shares of Company Common Stock were outstanding as of August 3, 2001. SECTION
2.3(c) of the Company Disclosure Schedule includes a true and complete list of
all outstanding warrants with grant dates, expiration dates and exercise prices.
True and complete copies of all instruments (or the forms of such instruments)
referred to in this section have been furnished previously to Parent.
(d) The Company has reserved 75,000 shares of Company Common Stock for
issuance upon conversion of the Convertible Debentures. True and complete copies
of the Convertible Debentures have been furnished previously to Parent.
(e) The Company is authorized to issue 2,905,000 shares of Company
Preferred Stock, of which (i) 1,112,500 shares are designated as Series A Stock,
1,025,915 shares of which are issued and outstanding as of August 1, 2001 and
(ii) 1,780,000 shares are designated as Series B Stock, 796,529 shares of which
are issued and outstanding as of August 1, 2001. All the issued and outstanding
shares of Company Preferred Stock are duly authorized, validly issued, fully
paid, nonassessable, and free of pre-emptive rights, except as set forth in
SECTION 2.3(e) of the Company Disclosure Schedule. As of August 1, 2001, all the
outstanding shares of Series A Stock are convertible into 1,096,425 shares of
Company Common Stock, and all the outstanding shares of Series B Stock are
convertible into 814,862 shares of Company Common Stock. There are 796,529
shares of Series B Stock issuable upon exercise of all the Company Preferred
Stock Purchase Rights.
(f) Except for (i) shares indicated as issued and outstanding on August
1, 2001 specified in SECTION 2.3(a) and (ii) shares issued after August 1, 2001,
upon (A) the exercise of outstanding Company Options listed in SECTION 2.3(b) of
the Company Disclosure Schedule, (B) the exercise of outstanding Company
Warrants listed in SECTION 2.3(c) of the Company Disclosure Schedule, (C)
conversion of the Convertible Debentures or (D) the conversion of all the
outstanding Company Preferred Stock, there are not as of the date hereof, and at
the Effective Time, there will not be, any shares of Company Common Stock issued
and outstanding.
(g) The Company's authorized capital stock consists solely of the
Company Common Stock described in SECTION 2.3(a) and the Company Preferred Stock
described in SECTION 2.3(e). There are not as of the date hereof, and at the
Effective Time there will not be, authorized or outstanding any subscriptions,
options, conversion or exchange rights, warrants, repurchase or redemption
agreements, or other agreements, claims or commitments of any nature whatsoever
obligating the Company to issue, transfer, deliver or sell, or cause to be
issued,
18
transferred, delivered, sold, repurchased or redeemed, additional shares of the
capital stock or other securities of the Company or obligating the Company to
grant, extend or enter into any such agreement, other than (i) the Company
Options listed in SECTION 2.3(b) of the Company Disclosure Schedule, (ii) the
Company Warrants listed in SECTION 2.3(c) of the Company Disclosure Schedule,
(iii) the Convertible Debentures, (iv) the Company Preferred Stock listed in
SECTION 2.3(e) and (v) the Company Preferred Stock Purchase Rights identified in
SECTION 2.3(e). Except as set forth in SECTION 2.3(g) of the Company Disclosure
Schedule, to the knowledge of the Company, there are no stockholder agreements,
voting trusts, proxies or other agreements, instruments or understandings with
respect to the voting of the capital stock of the Company.
(h) Neither the Company nor any Company Subsidiary beneficially owns
any shares of capital stock of Parent.
(i) The Company has no outstanding bonds, debentures, notes or other
indebtedness which have the right to vote on any matters on which stockholders
may vote.
(j) To the knowledge of the Company, there are not more than 35
stockholders of the Company who do not qualify as "accredited investors" (as
such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act).
2.4 COMPANY SUBSIDIARIES AND COMPANY JOINT VENTURES.
(a) SECTION 2.4(a) of the Company Disclosure Schedule sets forth all of
the Company Subsidiaries and the jurisdiction in which each is incorporated or
organized, and each jurisdiction in which it is qualified or otherwise
authorized to transact business. All issued and outstanding shares or other
equity interests of each Company Subsidiary are owned directly by the Company
free and clear of any charges, liens, encumbrances, security interests or
adverse claims. SECTION 2.4(a) of the Company Disclosure Schedule also sets
forth for each Company Subsidiary the individuals who comprise the board of
directors or comparable body for each such entity. The Company agrees to take,
or cause to be taken, the actions necessary so that those individuals will
resign and be replaced by individuals specified by Parent effective as of the
Effective Time. As used in this Agreement, "Company Subsidiary" means any
corporation, partnership or other organization, whether incorporated or
unincorporated, (i) of which the Company or any Company Subsidiary is a general
partner or (ii) at least 50% of the securities or other interests having voting
power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation, partnership or other organization
are directly or indirectly owned or controlled by the Company or by any Company
Subsidiary, or by the Company and one or more Company Subsidiaries.
(b) There are not as of the date hereof, and at the Effective Time
there will not be, any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other agreements, claims or
commitments of any nature whatsoever obligating any Company Subsidiary to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered, sold,
repurchased or redeemed, shares of the capital stock or other securities of the
Company or any Company Subsidiary or obligating the Company or any Company
Subsidiary to grant, extend or enter into any such agreement. To the knowledge
of the
19
Company, there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of any Company Subsidiary.
(c) The Company holds no interest in a Joint Venture. The term "Joint
Venture" means any corporation or other entity (including partnerships, limited
liability companies and other business associations) that is not a Company
Subsidiary and in which the Company or one or more Company Subsidiaries owns an
equity interest (other than equity interests held for passive investment
purposes which are less than 10% of any class of the outstanding voting
securities or other equity of any such entity).
2.5 FINANCIAL STATEMENTS. The Company has previously delivered to Parent the
audited financial statements of the Company for the years ended December 31,
1999 and December 31, 2000 (including the notes thereto) (the "Audited Financial
Statements"), including the audited balance sheet of the Company at December 31,
2000 (the "Company Balance Sheet"), and the unaudited balance sheet of the
Company at June 30, 2001 and the related statements of operations and cash flows
for such periods. All of such financial statements referred to in this section
are collectively referred to herein as the "Company Financial Statements." The
Company Financial Statements have been prepared from, and are in accordance
with, the books and records of the Company and present fairly the consolidated
financial position and the results of operations of the Company and the Company
Subsidiaries as of the dates and for the periods indicated, in each case in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis, except as otherwise stated therein and, in the
case of unaudited interim financial statements, except to the extent that they
may not include footnotes or may be condensed or summary statements and subject
to normal year-end adjustments that have not been and are not expected to be
material in amount.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. As at December 31, 2000, the Company and
the Company Subsidiaries had no material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), required to be
reflected or disclosed in the Company Balance Sheet (or notes thereto) that were
not adequately reflected or reserved against on the Company Balance Sheet. The
Company has no material liabilities of any nature, whether accrued, absolute,
contingent or otherwise, other than liabilities (i) adequately reflected or
reserved against on the Company Balance Sheet, (ii) included in SECTION 2.6 of
the Company Disclosure Schedule, (iii) included in any other representation or
warranty in Article 2 of this Agreement or the section of the Company Disclosure
Schedule related thereto, or (iv) incurred since December 31, 2000 in the
ordinary course of business consistent with past practice.
2.7 ABSENCE OF ADVERSE CHANGES.
(a) Except as set forth in SECTION 2.7(a) of the Company Disclosure
Schedule, since December 31, 2000, there has not been any change, event or
circumstance that has had, or is reasonably likely to have, a Company Material
Adverse Effect.
20
(b) Except as set forth in SECTION 2.7(b) of the Company Disclosure
Schedule, there has not been any action taken by the Company or any Company
Subsidiary during the period from December 31, 2000 through the date of this
Agreement that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of SECTION 4.1(b).
(c) The Company has no knowledge of any studies or tests, the results
of which call into question the results of any animal study or preclinical test
conducted by or on behalf of the Company and previously disclosed to Parent (the
"STUDIES"). The Company has not received any notices or correspondence from the
FDA or any other Governmental Entity (as defined below) requiring the
termination, suspension or a modification which would result in a materially
adverse change in any such Studies.
2.8 COMPLIANCE WITH LAWS.
(a) The Company and the Company Subsidiaries have all licenses,
permits, franchises, orders or approvals of any federal, state, local or foreign
governmental, administrative or regulatory body, authority, or agency (a
"Governmental Entity") material to the conduct of their businesses as presently
being conducted (collectively, "Permits"); such Permits are in full force and
effect; and no proceeding is pending or, to the knowledge of the Company,
threatened to revoke or limit any Permit.
(b) The Company and the Company Subsidiaries are not in violation of
and have no liabilities, whether accrued, absolute, contingent or otherwise,
under any federal, state, local or foreign law, ordinance or regulation ("Law")
or any order, judgment, injunction, decree or other requirement ("Orders") of
any Governmental Entity, relating to the operation of clinical testing
laboratories, labor and employment practices, health and safety, zoning,
pollution or protection of the environment, except for violations of or
liabilities under any of the foregoing which could not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(c) Each product or product candidate subject to the FDA jurisdiction
under the United States Federal Food, Drug and Cosmetic Act ("FDCA") that is
manufactured, tested, distributed, held, and/or marketed by the Company or any
Company Subsidiary is being manufactured, tested, distributed, held and marketed
in compliance with all applicable requirements under the FDCA including, but not
limited to, those relating to investigational use, premarket clearance, good
manufacturing practices, labeling, advertising, record keeping, filing of
reports and security.
(d) The Company has, prior to the execution of this Agreement, provided
to Parent copies of, or access to, all documents in its or any Company
Subsidiary's possession material to assessing compliance with the FDCA and its
implementing regulations, including, but not limited to, copies of (i) all
warning letters, notices of adverse findings and similar correspondence received
since the Company's inception, (ii) all audit reports performed since the
Company's inception, and (iii) any document concerning any significant oral or
written communication received from the FDA since the Company's inception.
21
(e) Neither the Company nor any Company Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
acting on behalf of the Company, or any Company Subsidiary, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others, or established or maintained any unlawful or
unrecorded funds in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any other domestic or foreign law. Neither the Company nor any
Company Subsidiary nor, to the knowledge of the Company, any director, officer,
agent, employee or other person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contributions, payments, gifts
or expenditures.
2.9 ACTIONS AND PROCEEDINGS. There are no outstanding Orders of any Governmental
Entity against the Company, any Company Subsidiary, or any of their securities,
assets or properties. Except as set forth in SECTION 2.9 of the Company
Disclosure Schedule, there are no actions, suits or claims or legal,
administrative or arbitration proceedings pending or, to the knowledge of the
Company, threatened against the Company, any Company Subsidiary, or any of their
securities, assets or properties or their officers and directors, in their
respective capacities as such that will or could reasonably be expected to
result in damages in excess of $50,000. To the knowledge of the Company, there
is no fact, event or circumstance now in existence that reasonably could be
expected to give rise to any action, suit, claim, proceeding or investigation
that, individually or in the aggregate, could be reasonably expected to have a
Company Material Adverse Effect or materially interfere with the Company's
ability to consummate the transactions contemplated hereby.
2.10 CONTRACTS AND OTHER AGREEMENTS.
(a) SECTION 2.10 of the Company Disclosure Schedule sets forth a list
of the following contracts and other agreements to which the Company or any
Company Subsidiary is a party or by or to which they or their assets or
properties are bound or subject:
(i) any agreement (A) involving research, development or the
license of Proprietary Rights (as defined in SECTION 2.12), (B) granting a right
of first refusal, or right of first offer or comparable right with respect to
Proprietary Rights, (C) relating to a joint venture, partnership or other
arrangement involving a sharing of profits, losses, costs or liabilities with
another person or entity, (D) providing for the payment or receipt by the
Company or a Company Subsidiary of milestone payments or royalties, (E)
containing a "most favored nation" pricing or terms clause, or (F) that
individually requires aggregate expenditures by the Company and/or any Company
Subsidiary in any one year of more than $25,000;
(ii) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, obligations or liabilities for
borrowed money;
(iii) any agreement of surety, guarantee or indemnification;
22
(iv) any agreement that limits or restricts the Company, any
Company Subsidiary or any of their affiliates or successors in competing or
engaging in any line of business, in any therapeutic area, in any geographic
area or with any person;
(v) any interest rate, equity or other swap or derivative
instrument;
(vi) any agreement obligating the Company to register securities
under the Securities Act;
(vii) any agreement for the sale of any of the securities, assets
or properties of the Company other than in the ordinary course of business or
for the grant to any person of any options, rights of first refusal, or
preferential or similar rights to purchase any of such securities, assets or
properties;
(viii) any agreement in which the Company is the purchaser of
goods or services and that requires less than 30 days' notice to be cancelled by
the Company or an assignee of the Company to avoid incurring a liability,
premium or penalty;
(ix) any agreement relating to the acquisition by the Company of
any operating business or the capital stock of any other person;
(x) any agreement requiring the payment to any person of a
commission or fee other than in the ordinary course of business or providing for
sharing of fees, rebating of charges, or similar arrangements;
(xi) any agreement with any current or former officer, director,
stockholder, employee, consultant, agent or other representative of the Company,
including any agreement for the payment of fees or other consideration to any
entity in which any officer or director of the Company has an interest; or
(xii) any other material agreement whether or not made in the
ordinary course of business.
All of the contracts and other agreements required to be set forth in SECTION
2.10 of the Company Disclosure Schedule are valid, subsisting, in full force and
effect, binding upon the Company or the applicable Company Subsidiary and, to
the knowledge of the Company, binding upon the other parties thereto in
accordance with their terms, and the Company and the Company Subsidiaries have
paid in full or accrued all amounts now due from them thereunder, and have
satisfied in full or provided for all of their liabilities and obligations
thereunder which are presently required to be satisfied or provided for and are
not in default under any of them, nor, to the knowledge of the Company, is any
other party to any such contract or other agreement in default thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder. True and complete copies of all of the
contracts and other agreements (and all written amendments or other
modifications thereto) referred to in SECTION 2.10 or SECTION 2.11(a) of the
Company Disclosure Schedule have been provided previously to Parent.
23
2.11 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company and the Company Subsidiaries do not own any real
property or any buildings or other structures nor have options or any
contractual obligations to purchase or acquire any interest in real property.
SECTION 2.11(a) of the Company Disclosure Schedule lists all real property
leases to which the Company and the Company Subsidiaries are a party and each
amendment thereto. All such current leases are in full force and effect, are
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing default or event of default (or event
that with notice or lapse of time, or both, would constitute a default) that
could reasonably be expected to have a Company Material Adverse Effect.
(b) The Company and the Company Subsidiaries have good and valid title
to, or, in the case of leased properties and assets, valid leasehold interests
in, all of their tangible properties and assets, real, personal and mixed, used
or held for use in its business, and such properties and assets, as well as all
other properties and assets of the Company and the Company Subsidiaries, whether
tangible or intangible, are free and clear of any liens, pledges, charges,
claims, security interests or other encumbrances of any sort ("Liens"), except
as reflected in the Audited Financial Statements or in SECTION 2.11(b) of the
Company Disclosure Schedule and except for Liens for Taxes not yet due and
payable and such imperfections of title and encumbrances, if any, that are not
material in character, amount or extent, and that do not materially detract from
the value, or materially interfere with the present use, of the property subject
thereto or affected thereby.
(c) The equipment, furniture, leasehold improvements, fixtures,
vehicles, any related capitalized items and other tangible property material to
the business of the Company and the Company Subsidiaries are in good operating
condition and repair, ordinary wear and tear excepted. SECTION 2.11 of the
Company Disclosure Schedule sets forth a true and correct summary of capital
assets of the Company and the Company Subsidiaries with individual descriptions
of major capital assets acquired from January 1, 1999 through August 1, 2001.
2.12 INTELLECTUAL PROPERTY.
(a) The Company and the Company Subsidiaries own, or are licensed to use, or
otherwise have the full legal right to use all patents, trademarks, service
marks, trade names, trade secrets, franchises, inventions, copyrights, and all
other technology and intellectual property (including, without limitation,
biological materials), all registrations of any of the foregoing, or
applications therefor, and all grants and licenses or other rights running to or
from the Company or a Company Subsidiary relating to any of the foregoing that
are material to their businesses as presently conducted or as contemplated to be
conducted, including without limitation those related to the Company's
phosphorylation and glycosylation technologies and current products under
development (collectively, the "Proprietary Rights"). A list of all registered
copyrights and trademarks, service marks, trade names, patents and patent
applications, and biological materials held by or licensed to the Company or a
Company Subsidiary has been delivered previously to Parent and is included in
SECTION 2.12 of the Company Disclosure Schedule. All patents, registered
trademarks and copyrights set forth on
24
the list referred to above are valid and subsisting and are not subject to any
taxes, maintenance fees or actions falling due within 90 days of the date of
this Agreement. The Company is not aware of any claim by any third party that
the businesses of the Company or the Company Subsidiaries (including products
under development) infringe upon the proprietary rights of others, nor has the
Company or any Company Subsidiary received any notice or claim of infringement
from any third party. The Company is not aware of any existing or threatened
infringement by any third party on, or any competing claim of right to use or
own any of, the Proprietary Rights. Except as disclosed in SECTION 2.12 of the
Company Disclosure Schedule, the Company and the Company Subsidiaries have the
unencumbered right to sell their products and services (whether now offered for
sale or under development) free from any royalty or other obligations to third
parties.
(b) To the knowledge of the Company, none of the activities of the
employees of the Company or any Company Subsidiary on behalf of such entity
violates any agreement or arrangement which any such employees have with former
employers. To the Company's knowledge, all employees and consultants who
contributed to the discovery or development of any of the Proprietary Rights
(other than Proprietary Rights licensed to the Company or a Company Subsidiary
by any party other than a consultant to the Company or Company Subsidiary) did
so either (a) within the scope of his or her employment such that, in accordance
with applicable law, all Proprietary Rights arising therefrom became the
exclusive property of the Company or any Company Subsidiary or (b) pursuant to
written agreements assigning or licensing all Proprietary Rights arising
therefrom to the Company or any Company Subsidiary.
2.13 INSURANCE. SECTION 2.13 of the Company Disclosure Schedule sets forth a
true and complete list of all policies or binders of fire, liability, product
liability, workmen's compensation, vehicular, directors' and officers' and other
insurance held by or on behalf of the Company and the Company Subsidiaries as of
the date of this Agreement. To the Company's knowledge, such policies are in
full force and effect. Neither the Company nor any Company Subsidiary is in
material default with respect to any provision contained in such policy or
binder nor has any of the Company or a Company Subsidiary failed to give any
notice or present any claim under any such policy or binder in due and timely
fashion. There are no outstanding unpaid claims under any such policy or binder.
Neither the Company nor any Company Subsidiary has received notice of
cancellation or non-renewal of any such policy or binder.
2.14 COMMERCIAL RELATIONSHIPS. The relationships of the Company and the Company
Subsidiaries with their suppliers, distributors, collaborators, licensors and
licensees are generally good commercial working relationships. No such entity
has canceled or otherwise terminated its relationship with the Company or any
Company Subsidiary or has, during the last twelve months, materially altered its
relationship with the Company or any Company Subsidiary. The Company does not
know of any plan or intention of any such entity, and has not received any
written threat or notice from any such entity, to terminate, cancel or otherwise
materially and adversely modify its relationship with the Company or any Company
Subsidiary.
25
2.15 TAX MATTERS.
(a) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means all United States federal,
state and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, use, property, excise, value added, AD
VALOREM, estimated, stamp, alternative or add-on minimum, recapture,
environmental, withholding and any other taxes, charges, duties, impositions or
assessments, together with all interest, penalties, and additions imposed on or
with respect to such amounts, including any liability for taxes of a predecessor
entity. "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement filed or required to be filed with any taxing
authority in connection with the determination, assessment, collection or
imposition of any Taxes.
(b) All Tax Returns required to be filed on or before the date hereof
by or with respect to the Company and the Company Subsidiaries have been filed
within the time and in the manner prescribed by law. All such Tax Returns are
true, correct and complete in all material respects, and all Taxes owed by the
Company or the Company Subsidiaries, whether or not shown on any Tax Return
(including all withholding and payroll Taxes), have been paid. The Company has
not received written notice of any claim by any taxing authority in any other
jurisdiction that the Company or the Company Subsidiaries are or may be subject
to taxation by that jurisdiction.
(c) There are no Liens or other encumbrances with respect to Taxes upon
any of the assets or properties of the Company or the Company Subsidiaries,
other than with respect to Taxes not yet due and payable.
(d) No audit is currently pending with respect to any Tax Return of the
Company or the Company Subsidiaries, nor has the Company received any written
communication from any taxing authority which has caused or should reasonably
cause it to believe that an audit is forthcoming. No deficiency for any Taxes
has been proposed in writing against the Company or the Company Subsidiaries,
which deficiency has not been paid in full. No issue relating to the Company or
the Company Subsidiaries or involving any Tax for which the Company or the
Company Subsidiaries might be liable has been resolved in favor of any taxing
authority in any audit or examination which, by application of the same
principles, could reasonably be expected to result in a deficiency for Taxes of
the Company or the Company Subsidiaries for any subsequent period.
(e) There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxes due from or with respect to
the Company or the Company Subsidiaries for any taxable period, no power of
attorney granted by or with respect to the Company or the Company Subsidiaries
relating to Taxes is currently in force, and no extension of time for filing any
Tax Return required to be filed by or on behalf of the Company or any Company
Subsidiary is in force. The Company has delivered to Parent complete and correct
copies of all income Tax Returns, audit reports and statements of deficiencies
for each of the taxable years since its inception filed by or issued to or with
respect to the Company or the Company Subsidiaries.
26
(f) With respect to any period for which Tax Returns have not yet been
filed, or for which Taxes are not yet due or owing, the Company has made such
accruals for such Taxes in the Audited Financial Statements as are required by
GAAP.
(g) No consent to the application of Section 341(f)(2) of the Code (or
any predecessor provision) has been made or filed by or with respect to the
Company or any Company Subsidiary or any of their assets or properties.
(h) The Company and the Company Subsidiaries are not a party to or
bound by, nor do they have any obligation under, any Tax sharing agreement or
similar contract or arrangement. Neither the Company nor any Company Subsidiary
has any liability for the Taxes of any person other than the Company or a
Company Subsidiary under Treasury Regulation 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract, or
otherwise.
(i) There is no contract or agreement, plan or arrangement obligating
the Company or the Company Subsidiaries to make any payment that would not be
deductible by reason of Section 162(m) or 280G of the Code. Neither the Company
nor any Company Subsidiary has agreed to, or is required to, make any
adjustments under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(j) Neither the Company nor the Company Subsidiaries are, or were
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
2.16 EMPLOYEE BENEFIT PLANS.
(a) SECTION 2.16 of the Company Disclosure Schedule sets forth a
complete list of all pension, savings, profit sharing, retirement, deferred
compensation, welfare, fringe benefit, medical or life insurance, short and long
term disability, incentive, bonus, stock, vacation pay, severance pay and
similar plans, programs or arrangements (the "Plans"), including without
limitation, all cafeteria plans maintained under Section 125 of the Code and
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") maintained by the Company or
the Company Subsidiaries or to which the Company or any of the Company
Subsidiaries is a party or is required to contribute.
(b) The Company has delivered or made available to Parent current,
accurate and complete copies of (i) each Plan that has been reduced to writing
and all amendments thereto, (ii) a summary of the material terms of each Plan
that has not been reduced to writing, including all amendments thereto, (iii)
the summary plan description for each Plan subject to Title I of ERISA, and in
the case of each other Plan, any similar employee summary (including but not
limited to any employee handbook description), (iv) for each Plan intended to be
qualified under Section 401(a) or Section 501(c)(9) of the Code, the most recent
determination letter or exemption determination issued by the Internal Revenue
Service ("IRS"), (v) for each Plan with respect to which a Form 5500 series
annual report/return is required to be filed, the
27
most recently filed such annual report/return and annual report/return for the
two preceding years, together with all schedules and exhibits, (vi) all
insurance contracts, administrative services contracts, trust agreements,
investment management agreements or similar agreements maintained in connection
with any Plan, (vii) any correspondence from the IRS, Department of Labor
("DOL") or other U.S. government agency or department relating to an audit or an
asserted or assessed penalty with respect to a Plan or relating to requested
relief from any liability or penalty (including, but not limited to, any
correspondence relating to the IRS's EPCRS, APRSC, VCR, CAP or Walk-in Cap, VCP,
VCO, VCS or similar programs, or the DOL's amnesty programs for late filers and
non-filers or for correction of fiduciary breaches), (viii) for each Plan that
is a defined benefit pension plan, the most recent actuarial valuation report
and actuarial valuation report for the two preceding years, (ix) for each Plan
that is intended to be qualified under Code Section 401(a), any previously
prepared copies of compliance testing results (nondiscrimination testing
(401(a)(4), 410, 411, ADP, ACP, multiple use), 402(g), 415 and top-heavy tests)
for the most recent plan year and three preceding plan years and (x) COBRA and
HIPAA forms and notices used for each Plan that is a group health plan.
(c) There is no entity (other than the Company or any Company
Subsidiary) that together with the Company or any Company Subsidiary would be
treated as a single-employer within the meaning of Section 414(b), (c), (m), (n)
or (o) of the Code or Section 4001(b) of ERISA. Neither the Company nor any
Company Subsidiary has ever maintained, contributed to or incurred any liability
under: (i) any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or
a "multiple employer plan" as defined in Section 413(c) of the Code; (ii) any
pension plan subject to Title IV of ERISA or Section 412 of the Code or Section
302 of ERISA; or (iii) any voluntary employees' beneficiary association within
the meaning of Section 501(c)(9) of the Code or any welfare benefit fund within
the meaning of Section 419(e) of the Code. Neither the Company nor any Company
Subsidiary has incurred any liability under Sections 4062, 4063 or 4201 of
ERISA.
(d) Each Plan maintained by the Company or a Company Subsidiary which
is intended to be qualified under either Section 401(a) or 501(c)(9) of the Code
("Qualified Plans") has been determined to be so qualified by the IRS, and to
the Company's knowledge no circumstances exist that could reasonably be expected
to cause the Qualified Plans to lose such qualified status. Each such Plan and
each other Plan has been administered in all material respects in accordance
with the terms of such Plan and the provisions of any Law, including without
limitation ERISA and the Code, and to the knowledge of the Company, nothing has
been done or not done with respect to any Plan that could result in any
liability on the part of the Company or any Company Subsidiary with respect to a
violation of any requirement of Title I of ERISA or Chapter 43 of the Code. All
reports, forms and notices required to be filed with respect to each Plan,
including without limitation Form 5500 series annual reports/returns and PBGC
Form 1s, have been timely filed. All contributions, and premiums and other
amounts due to or in connection with each Plan under the terms of the Plan or
applicable law have been timely made except for any failure or failures which
could not reasonably be expected to have a Company Material Adverse Effect, and
provision has been made on the Company Balance Sheet for such contributions,
premiums and other amounts that were due as of the date of the Company Balance
Sheet but were attributable to service before such date.
28
(e) No "reportable event" as defined in Section 4043 of ERISA has
occurred with respect to any Plan subject to Title IV of ERISA. With respect to
each Plan subject to Title IV of ERISA, such Plan has no unfunded benefit
liabilities and such Plan could be terminated in a "standard termination" under
Section 4041(b) of ERISA on or before the Effective Time without any additional
contribution from any contributing employer (but disregarding any other
prerequisites for terminating such Plan). With respect to each Plan subject to
Section 412 of the Code, there is no accumulated funding deficiency (whether or
not waived) under such Plan.
(f) Except as disclosed in SECTION 2.16(f) of the Company Disclosure
Schedule, all claims for benefits under any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA, or similar plan for employee benefits not
subject to ERISA, incurred by covered employees on or before the Closing Date
are or will be fully covered by third-party insurance policies or programs.
Except for continuation of health coverage to the extent required under Section
4980B of the Code or Section 601 et seq. of ERISA, other applicable law or as
otherwise set forth in this Agreement, there are no obligations under any Plan
providing benefits after termination of employment.
(g) There are no complaints, charges or claims against the Company
pending or threatened to be brought by or filed with any Governmental Entity
based on, arising out of, in connection with or otherwise relating to the
classification of any individual by the Company as an independent contractor or
"leased employee" (within the meaning of Section 414(n) of the Code) rather than
as an employee, and to the Company's knowledge no conditions exist under which
the Company could incur any liability based on, arising from or in connection
with any incorrect classification of any such individual.
(h) Except for individual employment agreements, with respect to each
Plan: (i) that has been reduced to writing, the Company has done nothing outside
of such Plan that would interfere with or prohibit amending, modifying or
terminating such Plan without advance notice to or consent by any employee,
former employee or beneficiary and (ii) that has not been reduced to writing,
such Plan can be amended, modified or terminated without advance notice to or
consent by any employee, former employee or beneficiary, except as required by
law.
(i) Except as disclosed in SECTION 2.16 of the Company Disclosure
Schedule, no current or former employee of the Company will become entitled to
any bonus, retirement, severance, job security or similar benefit or enhanced
benefit (including acceleration of vesting or exercise of any equity incentive
award) as a result of this Agreement or the transactions contemplated hereby.
2.17 EMPLOYEE RELATIONS.
(a) The Company and the Company Subsidiaries, collectively, have
approximately 83 full-time equivalent employees and generally enjoy good
employer-employee relations. Neither the Company nor any Company Subsidiary is
delinquent in payments to any of its employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them or amounts required to be reimbursed to such employees. Except
as disclosed in SECTION 2.17 of the Company Disclosure Schedule, upon
29
termination of the employment of any employees, none of the Company, the Company
Subsidiaries nor Parent shall be liable, by reason of the Merger or anything
done prior to the Effective Time, to any of such employees for severance pay or
any other payments (other than accrued salary, vacation or sick pay in
accordance with normal policies). True and complete information as to all
current directors, officers, employees or consultants of the Company and the
Company Subsidiaries including, in each case, name, current job title and annual
rate of compensation (including bonuses and equity compensation) for each of the
last two years has been made available previously to Parent.
(b) The Company and each Company Subsidiary (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
employees, (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to employees, (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing, and (iv) is not liable for any payment to any
trust or other fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the ordinary course of
business and consistent with past practice).
(c) No work stoppage or labor strike against the Company or any Company
Subsidiary is pending or, to the knowledge of the Company, threatened. Neither
the Company nor any Company Subsidiary is involved in or, to the knowledge of
the Company, threatened with, any labor dispute, grievance, or litigation
relating to labor, safety or discrimination matters involving any employee,
including without limitation charges of unfair labor practices or discrimination
complaints, that, if adversely determined, could reasonably be expected to have
a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary has engaged in any unfair labor practices within the meaning of the
National Labor Relations Act that would, directly or indirectly result in
material liability to the Company. Neither the Company nor any Company
Subsidiary is presently, nor has it been in the past, a party to or bound by any
collective bargaining agreement or union contract with respect to employees, and
no collective bargaining agreement is being negotiated by the Company or any
Company Subsidiary. No union organizing campaign or activity with respect to
non-union employees of the Company or any Company Subsidiary is ongoing, pending
or, to the knowledge of the Company, threatened.
(d) None of the executive officers or key employees of the Company has
given notice to the Company, nor is the Company otherwise aware, that any such
officer or employee intends to terminate his or her employment with the Company.
2.18 ENVIRONMENTAL MATTERS.
(a) Neither the Company nor any of the Company Subsidiaries has
violated, is in violation of, or has been notified that it is in violation of,
Environmental Laws, and except in full compliance with Environmental Laws,
neither the Company nor any of the Company Subsidiaries has generated, used,
handled, transported or stored any Hazardous Materials or
30
shipped any Hazardous Materials for treatment, storage or disposal at any other
site or facility. There has been no generation, use, handling, storage or
disposal of any Hazardous Materials in violation of any Environmental Laws at
any site owned or operated by, or premises leased by, the Company or any of the
Company Subsidiaries during the period of the Company's or such Company
Subsidiary's ownership, operation or lease or, to the Company's knowledge, prior
thereto, nor has there been or is there threatened any Release of any
Environmental Contaminants into, on, at or from any such site or premises,
including without limitation into the ambient air, groundwater, surface water,
soils or subsurface strata, during such period or, to the Company's knowledge,
prior thereto in violation of any Environmental Laws or which created or will
create an obligation to report or respond in any way to such Release. There is
no underground storage tank or other container at any site owned or operated by,
or premises leased by the Company or any Company Subsidiary or, to the Company's
knowledge, on any site formerly owned or operated by, or premises formerly
leased by, the Company or any Company Subsidiary.
(b) Neither the Company nor any Company Subsidiary has received
notification in any form that, and the Company has no knowledge that, any site
currently or formerly owned or operated by, or premises currently or formerly
leased by, the Company or any Company Subsidiary is the subject of any federal,
state or local civil, criminal or administrative investigation evaluating
whether, or alleging that, any action is necessary to respond to a Release or a
threatened Release of any Environmental Contaminant. No such site or premises is
listed, or to the Company's knowledge, proposed for listing, on the National
Priorities List or the Comprehensive Environmental Response, Compensation, and
Liability Information System, both as provided under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), or any
comparable state or local governmental lists. Neither the Company nor any
Company Subsidiary has received written notification of, and the Company has no
knowledge of, any potential responsibility of the Company or any Company
Subsidiary pursuant to the provisions of (i) CERCLA, (ii) any similar federal,
state, local or other Environmental Laws, or (iii) any Order issued pursuant to
the provisions of any such Environmental Laws with respect to any Environmental
Contaminant used, manufactured, generated, stored, or treated at, transported
from, or disposed of on, any site currently or formerly owned or operated by, or
premises currently or formerly leased by, the Company or any Company Subsidiary.
(c) The Company and the Company Subsidiaries have obtained all Permits
required by Environmental Laws necessary to enable them to conduct their
respective businesses and are in compliance with said Permits in all material
aspects.
(d) There is no environmental or health and safety matter that
reasonably could be expected to have a Company Material Adverse Effect. The
Company previously has furnished to Parent copies of any and all environmental
audits or risk assessments, site assessments, documentation regarding off-site
disposal of Hazardous Materials or Release of Environmental Contaminant, spill
control plans and all other material correspondence, documents or communications
with any Governmental Entity regarding the foregoing.
31
(e) For purposes of this Agreement:
(i) "Environmental Laws" means any federal, state, local or foreign
laws (including common law), regulations, codes, rules, orders, ordinances,
permits, requirements and final governmental determinations pertaining to the
environment, pollution or protection of human health, safety or the environment,
as adopted or in effect in the jurisdictions in which the applicable site or
premises are located, including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section 9601 et
seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section
11001 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq.; the federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq.; the federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section
136 et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 1001 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Section 1801 et seq.; the
Atomic Energy Act, as amended 42 U.S.C. Section 2011 et seq.; the Occupational
Safety and Health Act, as amended, 29 U.S.C. Section 651 et seq.; the federal
Food, Drug and Cosmetic Act, as amended 21 U.S.C. Section 301 et seq. (insofar
as it regulates employee exposure to Hazardous Materials), and any state or
local statute of similar effect; and including without limitation any laws
relating to protection of safety, health or the environment which regulate the
use of biological agents or substances including medical or infectious wastes as
any such laws have been amended;
(ii) "Environmental Contaminant" means Hazardous Materials, or any
other pollutants, contaminants, toxic or constituent substances or waste
radioactive substances, materials or special wastes, petroleum or petroleum
products, polychlorinated biphenyls, asbestos containing materials, or any other
substance or material, in each case regulated by applicable Environmental Laws;
(iii) "Hazardous Materials" means (A) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"hazardous air pollutants," "contaminants," "toxic chemicals," "toxics,"
"hazardous chemicals," "extremely hazardous substances," "pesticides," "oil" or
related materials as defined in any applicable Environmental Law, or (B) any
petroleum or petroleum products, oil, natural or synthetic gas, radioactive
materials, asbestos-containing materials, urea formaldehyde foam insulation,
radon, and any other substance defined or designated as hazardous, toxic or
harmful to human health, safety or the environment under any Environmental Law;
and
(iv) "Release" has the meaning specified in CERCLA.
2.19 NO BREACH. Except for (a) filings with the Secretary of State of Delaware,
(b) any required filing of a Notification and Report Form under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, as amended (the "HSR Act"), and
(c) matters listed in SECTION 2.19 of the Company Disclosure Schedule, the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
32
will not (i) violate any provision of the Certificate of Incorporation or
By-Laws of the Company, (ii) violate, conflict with or result in the breach of
any of the terms or conditions of, result in modification of, or otherwise give
any other contracting party the right to terminate, accelerate obligations under
or receive payment under or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other agreement to
which the Company or any Company Subsidiary is a party or to which any of them
or any of their assets or properties is bound or subject, (iii) violate any Law
or Order of any Governmental Entity applicable to the Company or the Company
Subsidiaries or by which any of the Company's or the Company Subsidiaries'
assets or properties is bound, (iv) violate any Permit, (v) require any filing
with, notice to, or permit, consent or approval of, any Governmental Entity,
(vi) result in the creation of any Lien or other encumbrance on the assets or
properties of the Company or a Company Subsidiary, or (vii) cause any of the
assets owned by the Company or any Company Subsidiary to be reassessed or
revalued by any taxing authority in Oklahoma or New Jersey or other Governmental
Entity, excluding from the foregoing clauses (ii), (iii), (iv), (v), (vi) and
(vii) violations, breaches and defaults which, and filings, notices, permits,
consents and approvals the absence of which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect or materially
interfere with the ability of the Company to consummate the transactions
contemplated hereby. Except as set forth in SECTION 2.19 of the Company
Disclosure Schedule, the Company or any Company Subsidiary is not and will not
be required to give any notice to or obtain any consent or waiver from any
individual or entity in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby in order
to avoid a modification or termination of, or a payment or default under, a
contract or agreement with a third party.
2.20 BOARD APPROVALS.
(a) The Board of Directors of the Company, as of the date of this
Agreement, has (i) adopted and declared the advisability of this Agreement and
(ii) determined to recommend that the stockholders of the Company adopt this
Agreement.
(b) The Company has taken all action necessary such that no "fair
price," "control share acquisition," "business combination" or similar statute
(including Section 203 of the DGCL) will apply to the execution, delivery or
performance of this Agreement.
2.21 FINANCIAL ADVISOR; NO FINDER'S FEE. The Company previously has provided
Parent with a copy of Xxxxxx Xxxxxxx Xxxx Xxxxxx'x ("Xxxxxx Xxxxxxx") engagement
letter. Other than Xxxxxx Xxxxxxx, no broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby, and, other than the fee
payable to Xxxxxx Xxxxxxx, there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection herewith based on any
agreement, arrangement or understanding with the Company, or any action taken by
the Company.
2.22 BANK ACCOUNTS AND POWERS OF ATTORNEY. SECTION 2.22 of the Company
Disclosure Schedule identifies all bank accounts used in connection with the
operations of the Company and the Company Subsidiaries whether or not such
accounts are held in the name of the Company or the Company Subsidiaries, lists
the respective signatories therefor and lists the names of all
33
persons holding a power of attorney from the Company or any Company Subsidiary
and a summary statement of the terms thereof. Except as disclosed in SECTION
2.22 of the Company Disclosure Schedule, Company has not granted powers of
attorney to any person or entity.
2.23 RELATED PARTY TRANSACTIONS. Except as set forth in SECTION 2.23 of the
Company Disclosure Schedule and except for compensation and payment of
reimbursable expenses incurred in the ordinary course of business to regular
employees of the Company, no current or former officer, director, or other
affiliate of the Company, is now, or has been since the date of formation of the
Company (or any predecessor thereof), (i) a party to any transaction or contract
with the Company, (ii) indebted to the Company, or (iii) to the knowledge of the
Company the direct or indirect owner of an interest in any person which is a
present or potential competitor, supplier or customer of the Company (other than
non-affiliated holdings of less than 2% of a class of securities of a publicly
traded company), nor, to the knowledge of the Company, does any such person
receive income from any source other than the Company which should properly
accrue to the Company. No stockholder, together with the stockholder's
affiliates, holds of record 50% of more of the outstanding voting securities of
the Company or, to the knowledge of the Company, has the contractual power to
designate 50% of more of the directors of the Company.
2.24 INFORMATION PROVIDED.
(a) None of the information supplied by the Company for inclusion in
the information statement to be provided to the Company stockholders in
connection with the Merger (the "Information Statement") will, as of the date of
the Information Statement, contain any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The representations and warranties of the Company contained in this
Agreement and the Company Disclosure Schedule do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state any
material fact necessary to make such representations, warranties and statements,
in light of the circumstances under which they are made, not misleading.
SECTION 3 - REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
Except as set forth on the disclosure schedule prepared and signed by
Parent delivered by Parent to the Company on the date hereof (the "Parent
Disclosure Schedule"), Parent and Merger Sub hereby make the following
representations and warranties to the Company. Notwithstanding any other
provision of this Agreement or the Parent Disclosure Schedule, each exception
set forth in the Parent Disclosure Schedule will be deemed to qualify each
representation and warranty set forth in this Agreement (i) that is specifically
identified (by cross-reference or otherwise) in the Parent Disclosure Schedule
as being qualified by such exception, or (ii) with respect to which the
relevance of such exception is reasonably apparent on the face of the disclosure
of such exception set forth in the Parent Disclosure Schedule.
34
3.1 ORGANIZATION AND QUALIFICATION.
(a) Parent is a corporation validly existing and in good standing under
the laws of the Commonwealth of Massachusetts, and has corporate power and
authority to own, lease and operate its assets and to carry on its business as
now being and as heretofore conducted. Merger Sub is a corporation validly
existing and in good standing under the laws of the State of Delaware. Parent is
qualified or otherwise authorized to transact business as a foreign corporation
or other organization in all jurisdictions in which such qualification or
authorization is required by law, except for jurisdictions in which the failure
to be so qualified or authorized could not reasonably be expected to have a
Parent Material Adverse Effect (as defined below). "Parent Material Adverse
Effect" shall mean a material adverse effect on the assets, properties,
business, results of operations or financial condition of Parent and "Parent
Subsidiaries" taken as a whole. As used in this Agreement, "PARENT SUBSIDIARY"
means Merger Sub and any other corporation, partnership or other organization,
whether incorporated or unincorporated, (i) of which Parent or any Parent
Subsidiary is a general partner or (ii) of which at least 50% of the securities
or other interests having voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation, partnership or other organization are directly or indirectly owned
or controlled by Parent or by any Parent Subsidiary, or by Parent and one or
more Parent Subsidiary.
(b) Merger Sub has been formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and, prior to the Effective
Time, will not have engaged in any other business activities.
(c) Parent has previously made available to the Company true and
complete copies of its management and accounting policies governing the
relationship of Parent's divisions (the "Divisional Policies"), charter and
bylaws, each as presently in effect, and neither Parent nor any Parent
Subsidiary is in default in the performance, observation or fulfillment of its
organizational documents or, with respect to Parent, the Divisional Policies,
except for one or more defaults (i) by Parent with respect to the Divisional
Policies and/or (ii) by a Parent Subsidiary with respect to its organizational
documents that would not reasonably be expected, individually or collectively,
to have a Parent Material Adverse Effect.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Each of Parent and Merger Sub
has the corporate power and authority to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and Merger Sub. This Agreement has been duly executed and delivered by
each of Parent and Merger Sub and constitutes their valid and binding
obligation, enforceable against each of them in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency and other
similar laws affecting the rights and remedies of creditors generally and
general principles of equity.
3.3 CAPITALIZATION. The authorized capital stock of Parent consists of
690,000,000 shares of common stock and 10,000,000 shares of preferred stock,
$0.01 par value per share ("Parent Preferred Stock"). Of the Parent common
stock, as of the date of this Agreement,
35
500,000,000 shares have been designated Parent Common Stock, 100,000,000 shares
have been designated Genzyme Biosurgery Division Common Stock, $0.01 par value
per share ("GBX Common Stock"), and 40,000,000 shares have been designated
Molecular Oncology Division Common Stock, $0.01 par value per share ("GMO Common
Stock"), and 50,000,000 shares have been undesignated as to series. As of June
30, 2001, 207,421,578 shares of Parent Common Stock were issued and outstanding,
39,951,500 shares of GBX Common Stock were issued and outstanding and 16,673,985
shares of GMO Common Stock were issued and outstanding. As of the date of this
Agreement, no shares of Parent Preferred Stock are outstanding. Of the Parent
Preferred Stock, as of the date of this Agreement, 2,000,000, 1,000,000 and
400,000 shares have been designated as Series A Junior Participating Preferred
Stock, Series B Junior Participating Preferred Stock, and Series C Junior
Participating Preferred Stock, respectively, and reserved for issuance under the
Parent Rights Plan. Parent holds all the outstanding shares of common stock,
$0.01 par value per share, of Merger Sub.
3.4 SEC REPORTS. Parent previously has made available to the Company (i) its
Annual Report on Form 10-K for the year ended December 31, 2000 ("Parent 10-K"),
(ii) all proxy statements relating to Parent's meetings of stockholders held
after December 31, 2000, and (iii) all other documents filed by Parent with the
SEC under the Exchange Act since January 1, 2001 (together with the documents
filed by Parent with the SEC under the Exchange Act prior to the Effective Time,
the "Parent SEC Reports"). As of their respective dates, each of the Parent SEC
Reports complied, or in the case of those filed between the date of this
Agreement and the Effective Time will comply, in all material respects with
applicable SEC requirements and did not, and in the case of those filed between
the date of this Agreement and the Effective Time, will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since March 31, 2000,
Parent has timely filed and between the date of this Agreement and the Closing
Date, Parent will file with the SEC, all periodic reports required to be filed
by it under the Exchange Act.
3.5 FINANCIAL STATEMENTS. The consolidated financial statements contained in the
Parent 10-K and Parent's Quarterly Report on Form 10-Q for the quarter ending
March 31, 2001 have been prepared in accordance with GAAP applied on a
consistent basis, except as otherwise indicated therein, and fairly present in
all material respects the consolidated financial condition, results of
operations and cash flows of Parent and its consolidated subsidiaries as of and
for the periods presented therein, except as otherwise indicated therein and
subject, in the case of the unaudited financial statements, to normal year-end
and audit adjustments, which in the aggregate are not material, and the absence
of footnote disclosures.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. As of December 31, 2000, Parent had no
material liabilities of any nature, whether accrued, absolute, contingent, or
otherwise (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others or liabilities for taxes due or then
accrued or to become due), required to be reflected or disclosed in the Parent
balance sheet included in the Parent 10-K (or the notes thereto), that were not
adequately reflected or reserved against on such balance sheet. Except as
disclosed in the Parent SEC Reports, Parent has no such liabilities, other than
liabilities (i) adequately reflected or reserved against on such balance sheet,
(ii) included in SECTION 3.6 of the Parent Disclosure
36
Schedule, (iii) reflected in Parent's unaudited consolidated balance sheet (or
the notes thereto) dated March 31, 2001, (iv) incurred since March 31, 2001 in
the ordinary course of business, or (v) that would not, in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
3.7 ABSENCE OF ADVERSE CHANGES. Since March 31, 2001, except as disclosed in the
Parent SEC Reports, there has not been any event, change or circumstance which
has had a Parent Material Adverse Effect.
3.8 NO BREACH. Except for (a) filings under the Securities Act, (b) filings
under the Exchange Act, (c) filings with the Secretary of State of Delaware, and
(d) any required filing of a Notification and Report form under the HSR Act, the
delivery and performance of this Agreement by Parent and Merger Sub and
consummation by each of them of the transactions contemplated hereby will not
(i) violate any provision of the charter or by-laws of Parent or Merger Sub,
(ii) violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of, or otherwise give any other
contracting party the right to terminate, accelerate obligations under or
receive payment under or constitute (or with notice or lapse of time or both
constitute) a material default under, any material instrument, contract or other
agreement to which Parent, Merger Sub or any Parent Subsidiary is a party or to
which any of them or any of their assets or properties is bound or subject,
(iii) violate any Law or Order of any Governmental Entity applicable to Parent,
Merger Sub or any Parent Subsidiary or by which any of their assets or
properties is bound, (iv) require any filing with, notice to, or permit, consent
or approval of, any Governmental Entity, or (v) result in the creation of any
Lien or other encumbrance on the assets of properties of Parent, Merger Sub or
any Parent Subsidiary excluding from the foregoing clauses (ii), (iii) (iv) and
(v) violations which, and filings, notices, permits, consents and approvals the
absence of which, in the aggregate, will not have a Parent Material Adverse
Effect or materially interfere with Parent's ability to consummate the
transactions contemplated hereby. Except as disclosed in SECTION 3.8 of Parent's
Disclosure Schedule, neither Parent nor any Parent Subsidiary is or will be
required to give any notice to or obtain any consent or waiver from any
individual or entity in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby in order
to avoid a modification or termination of, or a payment or default under, a
contract or agreement with a third party, other than consents or waivers which,
individually or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect.
3.9 INTELLECTUAL PROPERTY. Parent owns, or is licensed to use, or otherwise has
the legal right to use, all patents, trademarks, servicemarks, tradenames, trade
secrets, franchises and copyrights, and all applications for any of the
foregoing necessary for the conduct of its business except (a) to the extent
failure to have such ownership or licenses is not reasonably expected to have a
Parent Material Adverse Effect or (b) as disclosed in the Parent SEC Reports.
3.10 INFORMATION PROVIDED. None of the information supplied by Parent for
inclusion, or incorporation by reference, in the Information Statement will, as
of the date of the Information Statement, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
37
3.11 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
3.12 ACTIONS AND PROCEEDINGS. Except as set forth in the Parent SEC Reports,
there are no outstanding Orders of any Governmental Entity against Parent, any
Parent Subsidiary, or any of their assets or properties that could reasonably be
expected to have a Parent Material Adverse Effect. Except as set forth in the
Parent SEC Reports, there are no actions, suits or claims or legal,
administrative or arbitration proceedings pending or, to the knowledge of
Parent, threatened against Parent, any Parent Subsidiary or any of their
securities, assets or properties that could reasonably be expected to have a
Parent Material Adverse Effect or materially interfere with Parent's ability to
consummate the transactions contemplated hereby. To the knowledge of Parent,
except as disclosed in the Parent SEC Reports, there is no fact, event or
circumstances now in existence that reasonably could be expected to give rise to
any action, suit, claim, proceeding or investigation that, individually or in
the aggregate, could be reasonably expected to have a Parent Material Adverse
Effect or materially interfere with Parent's ability to consummate the
transactions contemplated hereby.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. Except with the prior written consent of Parent and
except as otherwise contemplated herein or referred to in SECTION 4.1 of the
Company Disclosure Schedule, during the period from the date hereof to the
Closing Date, the Company shall observe the following covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. The Company shall:
(i) PRESERVATION OF PERSONNEL. Use reasonable commercial efforts
consistent with past practice to preserve intact and keep available the services
of present employees of the Company and the Company Subsidiaries;
(ii) INSURANCE. Use reasonable commercial efforts to keep in effect
casualty, public liability, worker's compensation and other insurance policies
in coverage amounts not less than those in effect at the date of this Agreement;
(iii) PRESERVATION OF THE BUSINESS; MAINTENANCE OF PROPERTIES,
CONTRACTS. Use reasonable commercial efforts to (a) preserve the business of the
Company in accordance with past practices over the last twelve months, (b) keep
the Company's properties intact, (c) preserve its goodwill and business, (d)
maintain all physical properties in such operating condition as will permit the
conduct of the Company's business on a basis consistent with past practice, and
(e) perform and comply in all material respects with the terms of the contracts
referred to in SECTION 2.10.
(iv) INTELLECTUAL PROPERTY RIGHTS. Use reasonable best efforts to
preserve and protect the Proprietary Rights;
38
(v) ORDINARY COURSE OF BUSINESS. Operate the Company's business
solely in the ordinary course consistent with past practice;
(vi) COMPANY OPTIONS, WARRANTS, CONVERTIBLE DEBENTURES AND
PREFERRED STOCK. Use commercially reasonable efforts with respect to Company
Options, Company Warrants, the Convertible Debentures and the Company Preferred
Stock to effectuate the terms of this Agreement, PROVIDED, HOWEVER, that Parent
shall have the right to approve any agreements to modify terms of the underlying
instruments in advance; and
(vii) FDA MATTERS. Notify and consult with Parent immediately
(A) after receipt of any material communication from the FDA and before giving
any material submission to the FDA and (B) prior to making any material change
to a study protocol commencing new trials or making a material change to the
development timeline for any of its product candidates or programs.
(b) NEGATIVE COVENANTS PENDING CLOSING. The Company shall not:
(i) DISPOSITION OF ASSETS. Sell or transfer, or mortgage, pledge,
lease or otherwise encumber any of its assets, including its Proprietary Rights,
other than sales or transfers in the ordinary course of business and in amounts
not exceeding, in the aggregate, $50,000;
(ii) LIABILITIES. Incur any indebtedness for borrowed money (other
than pursuant to existing lines of credit or lease lines or payroll
obligations), or enter into any contracts or commitments involving potential
payments to or by the Company or any Company Subsidiary in any single instance
of $100,000 or more or in the aggregate of $250,000 or more, except as set forth
on SECTION 4.1(b)(ii) of the Company Disclosure Schedule;
(iii) COMPENSATION. Increase the compensation payable to any
officer, director, employee, agent or consultant other than in the ordinary
course of business consistent with past practice; or enter into any employment,
severance or other agreement with any officer, director, employee, agent or
consultant of the Company or a Company Subsidiary, except employment or
consulting agreements entered into in the ordinary course of business consistent
with past practices; or adopt, or increase the benefits under, any employee
benefit plan, except, in each case, as required by law, in accordance with
existing agreements or in the ordinary course of business consistent with past
practices;
(iv) CAPITAL STOCK. Except as set forth on SCHEDULE 4.1(b), grant
or accelerate the exercisability of, any option, warrant or other right to
purchase, or declare or pay any dividend or other distribution with respect to
any shares of its capital stock, or redeem or otherwise repurchase any shares of
its capital stock, except for any redemption or repurchase of shares of the
Company's capital stock at cost from employees or consultants of the Company
upon the termination of such employees or consultants;
(v) CHARTER AND BY-LAWS. Cause, permit or propose any amendments
to the Certificate of Incorporation or By-Laws of the Company except as
contemplated hereby;
39
(vi) ACQUISITIONS. Make, or permit to be made, any material
acquisition of property or assets outside the ordinary course of business;
(vii) CAPITAL EXPENDITURES. Authorize any single capital
expenditure in excess of $100,000 or capital expenditures which in the aggregate
exceed $250,000;
(viii) ACCOUNTING POLICIES. Except as may be required as a result
of a change in law or in GAAP, change any of the accounting practices or
principles used by it or restate any of the Audited Financial Statements of the
Company;
(ix) TAXES. Without Parent's written consent, make any Tax
election or settle or compromise any material federal, state, local or foreign
Tax liability (other than settlements or compromises not involving any payments
of Taxes), change its annual tax accounting period, change any method of Tax
accounting, enter into any closing agreement relating to any Tax, surrender any
right to claim a Tax refund, or consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment;
(x) LEGAL. Settle or compromise any pending or threatened suit,
action or claim which relates to the transactions contemplated hereby;
(xi) EXTRAORDINARY TRANSACTIONS. Adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of the Company
Subsidiaries (other than the Merger);
(xii) PAYMENT OF INDEBTEDNESS. Pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Company Balance Sheet or
incurred in the ordinary course of business and other than as contemplated by
SECTION 1.7(c) of this Agreement;
(xiii) NEW AGREEMENTS/AMENDMENTS. Enter into or modify, or permit a
Company Subsidiary to enter into or modify, any material supply, license,
development, research or collaboration agreement with any other person or
entity;
(xiv) CONFIDENTIALITY AGREEMENTS. Modify, amend or terminate, or
waive, release or assign any material rights or claims with respect to any
confidentiality agreement to which the Company is a party; or
(xv) OBLIGATIONS. Obligate itself to do any of the foregoing.
(c) CONTROL OF THE COMPANY'S BUSINESS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.
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4.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Effective Time,
Parent shall be entitled, through its employees and representatives, to have
such access to the assets, properties, business and operations of the Company,
as is reasonably necessary or appropriate in connection with Parent's
investigation of the Company with respect to the transactions contemplated
hereby. Any such investigation and examination shall be conducted at reasonable
times and under reasonable circumstances so as to minimize any disruption to or
impairment of the Company's business and the Company shall cooperate fully
therein. No investigation by Parent shall diminish or obviate any of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement. In order that Parent may have full opportunity to make such
investigation, the Company shall furnish the representatives of Parent during
such period with all such information and copies of such documents concerning
the affairs of the Company as such representatives may reasonably request and
cause its officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with such representatives in connection with such investigation.
Parent shall hold all such information in accordance with the provisions of the
Mutual Non-Disclosure Agreement dated February 28, 2001 between Parent and the
Company (the "Confidentiality Agreement").
4.3 TAX TREATMENT. None of the parties shall take, or cause or permit any of its
subsidiaries to take, any action that would prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code; PROVIDED,
HOWEVER, that it shall not constitute a breach of the covenant in this Section
4.3 for, and nothing in this Section 4.3 shall limit the ability of, Parent to
take any action following the Closing Date to the extent that action would
require a change in the Contingent Merger Consideration to include property
other than Parent Common Stock pursuant to Section 1 of this Agreement.
4.4 EXPENSES. Except as otherwise provided herein, the Company and Parent shall
bear their respective expenses incurred in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
4.5 FURTHER ASSURANCES. Each of the parties shall execute such documents,
further instruments of transfer and assignment and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby, including delivering
customary representation letters contemplated by SECTIONS 6.4 and 7.2. Without
limiting the generality of the foregoing, the Company agrees to duly execute and
deliver, and to use commercially reasonable efforts to cause any individual or
entity listed as a co-owner of, or who otherwise has any power of attorney or
other rights with respect to, any of the Proprietary Rights of the Company, to
duly execute and deliver such further instruments and do and cause to be done
such further actions and things, including, without limitation, the execution of
such additional assignments, agreements, documents and instruments, that Parent
may at any time and from time to time reasonably request to more effectively
transfer ownership, control and/or administration of such Proprietary Rights to
the Surviving Corporation. The Company shall use commercially reasonable efforts
to obtain the consents identified in SECTION 2.19 of the Company Disclosure
Schedule. Each party shall use its respective reasonable commercial efforts to
take other such actions to ensure that, to the extent within its control or
capable of influence by it, the transactions contemplated by this Agreement
41
shall be fully carried out in a timely fashion. Nothing in this Agreement shall
require Parent or Merger Sub to sell, hold separate, license or otherwise
dispose of or conduct their business in a specified manner, or agree to sell,
hold separate, license or otherwise dispose of or conduct their business in a
specified manner, or permit the sale, holding separate, licensing or other
disposition of, any assets of Parent or Merger Sub that are material, whether as
a condition to obtaining any approval from a Governmental Entity or any other
person or for any other reason. Nothing in this Agreement shall require the
Company, in its exercise of commercially reasonable efforts, to incur any
material liability or obligation to pay any consideration to any third party
(other than its attorneys, accountants and financial advisors), unless such
payment is only required if the Merger is consummated or Parent agrees to
indemnify the Company for such payments.
4.6 STOCKHOLDER APPROVAL. The Company will, as soon as practicable following the
date of this Agreement, (i) duly call, give notice of, convene and hold a
special meeting of the Company stockholders (the "Company Stockholder Meeting")
or solicit a written consent of the Company stockholders in accordance with
applicable law and the Company's Certificate of Incorporation and its By-Laws
for the purpose of considering the approval and adoption of this Agreement (the
"Written Consent"); (ii) include in the notice of the Company Stockholder
Meeting or Written Consent sent to the Company stockholders the unqualified
recommendation of the Board of Directors that the Company stockholders adopt
this Agreement; and (iii) use commercially reasonable efforts (A) to cause the
notice of the Company Stockholders Meeting or Written Consent to be mailed to
the Company stockholders at the earliest practicable time after the execution of
this Agreement and (B) to obtain the necessary approvals of the Company
stockholders of this Agreement, the Merger and the transactions contemplated
hereby.
4.7 INFORMATION STATEMENT. In connection with the Company Stockholder Meeting
and/or Written Consent, as soon as practicable after the date of this Agreement,
Parent and the Company shall prepare and the Company shall mail the Information
Statement to the Company's stockholders. Each of Parent and the Company shall
furnish to the other all information concerning them that the other may
reasonably request in connection with such Information Statement. If any event
relating to the Company or Parent occurs, or if the Company or Parent becomes
aware of any information, in either case that should be disclosed in an
amendment or supplement to the Information Statement, then Parent and the
Company shall promptly prepare such amendment or supplement and the Company
shall promptly distribute the same to the Company stockholders. The Company
shall assist Parent in obtaining such information as Parent reasonably requires
to allow Parent to determine the number and nature of the Company stockholders
in their capacity as purchasers (as such term is used under Rule 506 of
Regulation D promulgated under the Securities Act ("Regulation D")). In
connection with the distribution of the Information Statement to the Company
stockholders, the Company shall use its commercially reasonable efforts to cause
each Company stockholder previously identified as an unaccredited investor to
complete and return an accredited investor questionnaire substantially the form
attached hereto as EXHIBIT B (the "Accredited Investor Questionnaire"). To the
extent that Parent reasonably determines that a Company stockholder is not an
"accredited investor" (as defined in Rule 501(a) of Regulation D) and does not
meet the financial knowledge and experience requirements of Rule 506 of
Regulation D, the Company agrees that it shall use its commercially reasonable
efforts to cause all such Company stockholders to use a "purchaser
representative" (as defined in Rule 501(h) of Regulation D) to assist such
Company stockholders
42
in evaluating the Information Statement and the investment decisions represented
by this Agreement, the Merger and the transactions contemplated hereby.
4.8 REGISTRATION ON FORM S-3.
(a) REGISTRATION OF INITIAL MERGER CONSIDERATION. Subject to the terms
and conditions set forth below, Parent will, as soon as practicable after the
date of this Agreement, file with the SEC a Registration Statement (the "Initial
Registration Statement") under the Securities Act covering the resale of the
shares of Parent Common Stock to be issued at the Effective Time pursuant this
Agreement (the "Initial Registrable Shares"), and will use its reasonable
efforts to cause such Registration Statement to be declared effective by the SEC
as soon as practicable thereafter (but in any event prior to the Closing) and to
keep the Registration Statement covering the Initial Registrable Shares
continuously effective until the earlier of (i) the date on which all Initial
Registrable Shares covered by such Registration Statement have been sold and
(ii) the second anniversary of the Effective Time.
(b) REGISTRATION OF CONTINGENT MERGER CONSIDERATION. Subject to the
terms and conditions set forth below, Parent will, as soon as practicable (but
in any event within 30 days) after an applicable Milestone Date, file with the
SEC a Registration Statement under the Securities Act covering the resale of any
shares of Parent Common Stock included in any Contingent Merger Consideration
payable on such Milestone Date pursuant to SECTION 1.6(b) that are not then
eligible for resale by non-affiliates of Parent pursuant to Rule 144(k) or a
successor rule (the "Contingent Registrable Shares" and together with the
Initial Registrable Shares, the "Registrable Shares"), and will use its
reasonable efforts to cause such Registration Statement to be declared effective
by the SEC as soon as practicable thereafter and to keep the Registration
Statement covering the Contingent Registrable Shares continuously effective
until the earlier of (i) the date on which the Contingent Registrable Shares
covered by such Registration Statement have been sold and (ii) the second
anniversary of the applicable Milestone Date.
(c) In connection with the foregoing:
(i) Upon the written request of any former Company stockholder,
Parent shall promptly prepare and file with the SEC any Prospectus supplement
covering the resale of any Initial Registrable Shares that were not included in
the Initial Registration Statement, PROVIDED THAT, (i) Parent shall not be
obligated to file more than four such Prospectus supplements in any 12 month
period and (ii) the requesting stockholder shall have provided Parent with the
information regarding such stockholder required under SECTION 4.8(g).
(ii) Parent shall promptly, subject to SECTION 4.8(d), prepare and
file with the SEC such amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for as long as such
registration is required to remain effective hereunder; and shall cause a
Prospectus to be supplemented by any required Prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act.
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(iii) Parent shall promptly furnish to each Company stockholder two
copies of a Prospectus and any amendments or supplements thereto, each in a form
that can be copied by the Company stockholder.
(iv) Parent shall promptly give notice to the selling stockholders
(1) when a Prospectus or Prospectus supplement or amendment has been filed and,
with respect to a Registration Statement or a post-effective amendment, when the
same has become effective, (2) of any request by the SEC for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after a Registration Statement has become effective, (3) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement, and (4) of the happening of any event that makes any
statement made in a Registration Statement or related Prospectus untrue or that
requires the making of any changes in a Registration Statement or Prospectus so
that they will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) SUSPENSION PERIOD.
(i) Unless notified pursuant to SECTION 4.8(d)(ii) below, upon
receipt of a notice under clauses (2) through (4) of SECTION 4.8(c)(iv), the
Company stockholders shall forthwith discontinue disposition of the Registrable
Shares pursuant to a Registration Statement until the stockholders' receipt of
copies of the applicable supplemented or amended Prospectus contemplated by
SECTION 4.8(c)(iii) or until the Company stockholders are advised in writing by
Parent that the use of a Prospectus may be resumed, and, if so directed by
Parent, the Company stockholders shall deliver to Parent all copies, other than
one permanent file copy, of a Prospectus at the time of receipt of such notice.
Parent shall use reasonable commercial efforts to take such actions, as soon as
practicable (but in any event within 60 days) after the delivery of a notice
under clause (2) through (4) of SECTION 4.8(c)(iv), as are necessary to
appropriately revise or supplement a Prospectus or to cause the SEC to lift the
stop order.
(ii) In addition, if Parent shall furnish to the former Company
stockholders a certificate signed by the President or Chief Executive Officer of
Parent stating that the Board of Directors of Parent has made the good faith
determination (i) that continued use by the selling stockholders of the
Registration Statement for purposes of effecting offers or sales of Registrable
Shares pursuant thereto would require, under the Securities Act, premature
disclosure in the Registration Statement (or the prospectus relating thereto) of
material, nonpublic information concerning Parent, its business or prospects or
any proposed material transaction involving Parent and (ii) that such premature
disclosure would be materially adverse to Parent, its business or prospects or
any such proposed material transaction or would make the successful consummation
by Parent of any such material transaction significantly less likely, the
Company stockholders shall not use the Registration Statement to sell any shares
of Parent Common Stock covered by the Registration Statement until notified by
Parent that the reason for the suspension no longer exists; PROVIDED, HOWEVER,
that in no event will the suspension period contemplated by this sentence exceed
90 days in the aggregate during any 12-month period during which Parent is
otherwise obligated to keep such Registration Statement effective. As a
44
condition to having shares included in a Registration Statement and listed in a
Prospectus, Company stockholders shall be required to agree to the restrictions
provided in this SECTION 4.8(d), the indemnification provisions provided
hereunder, to provide the information required by SECTION 4.8(g) hereof, and to
keep confidential the receipt of any notice under SECTION 4.8(c)(iv) and the
contents of any such notice.
(e) REGISTRATION EXPENSES. Parent shall bear all expenses incurred in
connection with the registration of the Registrable Shares pursuant to this
SECTION 4.8, including without limitation all printing, legal and accounting
expenses incurred by Parent and all registration and filing fees imposed by the
SEC or The Nasdaq National Market or, if the Parent Common Stock is not then
listed on such market, the principal securities exchange or system on which
Parent Common Stock is then traded or quoted. The Company stockholders shall be
responsible for any brokerage commissions and taxes of any kind (including,
without limitation, transfer taxes) with respect to any disposition, sale or
transfer of the Registrable Shares and for any legal, accounting and other
expenses incurred by the Company stockholders in connection with any such
disposition.
(f) INDEMNIFICATION.
(i) INDEMNIFICATION BY PARENT. To the extent permitted by law,
Parent shall indemnify and hold harmless each of the Company stockholders, their
respective directors, officers and employees, brokers and underwriters (as
defined in the Securities Act), and each person who controls such Company
stockholder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with, or is
controlled by, such Company stockholder, together with the partners, brokers,
underwriters (as defined in the Securities Act), officers, directors, trustees,
stockholders and employees of such controlling person (collectively, the
"CONTROLLING PERSONS"), from and against all losses, claims, damages,
liabilities and reasonable expenses, including without limitation reasonable
legal fees and expenses (collectively, the "Damages"), incurred by such Company
stockholder and any such Controlling Person (and their respective partners,
officers, directors, trustees, stockholders and employees, brokers and
underwriters (as defined in the Securities Act), as applicable) arising out of
or based upon any untrue statement of material fact contained in a Registration
Statement (or any amendment thereto), or any omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any untrue statement
of a material fact contained in any Prospectus (as amended or supplemented if
Parent shall have furnished any amendments or supplements thereto), or any
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such Damages arise out of or are based upon any such untrue
statement or omission based upon written information relating to the Company
stockholders furnished to Parent by or on behalf of such Company stockholders
for use therein; PROVIDED, HOWEVER, that Parent shall not be liable to the
Company stockholders under this SECTION 4.8(f) to the extent that any such
Damages were caused by the fact that such Company stockholders (A) sold the
Registrable Shares to a person as to whom it was not sent or given, at or prior
to the written confirmation of such sale, a copy of such Prospectus as then
amended or supplemented, if Parent has previously furnished copies thereof to
the Company stockholders and a Prospectus, as then amended and supplemented, has
45
corrected any such misstatement or omission or (B) sold the Registrable Shares
during a suspension period under SECTION 4.8(d). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
Parent or any Controlling Persons and shall survive the transfer of Registrable
Shares by the Company stockholders.
(ii) INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. To the extent
permitted by law, each Company stockholder shall severally indemnify and hold
harmless Parent, its directors, officers and employees, and each person, if any,
who controls Parent within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from Parent to the Company stockholders, but only with reference to
written information relating to such Company stockholder furnished to Parent by
such Company stockholder for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto); PROVIDED,
HOWEVER, that in no event shall the foregoing indemnification obligations of
such Company stockholder exceed the aggregate proceeds received by such Company
stockholder in the offering of Registrable Shares covered by a Registration
Statement to which the claim for such indemnification relates.
(iii) PROCEDURE. Each party entitled to indemnification under this
SECTION 4.8(f) (the "INDEMNIFIED PARTY") shall give prompt written notice of any
claim as to which indemnification may be sought to the party required to provide
indemnification (the "INDEMNIFYING PARTY"), PROVIDED THAT, failure to give such
notice shall not relieve the Indemnifying Party of its obligations hereunder
except to the extent of actual prejudice. The Indemnifying Party shall be
entitled to assume the defense of any such claim with counsel reasonably
satisfactory to the Indemnified Party. No Indemnifying Party shall, except with
the consent of the Indemnified Party, agree to any settlement that does not
include a release of the Indemnified Party from all liability in respect of such
claim, and the Indemnified Party shall not settle such claim or admit liability
in respect of such claim without the prior written consent of the Indemnifying
Party.
(iv) CONTRIBUTION. If the indemnification provided for in this
SECTION 4.8(f) is held by a court of competent jurisdiction to be unavailable or
insufficient to an Indemnified Party with respect to any Damages referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such Damages as well as any other relevant
equitable consideration; PROVIDED, HOWEVER, that in no event shall the foregoing
contribution obligation of any Company stockholder exceed the aggregate proceeds
received by such Company stockholder in the offering of Registrable Shares
covered by a Registration Statement to which the claim for such contribution
relates. The relevant fault of the Indemnifying Party shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or the omission to state a material fact related to information supplied by
the Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
46
(g) INFORMATION BY THE COMPANY STOCKHOLDERS. The Company stockholders
shall furnish to Parent such information regarding such stockholders and the
distribution proposed by the Company stockholders as Parent may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement, including the Selling
Stockholder Notice and Questionnaire attached as EXHIBIT C and shall agree to
notify Parent promptly following sales pursuant to a Registration Statement.
(h) CERTAIN DEFINITIONS. As used in this SECTION 4.8, the following
terms have the following meanings:
(i) A "PROSPECTUS" means the prospectus included in any
Registration Statement or any prospectus filed pursuant to Rule 424 with respect
to any such Registration Statement, as amended or supplemented by any prospectus
supplement, and by all other amendments and supplements to such prospectus,
including post-effective amendments to any such Registration Statement, and in
each case including all material incorporated by reference or deemed to be
incorporated by reference in any such prospectus.
(ii) A "REGISTRATION STATEMENT" means any registration statement of
Parent that covers any of the Registrable Shares pursuant to the provisions of
this Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including any
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in any such registration statement.
(i) TRANSFER OF REGISTRATION RIGHTS. Notwithstanding anything to the
contrary contained herein, the registration rights set forth herein shall be
transferable to (i) any transferees of the Company stockholders who receive any
Registrable Shares by gift, partnership distribution or other transfer that does
not constitute a sale (as such term is defined in Section 2(3) of the Securities
Act) and (ii) any transferee (A) who received such Registrable Shares at a time
when the Registration Statement was not available to cover such transfer and (B)
in whose hands the Registrable Shares continue to be "restricted securities"
within the meaning of Rule 144 under the Securities Act.
(j) TERMINATION OF REGISTRATION RIGHTS. Notwithstanding anything to the
contrary contained herein, the registration rights set forth herein shall
terminate with respect to each stockholder when such stockholder is able to sell
all of his, her or its Registrable Shares under Rule 144(k) under the Securities
Act (or any successor rule thereto).
(k) RULE 144. Parent shall comply with the requirements of Rule 144(c)
under the Securities Act, as such Rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the SEC), regarding the
availability of current public information to the extent required to enable each
recipient of Merger Consideration to sell such Merger Consideration without
registration under the Securities Act pursuant to the resale provisions of Rule
144 (or any similar rule or regulation). Upon request, Parent will deliver to
such recipient a written statement as to whether it has complied with such
requirements and, upon such recipient's compliance with the applicable
provisions of Rule 144, will take such action as may be required (including,
without limitation, causing legal counsel to issue an appropriate opinion)
47
to cause its transfer agent to effectuate any transfer of Merger Consideration
properly requested by such recipient, in accordance with the terms and
conditions of Rule 144. The obligations under this SECTION 4.8(k) shall
terminate on the two year anniversary of the Effective Time of the Merger.
4.9 PUBLIC ANNOUNCEMENTS. The Company and Parent shall, and shall cause each of
its respective directors, officers, employees, agents, and affiliates to,
consult with the other to get the other's approval, before issuing any press
release or otherwise making any public statement with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation and approval, except as may be
required by applicable Law.
4.10 NASDAQ LISTINGS. Prior to the Closing Date and each Milestone Date, Parent
shall, if necessary, file with Nasdaq a Notification for Listing of Additional
Shares covering the shares of Parent Common Stock to be issued as Initial Merger
Consideration and Contingent Merger Consideration in the Merger, including the
shares of Parent Common Stock issuable upon exercise of the Assumed Options and
Assumed Warrants and upon conversion of the Convertible Debentures.
4.11 NO SOLICITATION. The Company shall not, and shall cause each Company
Subsidiary and each director, officer, employee, agent or other representative
(including each financial advisor and attorney) of the Company and each Company
Subsidiary not to, (a) solicit, initiate, facilitate, assist or encourage action
by, or discussions with, any person, other than Parent, relating to the possible
acquisition of the Company or any Company Subsidiary or of all or a material
portion of the assets or capital stock of the Company or any Company Subsidiary
or any merger, reorganization, consolidation, business combination, share
exchange, tender offer, recapitalization, dissolution, liquidation or similar
transaction involving the Company or any Company Subsidiary (an "Alternative
Transaction"), (b) participate in any negotiations regarding, or furnish
information with respect to, any effort or attempt by any person to do or to
seek any Alternative Transaction or (c) grant any waiver or release under any
standstill or similar agreement. The Company shall notify Parent promptly (and,
in any case, within one business day) of any inquiries, proposals or offers
received by, any information requested from, or any discussions or negotiations
sought to be initiated or continued with, the Company, any Company Subsidiary or
any of their directors, officers, employees, agents or other representatives
concerning an Alternative Transaction indicating, in connection with such
notice, the names of the parties and the material terms and conditions of any
proposal or offer and, in the case of written materials, providing copies of
such materials. The Company agrees that it will keep Parent informed, on a
prompt basis (and, in any case, within one day of any significant development),
of the status and terms of any such proposals or offers and the status of any
such discussions or negotiations. The Company agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with respect to any potential Alternative Transaction or similar
transaction or arrangement. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence of this SECTION 4.11 of the obligations undertaken in this SECTION
4.11.
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4.12 REGULATORY FILINGS. As soon as is reasonably practicable, and only to the
extent required, the Company and Parent each shall file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") any Notification and Report Forms relating
to the Merger required by the HSR Act, as well as comparable pre-merger
notification forms required by the merger notification and control laws and
regulations of any other applicable jurisdiction, as agreed to by the parties.
The Company and Parent each shall promptly (a) supply the other with any
information which may be required in order to make such filings and (b) supply
any additional information which may be requested by the FTC, the DOJ or the
competition or merger control authorities of any other jurisdiction and which
the parties reasonably deem appropriate.
4.13 COMPANY 401(k) PLAN. Except with the prior written consent of Parent,
during the period from the date hereof to the Effective Time, the Company shall
not (i) make any discretionary contribution to the Company 401(k) plan (the
"Company 401(k) Plan") or (ii) make any required contribution to the Company
401(k) Plan in Company Common Stock. The Company shall terminate the Company
401(k) Plan as of the day immediately preceding the Closing Date. Employees may,
as soon as practicable following Parent's receipt of a favorable IRS
determination letter on termination of the Company 401(k) Plan, elect a direct
rollover of their Company 401(k) Plan benefits, including any Company 401(k)
Plan loan outstanding as of the Closing Date, to Parent's 401(k) plan, provided
any such loan has not been accelerated at the time of rollover. As soon as
practicable following Parent's receipt of a favorable IRS determination letter
on termination of the Company 401(k) Plan, Parent's 401(k) plan shall accept the
direct rollover of electing employee's benefits under the Company 401(k) Plan in
cash and, if applicable, promissory notes that are not accelerated from
Company's 401(k) Plan as provided under Section 401(a)(31) of the Code.
4.14 TERMINATION OF SEVERANCE AND SALARY CONTINUATION PLANS. The Company agrees
to terminate, to the extent applicable, any and all group severance, separation
or salary continuation plans, programs or arrangements that may be covered under
ERISA immediately prior to the Closing.
4.15 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the Closing
Date, the Company shall give prompt notice to Parent, and Parent and Merger Sub
shall give prompt notice to the Company, of (a) the occurrence or non-occurrence
of any event or circumstance the occurrence or non-occurrence of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate if made at such time and (b) any failure of the Company,
Parent and Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. The Company shall not be liable for breach of this SECTION 4.15
unless such breach could reasonably be expected to result in a Company Material
Adverse Effect and neither Parent nor Merger Sub shall be liable for breach of
this SECTION 4.15 unless such breach could reasonably be expected to result in a
Parent Material Adverse Effect.
4.16 DELIVERY OF SEC COMPLIANT FINANCIAL STATEMENTS. Promptly after the date of
this Agreement, the Company shall deliver to Parent true and complete copies of
its financial statements for the last two fiscal years and the six months ended
June 30, 2001 in compliance as
49
to form with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. In addition, within 45 days of the
end of each calendar quarter ending after the date of the last balance sheet
provided pursuant to the preceding sentence, the Company will deliver to Parent
true and complete copies of the financial statements for such periods in
compliance with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.
4.17 EMPLOYEE MATTERS.
(a) Parent shall give individuals who are employed by the Company
immediately prior to the Effective Time and remain as employees of the Surviving
Corporation or Parent ("Continuing Employees") full credit for purposes of
eligibility, vesting, benefit accrual (except for purposes of benefit accrual
under any defined benefit pension plans and except as would result in
duplication of benefits) and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Parent for such Continuing
Employees' service with the Company to the same extent recognized by the Company
immediately prior to the Effective Time.
(b) Parent shall waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Continuing Employees under any medical or dental
benefit plans that such employees may be eligible to participate in after the
Effective Time, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Effective Time under any plan maintained for the Continuing Employees
immediately prior to the Effective Time. In addition, all deductibles and
co-payments under Parent's benefit plans shall be satisfied by the Continuing
Employee's payments under the Company's benefit plans during the same plan year.
(c) As of the Effective Time, Parent shall assume and honor in
accordance with their terms all employment, severance, and other compensation
agreements and arrangements existing prior to the execution of this Agreement
which are between Company and any director, officer, or employee thereof, each
as described in SECTION 2.16 of the Company Disclosure Schedule, except as
otherwise expressly agreed between Parent and such person.
4.18 DIRECTORS AND OFFICERS' INSURANCE.
(a) Parent understands and agrees that, prior to the Effective Time,
the Company intends to obtain a six-year "tail" insurance policy that provides
coverages substantially similar to the coverage provided under the Company's
directors and officers insurance policy in effect on the date of this Agreement
for the individuals who are directors and officers of the Company on the date of
this Agreement for events occurring prior to the Effective Time; PROVIDED,
HOWEVER, without Parent's prior written consent, the Company shall not pay more
than $100,000 to purchase such policy.
(b) From and after the Effective Time, Parent shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations, to the extent
legally permissible,
50
of the Company to its directors and officers (the "Indemnified Directors and
Officers") pursuant to the indemnification provisions under the Company's
Certificate of Incorporation or By-Laws as in effect on the date hereof.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges with any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers substantially all of its assets to any person in a
single transaction or a series of transactions, then, and in each such case,
Parent shall make or cause to be made proper provision so that the successors
and assigns of the Surviving Corporation assume the indemnification obligations
described herein for the benefit of the Indemnified Directors and Officers.
4.19 PARTICIPATION IN CERTAIN ACTIONS AND PROCEEDINGS. Until this Agreement is
terminated in accordance with SECTION 8.1, Parent shall have the right to
participate in the defense of any action, suit or proceeding instituted against
the Company (or any of its directors or officers) before any Governmental
Entity, to restrain, modify or prevent the consummation of the transactions
contemplated by this Agreement, or to seek damages or a discovery order in
connection with such transactions, PROVIDED, HOWEVER, Parent's right to
participate in such actions shall not include the right to control the Company's
defense of, or legal strategy in, any such action.
4.20 CONVERSION OF COMPANY PREFERRED STOCK; TERMINATION OF AGREEMENTS. The
Company agrees to use commercially reasonable efforts to effect an amendment of
the Certificate of Designation prior to the Closing Date to cause the automatic
conversion of all of the outstanding shares of Company Preferred Stock at the
Effective Time. In connection with such conversion, prior to the Closing, the
Company shall use commercially reasonable efforts to enter into agreement(s),
reasonably satisfactory in form and content to Parent (and conditioned and
effective upon the Closing), terminating all existing agreements relating to
Company preferred stockholders' rights, including but not limited to (i) that
certain Securities Purchase Agreement dated as of September 13, 2000, among the
Company and the purchasers named therein, (ii) the Series B Purchase Agreement
(except the provisions relating to the Company Preferred Stock Purchase Rights),
(iii) that certain Registration Rights Agreement dated as of September 13, 2000,
by and among the Company and certain of its Series A Preferred Stockholders, as
amended by Amendment No. 1 thereto dated as of April 17, 2001, (iv) that certain
Amended and Restated Rights Agreement dated as of February 26, 2001 between the
Company and Neose Technologies, Inc.; and (v) that certain Amended and Restated
Stockholders' Agreement dated April 17, 2001, by and among the Company and the
Company's stockholders who are parties thereto.
4.21 COMPANY OPTIONS.
(a) The Company shall use commercially reasonable efforts to suspend,
effective as of a date at least three business days prior to the Closing Date,
the exercise of any Company Options. To the extent that any Company Options are
exercised after the date of this Agreement, the Company shall update SCHEDULE I
to reflect such exercises. The Company shall
51
deliver to Parent three business days before the Closing Date a revised version
of SCHEDULE I updated in accordance with the foregoing.
(b) Within one business day after the Effective Time, Parent shall file
a registration statement on Form S-8 (or any successor or appropriate form),
with respect to the shares of Parent Common Stock subject to Assumed Options to
the extent the shares of Parent Common Stock issuable upon exercise of such
Assumed Options qualify for registration on Form S-8.
4.22 MANAGEMENT OF POMPE PROGRAMS.
(a) Promptly after the Effective Time, Parent shall transfer the
management responsibility for all of Parent's (and its subsidiaries' and
affiliates') development programs for enzyme replacement therapies for the
treatment of patients with Pompe disease (including management of budgets and
resources for such programs) to Xxxx X. Xxxxxxx, in his capacity as an employee
of Parent (as long as he is an employee of Parent), in a manner consistent with
Parent's obligations to third parties and SECTION 4.23(b) below; provided Xx.
Xxxxxxx is the President of the Company immediately prior to the Effective Time.
(b) In addition, in the event that Parent or any of its subsidiaries or
affiliates is or becomes a party to any collaboration, strategic alliance, joint
venture, license or other agreement with a third party for any development
program for enzyme replacement therapies for the treatment of patients with
Pompe disease (each, a "Pompe Partnered Program"), Parent shall transfer
Parent's and its subsidiaries' and affiliates' internal management
responsibility for such Pompe Partnered Program (including management of the
budgets and resources for such program) and for Parent's and its subsidiaries'
and affiliates' obligations to such third party to Xxxx X. Xxxxxxx, in his
capacity as an employee of Parent (as long as he is an employee of Parent), in a
manner consistent with Section 4.23(b) below; provided that Xx. Xxxxxxx is the
President of the Company immediately prior to the Effective Time. In the event
that, in connection with any Pompe Partnered Program, Parent or any of its
subsidiaries or affiliates shall have the right to appoint members to any
steering committee, project management committee or any other committee having a
managerial, supervisory or oversight role in connection with such Pompe
Partnered Program, Parent shall appoint Xx. Xxxxxxx, in his capacity as an
employee of Parent (as long as he is an employee of Parent), to serve as one of
such members of each such committee that Parent or its subsidiaries or
affiliates has the right to appoint members; provided that Xx. Xxxxxxx is the
President of the Company immediately prior to the Effective Time.
4.23 MANAGEMENT OF PROGRAMS. From and after the Effective Time and until the
earlier of: (i) payment, in full, by Parent of the Contingent Merger
Consideration, (ii) June 1, 2006 if the First Milestone is not achieved, and
(iii) June 1, 2008 if the First Milestone is achieved, Parent shall, and shall
cause or direct its subsidiaries and Affiliates (as defined below), including,
without limitation, the Surviving Corporation to:
(a) use its commercially reasonable and diligent efforts to execute the
Company's plans for a Phase I/II clinical trial for the Pompe program
substantially as such plans
52
existed as of the Effective Date with such modifications as may be (i)
reasonably deemed necessary or desirable due to the requirements, guidelines or
requests of applicable regulatory authorities or the Institutional Review
Board(s) of the institutions participating in such clinical trial or (ii)
reasonably deemed by Parent to be in the best interests of the Pompe disease
product development program or the patients in such program in consultation with
Xxxx X. Xxxxxxx (or his successor), in his capacity as an employee of Parent;
(b) make all decisions regarding (x) the development of and clinical
trials for potential Approved Products other than the product referenced in
clause (y) below (and related operating budgets) and (y) after the completion
(or earlier termination) of the Phase I/II trial referenced in clause 4.23(a)
above, the further development of and additional clinical trials for the Pompe
disease product that was under development by the Company prior to the Effective
Date (and related operating budgets), in the case of either of the foregoing
clauses (x) or (y), using commercially reasonable standards consistent with the
exercise of prudent scientific and business judgment and consistent with those
standards used by Parent for its other therapeutic products at a similar stage
of development and with similar commercial potential, with it being understood
and agreed that such decisions will be made by the management of Parent's
Therapeutics business unit (or the successor thereto) and its Portfolio
Management Committee (or the successor thereto) and that Xxxx X. Xxxxxxx (or his
successor), in his capacity as an employee of Parent, will participate in such
decisions; provided Xx. Xxxxxxx is the President of the Company immediately
prior to the Effective Time; and
(c) use its commercially reasonable and diligent efforts to develop
and/or conduct clinical trials for any potential Approved Products that Parent
decides, in accordance with the provisions of SECTION 4.23(b) above, to develop
or conduct trials for (or further develop or conduct additional clinical trials
for, as the case may be).
As used in this SECTION 4.23, the term (i) "commercially reasonable and
diligent efforts" shall mean that level of effort which, consistent with the
exercise of prudent scientific and business judgment, is applied by Parent to
its other therapeutic products at a similar stage of development and with
similar commercial potential, and (ii) "Affiliate" shall mean any corporation or
other entity which controls, is controlled by, or is under common control with
Parent. Parent shall be regarded as in control of another corporation or entity
if it owns or directly or indirectly controls more than fifty percent (50%) of
the voting stock or other ownership interest of a corporation or entity, or if
it possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of a corporation or other entity or the power to
elect or appoint more than fifty percent (50%) of the members of the governing
body of a corporation or other entity.
In the event that Parent or any of its subsidiaries or Affiliates is a
party to at the Effective Time, or after the Effective Time enters into or
amends (including any amendment for purposes of covering any potential Approved
Product), any collaboration, strategic alliance, joint venture, license or other
agreement with a third party for the development of any potential Approved
Product, Parent shall use its reasonable efforts to cause the provisions of this
Section 4.23 to substantially apply to such third party (it being understood
that, in such case, any reference in this Section 4.23 to Xxxx Xxxxxxx shall be
substituted for and deemed a reference to Parent and
53
all references to Xx. Xxxxxxx'x employment status with Parent (or its subsidiary
or affiliate, as the case may be) or the Company shall be disregarded as not
being applicable and any reference to Parent or any business unit of Parent
shall be substituted for and deemed a reference to such third party).
SECTION 5 - CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF EACH PARTY TO CONSUMMATE THE MERGER
The respective obligations of each party to consummate the Merger shall
be subject to the satisfaction or waiver by mutual consent of the other party,
at or before the Effective Time, of each of the following conditions:
5.1 STOCKHOLDER APPROVAL. The Company shall have obtained the requisite vote of
holders of Company Common Stock and Company Preferred Stock necessary to adopt
this Agreement and approve the transactions contemplated hereby.
5.2 ABSENCE OF ORDER. No temporary restraining order, preliminary or permanent
injunction or other Order issued by a court or other Governmental Entity of
competent jurisdiction shall be in effect and have the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger. Parent and
the Company each agree to use reasonable commercial efforts to have any such
Order or injunction lifted or stayed.
5.3 REGULATORY APPROVALS. All approvals from Governmental Entities shall have
been obtained; PROVIDED, HOWEVER, that the conditions of this SECTION 5.3 shall
not apply to any party whose failure to fulfill its obligations under this
Agreement shall have been the cause of, or shall have resulted in, such failure
to obtain such approval.
5.4 HSR ACT. Any waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
5.5 REGISTRATION STATEMENT. The SEC shall have declared effective a Registration
Statement covering resales of shares of Parent Common Stock included in the
Initial Merger Consideration by Company stockholders who have elected to include
shares in such Registration Statement, all in accordance with SECTION 4.8
hereof, and such Registration Statement shall not be subject to a stop order.
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
PARENT AND MERGER SUB TO CONSUMMATE THE MERGER
The obligations of Parent and Merger Sub to consummate the Merger are
subject, to the fulfillment of the following conditions, any one or more of
which may be waived by Parent:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by the Company in this Agreement shall have been accurate as of
the date of this Agreement and shall be accurate as of the Closing Date (without
giving effect to any materiality and knowledge qualifiers) as if made on and as
of the Closing Date except, in each case (i) to the extent such representations
and warranties speak as of a specific date, in which case such
54
representations and warranties shall be accurate in all material respects as of
such date or (ii) where the failure to be accurate, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. The Company
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by it
on or prior to the Effective Time. The Company shall have delivered to Parent a
certificate signed by its chief executive officer, dated the Closing Date, to
the foregoing effect, and certifying the amount of the Transaction Expenses.
6.2 CORPORATE CERTIFICATES. The Company shall have delivered a copy of the
Certificate of Incorporation of the Company, as in effect immediately prior to
the Closing Date, certified by the Delaware Secretary of State and a
certificate, as of the most recent practicable date, of the Delaware Secretary
of State as to the Company's corporate good standing.
6.3 SECRETARY'S CERTIFICATE. The Company shall have delivered a certificate of
the Secretary of the Company, dated as of the Closing Date, certifying as to (a)
the incumbency of officers of the Company executing documents executed and
delivered in connection herewith, (b) a copy of the By-Laws of the Company, as
in effect from the date this Agreement was approved by the Board of Directors of
the Company until the Closing Date, (c) a copy of the resolutions of the Board
of Directors of the Company authorizing and approving the applicable matters
contemplated hereunder, and (iv) a copy of the resolutions of the stockholders
of the Company adopting this Agreement and approving the transactions
contemplated hereby.
6.4 CONSENTS. The Company shall have obtained waivers or consents, which shall
remain in full force and effect, with respect to each agreement required to be
disclosed in SECTION 2.19 of the Company Disclosure Schedule such that the terms
of any such agreement are unchanged by this Agreement and the transactions
contemplated hereby, except for such waivers or consents as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
6.5 OPINION OF COUNSEL TO COMPANY. Parent shall have received the opinion of
Xxxxxxx Xxxx LLP, or Xxxxxxxx XxXxxx XxXxxxxxx XxXxx & Xxxxxx, P.C., counsel to
the Company, dated the Closing Date, addressed to Parent, and substantially in
the form of EXHIBIT D attached hereto.
6.6 NUMBER OF ACCREDITED INVESTORS. Each Company stockholder shall have
previously delivered to Parent an executed Accredited Investor Questionnaire
substantially in the form attached as EXHIBIT B, and there shall be no more than
35 Company stockholders who are not "accredited investors" as defined in Rule
501 under the Securities Act, or who are not otherwise excluded from the
calculation of the number of Purchasers under Rule 501(e) under the Securities
Act.
6.7 PURCHASER REPRESENTATIVE. Each Company stockholder who is not an "accredited
investor" as defined in Rule 501 under the Securities Act and who does not meet
the sophistication requirements set forth in Rule 501 under the Securities Act,
shall be represented by a Purchaser Representative, as defined in Regulation D
under the Securities Act, reasonably
55
satisfactory to Parent, and such Purchaser Representative shall have executed
and delivered documentation reasonably satisfactory to Parent.
6.8 CONVERSION AND SURRENDER OF ALL RIGHTS OF COMPANY PREFERRED STOCK. Prior to
the Effective Time, the Company shall have amended the Certificate of
Designation to provide for the automatic conversion of each outstanding share of
Company Preferred Stock at the Effective Time of the Merger into shares of
Company Common Stock. In addition, on or prior to the Effective Time, the
Company shall have delivered to Parent executed copies of the following
agreements:
(a) an amendment to that certain Securities Purchase Agreement dated as
of September 13, 2000, among the Company and the purchasers named therein,
pursuant to Article XI thereof, terminating such agreement, and all rights and
obligations of the parties thereunder, in their entirety;
(b) an amendment to the Series B Purchase Agreement, pursuant to
Article XIII thereof, terminating such agreement, and all rights and obligations
of the parties thereunder, in their entirety, except that the rights and
obligations of such parties with respect to, and the provisions of the Series B
Purchase Agreement that provide for, the Company Preferred Stock Purchase Rights
shall survive such termination as provided in SECTION 1.7(e);
(c) an amendment to that certain Registration Rights Agreement dated as
of September 13, 2000, by and among the Company and certain of its Series A
Preferred Stockholders, as amended by Amendment No. 1 thereto dated as of April
17, 2001, pursuant to Section 9(e) thereof, terminating such agreement, and all
rights and obligations of the parties thereunder, in their entirety;
(d) an amendment to that certain Amended and Restated Rights Agreement
dated as of February 26, 2001 between the Company and Neose Technologies, Inc.,
terminating such agreement, and all rights and obligations of the parties
thereunder, in their entirety; and
(e) an amendment to that certain Amended and Restated Stockholders'
Agreement dated April 17, 2001, by and among the Company and the Company's
stockholders who are parties thereto, pursuant to Section 6.4 thereof,
terminating such agreement, and all rights and obligations of the parties
thereunder, in their entirety.
6.9 FIRPTA CERTIFICATE. The Company shall have delivered (a) to Parent a
statement, dated not more than 20 days prior to the Closing Date, signed by a
responsible corporate officer verifying under penalties of perjury that the
statement is correct and otherwise complying with the applicable requirements of
Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h), certifying that
ownership interests in the Company are not U.S. real property interests as
defined in Section 897(c) of the Code and (b) to the IRS a notice to the IRS of
such certification in accordance with the provisions of Treasury Regulations
Section 1.897-2(h)(2), signed by a responsible corporate officer of the Company.
The Company acknowledges that Parent may file such notice with the IRS on behalf
of the Company on or after the Closing Date.
56
6.10 UPDATED SCHEDULE I. If any Company Options shall have been exercised after
the date of this Agreement, the Company shall have delivered to Parent three
business day before the Closing Date, a revised SCHEDULE I updated in accordance
with SECTION 4.21, or if no Company Options have been exercised after the date
hereof, include in the certificate to be delivered by the Company pursuant to
SECTION 6.1 a certification to that effect.
6.11 DISSENTING SHARES. The holders of not more than 5% of the total shares of
Company Common Stock and Company Preferred Stock (considered together on an
as-converted basis) shall have perfected rights of appraisal under Section 262
of the DGCL.
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
COMPANY TO CONSUMMATE THE MERGER
The obligation of the Company to consummate the Merger is subject to
the fulfillment of the following conditions, any one or more of which may be
waived by it:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate as of the date of this Agreement and shall be accurate as of the
Closing Date as if made on and as of the Closing Date (without giving effect to
any materiality or knowledge qualifiers) except (i) to the extent such
representations and warranties speak as of a specific date, in which case such
representations and warranties shall be accurate in all material respects as of
such date or (ii) where the failure to be accurate, in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect. Parent and
Merger Sub shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Effective Time. Parent and Merger Sub shall have
delivered to the Company a certificate from its chief executive officer or chief
financial officer, dated the Closing Date, to the foregoing effect.
7.2 TAX OPINION. The Company shall have received the opinion of Xxxxxxx Xxxx
LLP, dated on or prior to the Closing Date, to the effect that (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and (ii) Parent, the Company and Merger Sub will each be a party to a
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, counsel shall be entitled to rely on customary representation
letters of Parent, the Company and Merger Sub and others, in form and substance
reasonably satisfactory to such counsel; PROVIDED, HOWEVER, if Xxxxxxx Xxxx LLP
is unwilling to deliver such opinion, this condition shall be deemed satisfied
if Xxxxxx & Dodge LLP delivers such opinion. Parent, the Company and Merger Sub
agree to provide such representations as are reasonably requested by Xxxxxxx
Xxxx LLP and Xxxxxx & Dodge LLP in connection with its tax opinion.
7.3 CLERK'S CERTIFICATE. Parent shall have delivered a certificate of the Clerk
of Parent, dated as of the Closing Date, certifying as to (a) the incumbency of
officers of Parent executing documents executed and delivered in connection
herewith, (b) a copy of the By-Laws of Parent, as in effect from the date this
Agreement was approved by the Board of Directors of
57
Parent until the Closing Date, and (c) a copy of the resolutions of the Board of
Directors authorizing and approving the applicable matters contemplated
hereunder.
7.4 CORPORATE CERTIFICATES. Parent shall have delivered a copy of the Articles
of Organization of Parent, as in effect immediately prior to the Closing Date,
certified by the Secretary of the Commonwealth of Massachusetts and a
certificate, as of the most recent practicable date, of the Secretary of the
Commonwealth of Massachusetts as to Parent's corporate good standing. Merger Sub
shall have delivered a copy of the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Closing Date, certified by the Delaware
Secretary of State and a certificate as of the most recent practicable date of
the Delaware Secretary of State as to Merger Sub's corporate good standing.
7.5 CLOSING PARENT PRICE. The Closing Parent Price shall be not less than $34.36
(subject to adjustment for any reclassification, subdivision, recapitalization,
combination, exchange, stock split (including reverse stock split), stock
dividend or distribution or other similar transaction (other than the Merger)
affecting the shares of Parent Common Stock), PROVIDED, HOWEVER, in no event
shall this SECTION 7.5 apply if Parent exercises its right to increase the
Exchange Ratio pursuant to SECTION 8.1(e).
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after the stockholders of the Company adopt
this Agreement:
(a) by either the Company or Parent, by written notice to the other, if
the Effective Time shall not have occurred on or before December 21, 2001 (the
"Termination Date"); PROVIDED, HOWEVER, that the right to terminate this
Agreement under this SECTION 8.1(a) shall not be available to any party whose
breach of a representation or warranty or failure to fulfill any covenant or
other agreement under this Agreement has been the cause of, or resulted in the
failure of, the Merger to occur on or before such date;
(b) by the Company (provided that the Company is not then in breach of
any representation, warranty, covenant or other agreement contained herein such
that it is reasonably certain that the conditions to Parent's obligations to
close as set forth in SECTION 6.1 will not be satisfied), by written notice to
Parent, if a circumstance exists or circumstances exist such that it is
reasonably certain that the conditions to the Company's obligation to close as
set forth in SECTIONS 5 and 7 will not be satisfied; PROVIDED, HOWEVER, the
Company shall not have a right to terminate this Agreement pursuant to this
SECTION 8.1(b), (i) if the circumstance is or the circumstances are susceptible
to change through action or inaction by Parent and (ii) within 20 days after
written notice from the Company, Parent effects a change in the circumstance or
circumstances such that it ceases to be reasonably certain that the conditions
to the Company's obligation to close as set forth in SECTIONS 5 and 7 will not
be satisfied;
(c) by Parent (provided that Parent is not then in breach of any
representation, warranty, covenant or other agreement contained herein such that
it is reasonably certain that the conditions to the Company's obligation to
close as set forth in SECTION 7.1 will not be satisfied),
58
by written notice to the Company, if a circumstance exists or circumstances
exist such that it is reasonably certain that the conditions to Parent's
obligation to close as set forth in SECTIONS 5 and 6 will not be satisfied;
PROVIDED, HOWEVER, Parent shall not have a right to terminate this Agreement
pursuant to this SECTION 8.1(c), (i) if the circumstance is or the circumstances
are susceptible to change through action or inaction by the Company and (ii)
within 20 days after written notice from Parent, the Company effects a change in
the circumstance or circumstances such that it ceases to be reasonably certain
that the conditions to the Company's obligation to close as set forth in
SECTIONS 5 and 6 will not be satisfied;
(d) by either Parent or the Company, by written notice to the other, if
any Governmental Entity of competent jurisdiction shall have issued any
injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger and such injunction or
other action shall have become final and non-appealable;
(e) by the Company, upon three business days notice to Parent after the
satisfaction or waiver of the conditions set forth in SECTIONS 5 and 6 (other
than delivery of the items to be delivered at Closing), if the average of the
per share closing prices of Parent Common Stock as reported by The Nasdaq
National Market for the 20 trading days prior to the date such notice is given
is less than $34.36 (subject to adjustment for any reclassification,
subdivision, recapitalization, combination, exchange, stock split (including
reverse stock split), stock dividend or distribution or other similar
transaction (other than the Merger) affecting the shares of Parent Common
Stock); PROVIDED, HOWEVER, that Parent may negate such termination by notifying
the Company within such three business days of its election to increase the
Exchange Ratio by the percentage by which the quotient determined by dividing
(x) $34.36 (subject to adjustment for any reclassification, subdivision,
recapitalization, combination, exchange, stock split (including reverse stock
split), stock dividend or distribution or other similar transaction (other than
the Merger) affecting the shares of Parent Common Stock) by (y) the average of
the per share closing prices during the 20 trading days ending three trading
days prior to Closing Date exceeds 1, in which case the Closing Date shall occur
on the third trading day after Parent so notifies the Company.
(f) at any time with the mutual written consent of Parent and the
Company.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided in
SECTION 8.1, this Agreement shall forthwith become void and have no effect,
without liability on the part of Parent, Merger Sub and the Company and their
respective directors, officers or stockholders, except that (a) the provisions
of this SECTION 8, SECTION 9, SECTION 4.4 relating to expenses, and SECTION 4.9
relating to publicity shall survive and (b) no such termination shall relieve
any party from liability by reason of any willful breach by such party of any of
its representations, warranties, covenants or other agreements contained in this
Agreement.
8.3 AMENDMENT. Prior to the Effective Time, this Agreement may not be amended
except by an instrument signed by each of the parties hereto; PROVIDED, HOWEVER,
that after adoption of this Agreement by the Company stockholders and prior to
the Effective Time, without the further approval of the Company stockholders, no
amendment may be made that (a) alters or changes the amount or kind of
consideration to be received as provided in SECTION 1.6,
59
(b) alters or changes any term of the Certificate of Incorporation of the
Surviving Corporation or (c) alters or changes any of the terms and conditions
of this Agreement if such alteration or change would adversely affect the
Company stockholders.
8.4 WAIVER. At any time prior to the Effective Time, either party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto or (b) waive compliance with any of the agreements of the
other party or any conditions to its own obligations, in each case only to the
extent such obligations, agreements and conditions are intended for its benefit;
PROVIDED THAT, any such extension or waiver shall be binding upon a party only
if such extension or waiver is set forth in a writing executed by such party.
SECTION 9 - MISCELLANEOUS
9.1 SURVIVAL. None of the representations and warranties of the Company, Parent
or Merger Sub contained herein shall survive the Effective Time, and only those
covenants and agreements contained herein that by their terms are to be
performed after the Effective Time shall survive the Effective Time.
9.2 NOTICES. Any notice or other communication required or permitted hereunder
shall be in writing and shall be deemed given when so delivered in person, by
overnight courier, by facsimile transmission (with receipt confirmed by
telephone or by automatic transmission report) or two business days after being
sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
(a) if to Parent or Merger Sub, to:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Executive Vice President, Therapeutics and
Genetics
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
60
(b) if to the Company, to:
Novazyme Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq. and Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this SECTION 9.2 to the other
parties designate another address or person for receipt of notices hereunder.
9.3 ENTIRE AGREEMENT. This Agreement and the Voting Agreement contain the entire
agreement between the parties with respect to the Merger and supersede all prior
agreements, written or oral, between the parties with respect thereto, other
than the Confidentiality Agreement, which shall survive execution of this
Agreement and any termination of this Agreement.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
its conflict or law provisions, except to the extent that the laws of the State
of Delaware apply to the Merger and the rights of the stockholders relative to
the Merger.
9.5 BINDING EFFECT; NO ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns. This
Agreement is not assignable without the prior written consent of the other
parties hereto.
(b) Other than SECTIONS 1.6(b), 4.8, 4.18, 4.22 and 4.23, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
person other than Parent, Merger Sub and the Company and their respective
successors and permitted assigns any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement. The parties acknowledge and
agree that all former Company stockholders with respect to SECTIONS 1.6(b), 4.8,
4.22 and 4.23, and that all of the Company's officers and directors with respect
to SECTION 4.18, derive independent value from the provisions set forth in such
sections; that each of them is intended to be a third party beneficiary of such
provisions; and that each of them shall
61
have the right to enforce such provisions as if each was a party to this
Agreement; PROVIDED, THAT, (i) any modification of any rights or obligations
under SECTIONS 1.6(b), 4.8, 4.22 and 4.23 made or approved by a majority of Xxxx
X. Xxxxxxx, Xxxxxxx X. Xxxxxxxx and a representative of the holders of the
Company's Preferred Stock who shall be approved by a vote of the holders of a
majority of the outstanding shares of Company Preferred Stock, voting as a
single class, prior to the Effective Time (collectively, the "Representatives")
and (ii) any enforcement or termination of any rights or obligations under
Section 4.22 and 4.23 made or approved by a majority of the Representatives
shall be binding on all former Company Stockholders.
9.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
9.7 COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, and both of which together shall constitute
one and the same instrument.
9.8 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable. The
parties further agree to replace such invalid or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such invalid or
unenforceable provision.
9.9 SUBMISSION TO JURISDICTION; WAIVER. In the event any action shall be brought
to enforce or interpret the terms of this Agreement, the parties agree that such
action will be brought in the U.S. District Court, determined as follows: If the
party making a claim is the Company, the venue shall be the U.S. District Court
for Massachusetts; if the party making a claim is Parent or Merger Sub, the
venue shall be the U.S. District Court for the Western District of Oklahoma.
Each of the Company, Parent and Merger Sub hereby irrevocably submits with
regard to any action or proceeding for itself and in respect to its property,
generally and unconditionally, to the nonexclusive jurisdiction of the aforesaid
courts. Each of Company, Parent and Merger Sub hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts for
any reason other than the failure to lawfully serve process, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
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9.10 ENFORCEMENT. The parties recognize and agree that if for any reason any of
the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, immediate and irreparable harm or
injury would be caused for which money damages would not be an adequate remedy.
Accordingly, each party agrees that in addition to other remedies the other
party shall be entitled to an injunction restraining any violation or threatened
violation of the provisions of this Agreement. In the event that any action
shall be brought in equity to enforce the provisions of the Agreement, neither
party will allege, and each party hereby waives the defense, that there is an
adequate remedy at law.
9.11 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or ruling
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
9.12 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION RELATED HERETO OR
THERETO.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger as of the date first stated above.
GENZYME CORPORATION
By /s/ G. Jan van Heek
---------------------------------------------
Name: G. Jan van Heek
Title: Executive Vice President, Therapeutics
and Genetics
RODEO MERGER CORP.
By /s/ G. Jan van Heek
---------------------------------------------
Name: G. Jan van Heek
Title: Vice President
NOVAZYME PHARMACEUTICALS, INC.
By /s/ Xxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
[Signature Page to Agreement and Plan of Merger]
