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EXHIBIT 10.25
AGREEMENT AND PLAN OF MERGER
BETWEEN CORNING INCORPORATED,
BIOSYM TECHNOLOGIES, INC.,
MOLECULAR SIMULATIONS INC.
AND
MSI ACQUISITION INC.
August 15, 1995
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TABLE OF CONTENTS
ARTICLE I.
THE PLAN OF MERGER
1.1 Adoption of Plan of Merger
1.2 Terms of Merger; Conversion of Securities
1.3 Certificates Representing MSI Common Stock
and MSI Convertible Stock
1.4 Fractional Shares
ARTICLE II.
CLOSING
ARTICLE III.
CORNING AND BIOSYM'S REPRESENTATIONS AND WARRANTIES
3.1 Organization and Existence; Capitalization
3.2 Subsidiaries' Organization and Existence;
Capitalization
3.3 Authority to Execute and Perform Agreement
3.4 Financial Statements
3.5 Absence of Certain Changes or Events
(a) Employee Relations
(b) Stock Options, Dividends, etc.
(c) Sale or Pledge of Assets; Incurring
of Indebtedness
(d) Employee Benefit Plans and Certain
Salaried Employees
(e) Change in Accounting Practice or Inventory
(f) Adverse Determinations
(g) Product Changes
(h) Agreements Concerning (a)-(g)
3.6 Tax Matters
(a) Filing of Returns
(b) Adjustments to Reported Tax
(c) Withholding
(d) No DISC, FSC or Possessions Corporation
(e) Tax Payments and Returns
(f) Tax Sharing Agreements
(g) Tax-Exempt Property
(h) Non-Deductible Compensation
(i) Liens
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(j) Accounting Adjustments
(k) U.S. Real Property Holding Company
(l) Foreign Person
(m) Foreign Subsidiaries
(n) Tax Elections
3.7 Buildings and Equipment
3.8 Products
3.9 Contracts and Commitments
3.10 Employees; Employee Benefits
3.11 Permits, Licenses and Compliance with Laws
3.12 Government Investigations and Claims
3.13 Litigation and Claims
3.14 Environmental and Other Matters
3.15 Corporate Documents and Minute Books;
Officers and Directors
3.16 Bank Accounts, Loans
3.17 Brokers
3.18 Adverse Change
3.19 Disclosure
3.20 Proprietary Rights
3.21 Non-Assignable Rights
3.22 Notes and Accounts Receivable
3.23 Investment Purposes
ARTICLE IV.
MSI'S REPRESENTATIONS AND WARRANTIES
4.1 Organization and Existence; Capitalization
4.2 Subsidiaries' Organization and Existence;
Capitalization
4.3 Authority to Execute and Perform Agreement
4.4 Financial Statements
4.5 Absence of Certain Changes or Events
(a) Employee Relations
(b) Stock Options, Dividends, etc.
(c) Sale or Pledge of Assets; Incurring
of Indebtedness
(d) Employee Benefit Plans and Certain
Salaried Employees
(e) Change in Accounting Practice or
Inventory
(f) Adverse Determinations
(g) Product Changes
(h) Agreements Concerning (a)-(g)
4.6 Tax Matters
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(a) Filing of Returns
(b) Adjustments to Reported Tax
(c) Withholding
(d) No DISC, FSC or Possession Corporation
(e) Tax Payments and Returns
(f) Tax Sharing Agreements
(g) Tax-Exempt Property
(h) Non-Deductible Compensation
(i) Liens
(j) Accounting Adjustments
(k) U.S. Real Property Holding Company
(l) Foreign Person
(m) Foreign Subsidiaries
(n) Tax Elections
4.7 Equipment
4.8 Products
4.9 Contracts and Commitments
4.10 Employees; Employee Benefits
4.11 Permits, Licenses and Compliance with Laws
4.12 Government Investigations and Claims
4.13 Litigation and Claims
4.14 Environmental and Other Matters
4.15 Corporate Documents and Minute Books;
Officers and Directors
4.16 Bank Accounts, Loans
4.17 Brokers
4.18 Adverse Change
4.19 Disclosure
4.20 Proprietary Rights
4.21 Non-Assignable Rights
4.22 Notes and Accounts Receivable
4.23 Continuity of Business
4.24 Investment Purposes
ARTICLE V.
CERTAIN AGREEMENTS
5.1 Investigations and Operations of
Business of Biosym and Subsidiaries
(a) Access to Financial Records
(b) Preservation of Business
(c) Operations in the Ordinary Course
5.2 Notifications of Breach
5.3 Third Party Consents
5.4 Maintenance of Assets
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5.5 Payment of Certain Expenses
5.6 Cooperation; Satisfaction of Conditions
5.7 Certain Federal Income Tax Reporting
5.8 Contribution to Biosym Capital
5.9 Adjustment for Net Working Capital
5.10 Tax Indemnity
5.11 ERISA Indemnity
5.12 Post Closing Audit
5.13 Further Assurances
ARTICLE VI.
CONDITIONS OF MERGER
6.1 Conditions of Obligations of MSI
(a) Representations and Warranties of
Corning and Biosym to be True;
Performance by Corning and Biosym
(b) No Legal Proceedings
(c) Statutory Requirements and Biosym
Shareholder Approval
(d) Third Party Consents
(e) Opinion of Counsel for Biosym
(f) Resignations of Biosym Directors
(g) Share Certificates
(h) Shareholders Agreement
(i) Credit Facility
(j) Contribution of Debt
(k) Tax Opinion
(l) Certified Resolutions
6.2 Conditions of Obligations of Biosym
(a) Representations and Warranties of
MSI and MSI Acquisition to be True;
Performance by MSI and MSI Acquisition
(b) No Legal Proceedings
(c) Statutory Requirements and MSI
Shareholder Approval
(d) Third Party Consents
(e) Opinion of Counsel for MSI
(f) Tax Opinion
(g) Shareholders Agreement
(h) Share Certificates
(i) Certified Resolutions
(j) Restated Certificate of Incorporation
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ARTICLE VII.
TERMINATION OF OBLIGATIONS AND WAIVERS
OF CONDITIONS; PAYMENT OF EXPENSES
7.1 Termination of Agreement and Abandonment
of Merger
(a) Mutual Consent
(b) Expiration Date
(c) Unilateral
7.2 Effect of Termination
7.3 Payment of Expenses
ARTICLE VIII.
MISCELLANEOUS
8.1 Amendments
8.2 Further Instruments and Actions
8.3 Survival and Limitation of Representations
and Warranties
8.4 Arbitration
8.5 Publicity
8.6 Governing Law
8.7 Notices
8.8 No Assignment
8.9 Headings
8.10 Counterparts
8.11 Waiver
8.12 Severability
8.13 Entire Agreement, Modification
and Interpretation
SCHEDULE III
BIOSYM DISCLOSURE SCHEDULE
SCHEDULE IV
MSI DISCLOSURE SCHEDULE
EXHIBIT A
CERTIFICATE OF MERGER
EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION OF MSI AND BYLAWS
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EXHIBIT C
MSI COMMON STOCK
[Intentionally Omitted]
EXHIBIT D
NET WORKING CAPITAL
EXHIBIT E
LETTER AGREEMENT
EXHIBIT F
BIOSYM OPINION OF COUNSEL
EXHIBIT G
SHAREHOLDERS AGREEMENT
EXHIBIT H
REVOLVING LINE OF CREDIT
EXHIBIT I
OPINION OF MSI COUNSEL
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AGREEMENT AND PLAN OF MERGER
THIS IS AN AGREEMENT AND PLAN OF MERGER ("Agreement") made as of this
15th day of August, 1995, by and between Corning Incorporated, a New York
corporation ("Corning"), its wholly owned subsidiary, Biosym Technologies,
Inc., a California corporation ("Biosym"), Molecular Simulations Inc., a
Delaware corporation ("MSI") and its wholly-owned subsidiary, MSI Acquisition
Inc. ("MSI Acquisition").
RECITALS:
WHEREAS, MSI desires to acquire all of the outstanding shares of
capital stock of Biosym, in exchange for shares of common stock of MSI, par
value $.001 per share and shares of non-voting convertible common stock of MSI
more fully described below, pursuant to a plan of merger carried out in
accordance with Section 368 of the Internal Revenue Code of 1986 upon the terms
and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual and independent promises, and subject to the various terms and
conditions hereinafter set forth, Corning, Biosym, MSI and MSI Acquisition
agree as follows:
ARTICLE I. The Plan of Merger
1.1 Adoption of Plan of Merger. MSI has taken all requisite
corporate action to organize MSI Acquisition as a wholly-owned subsidiary prior
to the Closing for the purpose of merging with Biosym. MSI shall take all
requisite corporate action, including obtaining all required shareholder
consents, if any, to cause MSI Acquisition to adopt and approve this Agreement
as the Plan of Merger between MSI Acquisition and Biosym pursuant to the
General Corporation Law of the State of Delaware ("Delaware Law"). Biosym
shall take all requisite corporate action prior to the Closing Date as may be
necessary to adopt and approve this Agreement as its Plan of Merger in
accordance with the General Corporation Law of the State of California
("California Law"). On the Closing Date and subject to the satisfaction or
waiver of the conditions of this Agreement, MSI Acquisition and Biosym shall
cause a Certificate of Merger in the form set forth in Exhibit A ("Certificate
of Merger") hereto pursuant to this Agreement and Delaware Law to be filed with
the Secretary of the State of Delaware and an executed counterpart of such
Certificate of Merger in the form set forth in Exhibit A hereto pursuant to
this Agreement and California Law to be filed with the Secretary of the State
of California. In accordance with California Law and Delaware Law, the Merger
shall become effective upon the date and time stamped by the Secretary of State
of the State of Delaware upon the Certificate of Merger.
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1.2 Terms of Merger; Conversion of Securities.
(a) Pursuant to the merger (the "Merger") to be consummated as
provided in this Agreement and the Certificate of Merger, Biosym shall be
merged with and into MSI Acquisition at and as of the filing (as required by
law) of the Certificate of Merger on the Closing Date (as defined below) and
Biosym's separate existence shall thereupon cease and MSI Acquisition shall be
the surviving corporation. At the Closing (as defined below), the effect of
the Merger shall be as provided in the applicable provisions of California and
Delaware Law and without limiting the generality of the foregoing and subject
thereto, at the Closing, MSI Acquisition, as the surviving corporation in the
Merger shall, as a consequence of the Merger, succeed to all of the property,
rights, privileges, powers and franchised assets of Biosym and all debts,
liabilities, obligations, restrictions, disabilities and duties of Biosym shall
become the debts, liabilities, obligations, restrictions and disabilities and
duties of MSI Acquisition, except as otherwise may be expressly provided in
this Agreement.
(b) As of the Closing, the Certificate of Incorporation and Bylaws
of MSI shall be amended and restated as set forth in Exhibit B hereto.
(c) Upon consummation of the Merger, all of the outstanding shares
of Biosym common stock (1,000 shares) shall be canceled and converted into the
right to receive 5,776,558 shares of common stock of MSI ("MSI Common Stock")
together with 1,467,825 shares of non-voting convertible common stock, Class B,
of MSI on which no cash dividend is payable ("MSI Convertible Stock") more
fully described in the Certificate of Incorporation set forth in Exhibit B.
(d) The Merger is intended to be a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and to be accounted for as a purchase, not a pooling of interests.
1.3 Certificates Representing MSI Common Stock and MSI Convertible
Stock.
(a) MSI shall deliver at the Closing (as defined herein)
certificates representing the shares of MSI Common Stock and MSI Convertible
Stock for which all of the outstanding shares of Biosym Common Stock are to be
exchanged pursuant to this Agreement.
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(b) The MSI Common Stock and MSI Convertible Stock delivered to
Biosym's sole shareholder, Corning, at the Closing will be issued as a private
placement pursuant to Section 4.2 of the Securities Act of 1933, as amended
(the "1933 Act"), and are therefore exempt from registration under the 1933 Act
and the certificates representing such shares of stock delivered at the Closing
will bear legends set forth below, reflecting that such shares are not issued
in a transaction registered under the 1933 Act, and cannot be resold in the
absence of registration under said Act or pursuant to an exemption thereto and
such other legends as may be required pursuant to that certain Shareholders
Agreement described in Section 6.1(h) below.
The securities represented by this certificate have not been
registered under the 1993 Act, as amended and may not be sold or transferred in
the absence of registration or an exemption therefrom under said Act.
1.4 Fractional Shares. No certificates representing fractional
shares will be issued by MSI on account of the Merger.
ARTICLE II. Closing
Subject to the terms and conditions of this Agreement and in
particular of Article VI hereof, the closing of the transactions provided for
in Article I hereof (the "Closing") shall take place at the offices of Xxxxx,
Xxxxxxx & Xxxxxxxxx, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000-0000 on August 15, 1995, or on such other date and at such other time and
at such other place as shall be mutually agreed upon by Biosym and MSI (the
time and date of the Closing are referred to herein as the "Closing Date").
ARTICLE III. Corning and Biosym's Representations and Warranties
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement which is delivered by Biosym
to MSI prior to the execution of this Agreement (the "Biosym Disclosure
Schedule") Corning and Biosym each severally hereby represents and warrants to
MSI as follows:
3.1 Organization and Existence; Capitalization.
(a) Biosym is a corporation duly organized and validly existing
under the laws of the State of California and has the full corporate power to
carry on its business as it is now being conducted. Copies of the Restated
Articles of Incorporation and the Amended and Restated Bylaws of Biosym have
been delivered to MSI and as delivered are complete and correct as of the date
hereof. Biosym is qualified to do business in each jurisdiction where the
nature of such business or its assets or properties requires it to do so except
where the failure to so qualify would not have a material adverse effect on its
business, assets or properties taken as a whole.
(b) The authorized capital stock and the number of shares issued
and outstanding of all capital stock of Biosym as of the date hereof, is set
forth on the Biosym Disclosure Schedule hereto and is held of record and
beneficially by Corning free and clear of all liens, charges,
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restrictions, claims and encumbrances. All of the outstanding shares of
capital stock of Biosym are validly issued, fully paid and non-assessable.
There are no outstanding options, warrants, agreements, contracts, calls,
commitments or demands of any character to which Biosym is a party relating to
the capital stock of Biosym.
3.2 Subsidiaries' Organization and Existence; Capitalization. A
"Subsidiary" shall mean any corporation, partnership or other entity (expressly
excluding however any consortia organized by Biosym in the ordinary course of
its business), wherever and however organized, in which Biosym owns directly or
indirectly more than fifty percent (50%) of any of the voting stock, equity or
beneficial interest, is a partner of, or otherwise controls the management of,
by having the right or ability to designate a majority of the directors or
members of the governing body thereof, whether by agreement or otherwise.
(a) All Subsidiaries of Biosym are identified on the Biosym
Disclosure Schedule and each is a corporation duly organized and validly
existing under the laws of the country or state of its organization and has the
full power to carry on its business as it is now being conducted. Copies of
the Certificate or Articles of Incorporation and the Bylaws of each such
Subsidiary, have been delivered to MSI and as delivered are complete and
correct as of the date hereof. Each Subsidiary is qualified to do business in
each jurisdiction where the nature of such business or its assets or properties
requires it to do so, except where the failure to so qualify would not have a
material adverse effect on Biosym's business, assets or properties taken as a
whole.
(b) All of the outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and non-assessable and there are no
outstanding options, agreements, warrants, contracts, calls, commitments or
demands of any character relating to the capital stock of such Subsidiary.
(c) Except in connection with the Subsidiaries identified on the
Biosym Disclosure Schedule, neither Biosym nor its Subsidiaries own directly or
indirectly any voting stock, equity or beneficial interest in any third party
and do not have the right or ability to designate directors or members of the
governing body of any third party.
3.3 Authority to Execute and Perform Agreement. Biosym and Corning
each have the full legal right, power and authority to enter into, execute and
deliver this Agreement and in the case of Corning the Shareholders Agreement
described in Section 6.1(h) hereof and to perform fully their respective
obligations hereunder and thereunder. This Agreement has been duly executed
and delivered by Corning and Biosym and is the valid and binding obligation of
each of them enforceable against Corning and Biosym in accordance with its
terms assuming that this Agreement constitutes a valid and binding agreement of
MSI, except as enforcement may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought. The Board of
Directors of Corning and Biosym have approved this Agreement and the
consummation of the transactions contemplated hereby and no other corporate
proceedings are necessary to authorize this Agreement and the Shareholders
Agreement or the transactions contemplated hereby. The
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execution and delivery of this Agreement and the consummation by Corning and
Biosym of the transactions contemplated hereby at the Closing will not:
(a) conflict with or result in a breach or default of or
constitute or result in a default under any of the terms, conditions or
provisions of the Restated Articles of Incorporation, Amended and Restated
Bylaws or any governing instruments of Corning or Biosym or of any Subsidiary;
(b) require the further approval or consent of any federal, state,
county, local court or other governmental or regulatory body or the approval or
consent of any other person, and such other approvals or consents of any
federal, state, county, local court or other governmental or regulatory body,
the failure of which to make or obtain would materially adversely affect the
ability of Corning or Biosym to consummate the Merger; or
(c) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute a default (or an event which with
notice or lapse of time or both constitute a default) under or a violation of,
any statute, regulation, order, judgment or decree applicable to Corning,
Biosym or any Subsidiary, or any material instrument, material contract or
other material agreement to which Corning, Biosym or any Subsidiary is a party
or to which Corning, Biosym or any Subsidiary is bound or subject.
3.4 Financial Statements.
(a) Biosym has delivered to MSI copies of the unaudited
consolidated financial statements of Biosym and its Subsidiaries for the fiscal
years ending December 31, 1993 and December 31, 1994, and for the period from
January 1, 1995 to June 30, 1995, which statements include balance sheets and
statements of income and cash flows (collectively the "Biosym Financial
Statements"). The Biosym Financial Statements fairly present the financial
position of Biosym and its Subsidiaries, the results of their operations and
cash flows, in all material respects, all in conformity with U.S. generally
accepted accounting principles ("GAAP"), consistently applied for the periods
indicated thereon (except as may be indicated in the notes thereto) except that
the balance sheet and statements of income and cash flow dated June 30, 1995 do
not contain notes or year-end adjustments required by GAAP.
(b) Biosym and its Subsidiaries had as of the date of the Biosym
Financial Statements, no liabilities or obligations, secured or unsecured,
including tax liabilities due or to become due, not disclosed in the Biosym
Financial Statements or in the Biosym Disclosure Schedule attached hereto that
would in accordance with GAAP be required to be disclosed in such Biosym
Financial Statements.
(c) As of the date of this Agreement, Biosym and its Subsidiaries
have no actual or contingent liabilities or obligations secured or unsecured,
including tax liabilities, and not disclosed to MSI in the Biosym Financial
Statements, or in the Biosym Disclosure Schedule, except those liabilities
incurred in the ordinary course of business consistent with past practices
since June 30, 1995 or those which do not exceed $100,000 in the aggregate.
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3.5 Absence of Certain Changes or Events. Except as set forth on
the Biosym Disclosure Schedule, since December 31, 1994, Biosym and its
Subsidiaries have in all material respects conducted its business only in the
ordinary course consistent with past business practices and there have not been
any:
(a) Employee Relations. Employee relations disputes, including
without limitation threatened or actual employee claims;
(b) Stock Options, Dividends, etc. (i) Changes in the authorized
or issued capital stock of Biosym or any of its Subsidiaries, (ii) grant of any
stock option or right to purchase shares of the authorized or issued capital
stock of Biosym or any of its Subsidiaries, (iii) issuance of any security
convertible into the capital stock of Biosym or any of its Subsidiaries, (iv)
agreement by Biosym or any of its Subsidiaries to do any of the foregoing, or
(v) declaration or payment or promise to make payment of any dividend or other
distribution with respect to the capital stock of Biosym or any of its
Subsidiaries;
(c) Sale or Pledge of Assets; Incurring of Indebtedness. (i)
Sale, lease or transfer to third parties of any material assets reflected in
the Biosym Financial Statements (other than the customer software licenses or
sales of computer equipment to customers) having an original cost in excess of
$10,000 for any single item and $50,000 in the aggregate, (ii) mortgage or
pledge of any material properties or assets of Biosym or any of its
Subsidiaries, (iii) indebtedness incurred, assumed or guaranteed by Biosym or
any of its Subsidiaries that matures more than one year from the date such
indebtedness was incurred or which obligates Biosym to more than $50,000 in the
aggregate, (iv) notice of termination or termination by a third party or notice
of termination or termination by Biosym or any of its Subsidiaries of any lease
or contract, involving the payment or receipt by Biosym or any of its
Subsidiaries of an amount in excess of $25,000 in any one instance or $50,000
in the aggregate, except notice of termination or termination of customer
software licenses and software maintenance agreements in the ordinary course of
business, or (v) entering into by Biosym or any of its Subsidiaries of a lease
or other contract, other than customer agreements entered into in the ordinary
course of business, which cannot be terminated unilaterally by Biosym without
cost to Biosym or any of its Subsidiaries in excess of $25,000 in any one
instance or $50,000 in the aggregate;
(d) Employee Benefit Plans and Certain Salaried Employees. A
material change in any employment contract, bonus, stock option,
profit-sharing, pension, retirement, incentive or other similar arrangement of
Biosym or any of its Subsidiaries as in effect on June 30, 1995 or any increase
outside the ordinary course of business in the compensation payable or to
become payable by Biosym or any of its Subsidiaries to any of its officers,
employees or agents;
(e) Change in Accounting Practice or Inventory. Material change
in any accounting practice, capitalization of software development expenses or
writedown or revaluation of any asset including computer software;
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(f) Adverse Determinations. Materially adverse determination in
any litigation, action or proceeding before any court or governmental body
(domestic or foreign) relating to Biosym or its Subsidiaries and their
respective businesses, assets or properties;
(g) Product Changes. Material changes in the type, nature,
composition or quality of its products except in the ordinary course of
business and consistent with prior practice or customary business practices
prevailing in the industry generally; acceptance of orders in material amounts
from any customer under conditions relating to price, terms of payment, time of
delivery or like matters differing from the conditions regularly and usually
specified in the ordinary course of business; or change in its selling,
pricing, advertising or personnel practices, except in the ordinary course of
business, consistent with prior practice or customary business practices
prevailing in the industry generally;
(h) Agreements Concerning (a)-(g). Any binding or enforceable
agreement or obligation of Biosym or its Subsidiaries to make any of the
changes or cause any events described in paragraphs (a) through (g) above.
3.6 Tax Matters.
(a) Filing of Returns. (i) All federal, state, local and foreign
tax returns and tax reports required to be filed for Biosym and its
Subsidiaries have been filed with the appropriate taxing authorities on a
timely basis, subject to any extension of such due date, and all such returns
and reports are true, correct and complete in all material respects relating to
Biosym or its Subsidiaries, (ii) all federal, state, local and foreign taxes
(including interest and penalties) that are currently due from or relating to
Biosym, and any rebate due to Biosym or its Subsidiaries (including deferred
taxes) in respect of all periods ending on or before the date hereof have been
fully paid or are adequately provided for on the books and Biosym Financial
Statements or are being contested in good faith by Biosym, (iii) Biosym and its
Subsidiaries have not received any notice of any audit by the Internal Revenue
Service or other taxing authority or notice that any issues have been raised by
or are currently pending before the Internal Revenue Service or any other
taxing authority whether or not in connection with any of the returns and
reports referred to in clause (i) above, and (iv) Biosym and its Subsidiaries
have not given nor been requested to give waivers or extensions of any statute
of limitations relating to the payment of any taxes referred to in this
paragraph;
(b) Adjustments to Reported Tax. There are no material
adjustments to the federal, state and local and foreign tax returns and tax
reports applicable to Biosym or its Subsidiaries or any resulting deficiencies
or penalties proposed with respect thereto by the Internal Revenue Service or
any other taxing authority, and all deficiencies or penalties proposed by such
taxing authorities applicable to Biosym and its Subsidiaries have been paid,
reserved against as shown on the Biosym Financial Statements, or settled;
(c) Withholding. All federal, state, local or foreign taxes and
other charges, that Biosym or its Subsidiaries are or were required by law to
withhold or to collect, have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority;
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(d) No DISC, FSC or Possessions Corporation. Biosym has no
domestic international sales corporation within the meaning of Section 992 of
the Internal Revenue Code of 1986 as amended (the "IRC") nor any Foreign Sales
Corporation within the meaning of Section 922 of the IRC and is not an electing
corporation within the meaning of Section 936 of the IRC (relating to the
possessions tax credit);
(e) Tax Payments and Returns. Biosym made available to MSI or its
accountants, for years subsequent to December 31, 1992, true and complete
copies of all Biosym's pro forma federal income and state and local (including
the State of California) income tax work papers used to prepare Corning's
consolidated tax returns, and all foreign, federal and state and local income
tax returns filed separately by any Subsidiary;
(f) Tax Sharing Agreements. There are no tax sharing agreements
with respect to Biosym or its Subsidiaries concerning the payment of taxes;
(g) Tax-Exempt Property. Neither Biosym nor its Subsidiaries has
made an election for federal income tax purposes to treat any of their
respective assets as tax-exempt bond financed property or tax-exempt use
property within the meaning of the IRC or is contractually obligated to a third
party to so treat the assets owned by that third party;
(h) Non-Deductible Compensation. There is no contract, plan or
agreement covering any employee or former employee of Biosym or its
Subsidiaries that individually or in the aggregate would require Biosym or its
Subsidiaries to make any payment that would not be deductible pursuant to the
terms of Section 280G of the IRC;
(i) Liens. There are no liens for taxes (other than for taxes not
yet due and payable) upon the assets of Biosym or any of its Subsidiaries;
(j) Accounting Adjustments. Neither Biosym nor any of its
Subsidiaries has agreed to make, nor are they required to make, any adjustments
to their accounting methods that would have a tax impact on Biosym or any of
its Subsidiaries under Section 481 of the IRC or any similar state, local or
foreign tax provisions.
(k) U.S. Real Property Holding Company. Biosym is not, and has
not been, a "United States real property holding company" within the meaning of
Section 897 of the IRC;
(l) Foreign Person. Corning is not a "foreign person" as defined
in Section 1445(f)(3) of the IRC;
(m) Foreign Subsidiaries. None of Biosym's foreign Subsidiaries:
(i) is engaged in a United States trade or business for federal income tax
purposes; (ii) is a passive foreign investment company within the meaning of
the IRC; or (iii) has made an election, or is required, to treat any asset as
owned by another person for tax purposes. None of the Biosym foreign
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Subsidiaries has an investment in United States property within the meaning of
Section 956 of the IRC;
(n) Tax Elections. Neither Biosym nor any of its Subsidiaries has
filed a consent under Section 341(f) of the IRC (or any corresponding provision
of state, local or foreign tax law) or agreed to have Section 341(f)(2) of the
IRC (or any corresponding provision of state, local or foreign tax law) apply
to it. Neither Corning, Biosym nor any of its Subsidiaries has made and will
not make a deemed dividend election under Treasury Regulations Section
1.1502-32 or a consent dividend under Section 565 of the IRC. Corning has not
made, and will not make, the election provided in Treasury Regulations Section
1.1502-20(g) with respect to Biosym.
Notwithstanding any of the foregoing, no representation or warranty is
made by Biosym or Corning with respect to the tax consequences that may result
from the transactions contemplated by this Agreement.
3.7 Buildings and Equipment. All of the material computer and
other equipment owned or used by Biosym and its Subsidiaries are in usable
operating condition, are, in view of their age and excluding normal wear and
tear, not in need of maintenance other than normal scheduled maintenance, and
are free from any known defects except such defects as do not substantially
interfere with the continued use thereof in the conduct of Biosym's normal
business operations. Neither Biosym nor any Subsidiary owns or has ever owned
any buildings or other real property. All of the material leases for office
space of Biosym or any Subsidiary are valid and in full force and effect.
3.8 Products. The Biosym Disclosure Schedule sets forth a
description of all computer software programs owned or licensed by Biosym or
its Subsidiaries and licensed or intended to be licensed or sold to their
customers.
3.9 Contracts and Commitments. Set forth on the Biosym Disclosure
Schedule hereto are complete and accurate lists as of the date hereof of the
following:
(a) Distribution, dealer or sales representation agreements;
(b) Supplier agreements or requirement contracts of Biosym or any
Subsidiary not terminable without penalty on 30 days' notice which individually
are in excess of $50,000;
(c) Written consortia proposals (exclusive of consortia programs
existing as of the date of this agreement and identified in the Biosym
Disclosure Schedule) of Biosym or any Subsidiary which individually are in
excess of $150,000 and any grant request or proposal for a research and
development contract (including without limitation contracts for customized
software development or research services) in excess of $100,000 each;
(d) Purchase orders and purchase commitments of Biosym or any
Subsidiary which individually are either (i) in excess of $50,000 or (ii) for
which the total obligation is in excess of
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$20,000 and which cannot be terminated without penalty by Biosym or its
Subsidiaries on 90 days' notice;
(e) Personal property leases and other rental, use or service
arrangements of Biosym and its Subsidiaries which either (i) cannot be
terminated without penalty by Biosym or its Subsidiaries on 30 days' notice, or
(ii) individually requires payment by Biosym or its Subsidiaries over its
remaining life of more than $50,000 in the aggregate;
(f) Real property leases and similar contracts and arrangements
pursuant to which Biosym or any Subsidiary leases or rents any land, building,
facility, service center or other interest in realty which either (i) cannot be
terminated without penalty by Biosym or such Subsidiary on 30 days' notice or
(ii) individually requires payment by Biosym or its Subsidiaries over its
remaining life of more than $50,000 in the aggregate;
(g) All indemnity or guaranty arrangements, business acquisition
agreements entered into after January 1, 1994, licensing agreements except as
described in subsections (j) or (m) below, non-compete agreements (other than
with existing or former employees), joint venture agreements, commission
agreements, closing or other agreements with tax authorities or rulings
obtained from tax authorities to which Biosym or any of its Subsidiaries are a
party;
(h) All agreements between Biosym or any Subsidiary or any officer
or director of Biosym or its Subsidiaries on the one hand and Corning, its
Subsidiaries, or any entity controlled by, controlling or under common control
with Corning on the other, and all material transactions or obligations not
otherwise described in this Agreement between Biosym or any Subsidiary on the
one hand and Corning or any Corning Subsidiary on the other since December 31,
1994, including without limitation transfers of assets or rights, provision of
services, assignment of personnel and sharing of facilities;
(i) All other contracts, agreements, understandings, commitments,
leases, mortgages, notes, bonds, loan or credit agreements, deeds of trust,
indentures, security agreements or other instruments, whether written or oral
(other than those specifically included by subsection (a) through (g) above and
(j) through (n) below) and all amendments, consents, waivers, side letters and
commitments related thereto, to which Biosym or any of its Subsidiaries is a
party and which (i) if the total obligation is in excess of $20,000 cannot be
terminated without penalty by Biosym or its Subsidiaries on 30 days' notice or
(ii) individually requires payment by Biosym or such Subsidiary over its
remaining life of more than $50,000;
(j) All material agreements concerning any right of first refusal,
any invention assignment from non- employees or the disposition and/or use of
any trade secrets, copyrights or other intellectual property;
(k) All contracts, agreements or grants with any foreign, federal
or state government or any agency or instrumentality thereof which individually
require payment by or to Biosym or its Subsidiaries in excess of $50,000 or
require the rendering of substantial and material services by Biosym or its
Subsidiaries;
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(l) Any material agreement pursuant to which Biosym or its
Subsidiaries agreed not to engage in any business or compete in any line of
business in any geographic area or with any person;
(m) Any material technology or software development agreement,
arrangement or obligation, or any material technology or software cooperation
or exchange agreement, arrangement or obligation including without limitation
outstanding consortia agreements;
(n) Any effective agreement (except this Agreement and those
described herein) requiring the future disposition of any material portion of
the business or assets of Biosym or its Subsidiaries or concerning the future
acquisition of assets or shares of capital stock by Biosym or its Subsidiaries
of any other person.
Biosym has furnished to MSI samples of all of its material software
development agreements, consortia agreements, computer software licenses, and
software maintenance agreements. Items set forth pursuant to (a) through (n)
above being hereinafter collectively referred to as the "Contracts". Except
as otherwise set forth on the Biosym Disclosure Schedule, neither Biosym nor
its Subsidiaries is aware of any condition or event which, after notice or
lapse of time or both, would constitute a default by Biosym, its Subsidiaries
or a third party, except as to matters which are immaterial to the performance
of any such Contract.
3.10 Employees; Employee Benefits. Set forth on the Biosym
Disclosure Schedule hereto is a description of each material employee benefit
or compensation plan, policy or arrangement, including without limitation,
pension, retirement, deferred compensation, profit sharing, bonus or incentive,
medical, dental, health insurance and life insurance, other insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits or other employee benefit
plans of Biosym and each Subsidiary, under which employees of Biosym or any
Subsidiary are eligible to participate or derive a benefit (collectively
"Employee Plans" and individually "Employee Plan"), copies of all of which have
previously been made available or furnished to MSI. Except as set forth in the
Biosym Disclosure Schedule or as required by foreign law, neither Biosym nor
any Subsidiary is a party to, bound by, nor does it maintain or make any
contribution to any employment agreement, pension, retirement, deferred
compensation, profit sharing, bonus or incentive plan, policy or arrangement,
or any plan policy or arrangement providing for medical, dental or other health
insurance, life insurance, other insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement insurance,
compensation or benefits or other employee benefit plan or program (whether or
not legally binding), including, without limitation, any "employee benefit
plan" (as defined under Section 3(3) of the federal Employee Retirement Income
Security Act of 1974 ("ERISA"). Each Employee Plan complies in all material
respects with applicable laws, including, without limitation, ERISA and the IRC
where applicable. Each Employee Plan has been maintained materially in
compliance
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with its terms, and all applicable ERISA and other material requirements as to
the filing of reports, documents and notices with governmental agencies and the
furnishing of documents to participants or beneficiaries have been satisfied.
With respect to each applicable Employee Plan affecting U.S. employees, Biosym
has furnished to MSI copies of the most recently filed Form 5500, a summary
plan description, and the most recent Internal Revenue Service determination
letters, if any, with respect to each such Employee Plan. As to each Employee
Plan intended to qualify under IRC Section 401(a) or 403(a), (i) such Employee
Plan is designed to qualify and the corresponding trust for each such Employee
Plan is designed to qualify as a tax exempt trust under IRC Section 501(a), and
(ii) all contributions necessary to meet minimum funding requirements of IRC
Section 412 have been made or accrued. Neither Biosym nor any Subsidiary
maintains or has ever maintained or contributed to any Employee Plan subject to
Title IV of ERISA (relating to defined benefit pension plans). No "reportable
event" as defined in ERISA Section 4043(b) has occurred or is continuing with
respect to any Employee Plan which is subject to ERISA Section 4043(b) if any,
and to the best of Corning's and Biosym's knowledge, no "prohibited
transaction" as defined in IRC Section 4975 and ERISA Section 406 has occurred
with respect to any Employee Plan. Neither Biosym nor any Subsidiary has ever
contributed to any "multiemployer plan" as defined in ERISA Section 3(37). All
contributions and payments accrued under each Employee Plan, determined in
accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date, to the extent
they will not be discharged and paid on or prior to the Closing Date, are set
forth in the Biosym Financial Statements. Except as disclosed in writing to
MSI prior to the date hereof, there has been no amendment to, written
interpretation of or announcement (whether or not written) by Biosym or any
subsidiary relating to, or change in employee participation or coverage under,
any Employee Plan that would increase materially the expense of maintaining
such Employee Plan above the level of expense incurred in 1994. No tax under
Section 4980B of the IRC (which imposes penalties for failure to continue
coverage of group health plans) has been incurred in respect of any Employee
Plan that is a group health plan, as defined in Section 5000(b)(1) of the IRC.
With respect to the employees and former employees of Biosym and any
subsidiary, there are no employee post-retirement medical or health plans in
effect, except as required by Section 4980B of the IRC or as required by
foreign law.
3.11 Permits, Licenses and Compliance with Laws. All material
permits, licenses and approvals from federal, state, local and foreign
governmental and regulatory bodies held by Biosym and its Subsidiaries
(collectively the "Permits"), are valid and in force and sufficient for all
business presently conducted by Biosym and its Subsidiaries. Biosym and each
of its Subsidiaries is, and has been, in substantial compliance with all
foreign, federal, state and local laws, ordinances, codes, regulations, orders,
requirements, standards and procedures which are applicable to its business,
including without limitation all export control regulations. None of Biosym,
any Subsidiary or to Corning's or Biosym's knowledge any director, officer,
employee, agent or other person acting on behalf of Biosym or a 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. None of Biosym, any Subsidiary or to Biosym's
knowledge any director, officer, employee, or agent, or other person acting on
behalf of Biosym or a Subsidiary has received any unlawful contributions,
payments, gifts or expenditures.
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3.12 Government Investigations and Claims. Except as may be
otherwise set forth on Biosym Disclosure Schedule, neither Biosym nor any
Subsidiary, nor any officer, director, agent or managing agent of Biosym or its
Subsidiaries, has been convicted of, charged with or, to the knowledge of
Biosym, investigated for any violation of federal or state law related to
fraud, theft, embezzlement, breach of fiduciary responsibility, financial
misconduct, obstruction of an investigation or controlled substances, or has
been excluded or suspended from participation in any federal or state
government contracting program or has been subject to any order or consent
decree of, or criminal or civil fine or penalty imposed by, any court or
governmental agency relating to Biosym, or its Subsidiaries, or their
businesses and no state of facts exists or has existed which would constitute
valid grounds for the assertion of a claim against Biosym or a Subsidiary by
any governmental authority, or agency including without limitation claims for
defective pricing, cost accounting standards noncompliance, unallowable costs
or fraud. Biosym and each Subsidiary are in compliance with all requirements
of its classified government contracts, if any.
3.13 Litigation and Claims. Set forth on Biosym Disclosure
Schedule is a list and description of (i) every material claim, judicial
complaint, suit, action and judicial, regulatory, arbitral or governmental
action, proceeding or investigation pending, or to the knowledge of Biosym or
any Subsidiary, threatened against or by Biosym or its Subsidiaries, or any of
their respective officers, directors, agents acting on behalf of Biosym, or
managing agents in relation to Biosym or such Subsidiaries, as the case may be,
(ii) each such material claim, judicial complaint, suit, action, proceeding or
governmental investigation or administrative matter settled, adjudicated or
otherwise disposed of after January 1, 1994, and (iii) any claim that Biosym,
its business or any of its products infringes, violates or breaches any patent,
trade secret, copyright or intellectual property right of a third party or any
agreement to which Biosym is a party. Neither Biosym nor any of its
Subsidiaries is aware of any basis for any material claim against Biosym or any
Subsidiary, whether or not such a claim has been asserted including without
limitation any claims resulting from the sale of products or services other
than customary and normal returns of product in the ordinary course of
business.
3.14 Environmental and Other Matters. Biosym and its Subsidiaries,
are not, nor is any facility owned or leased by Biosym, or its Subsidiaries,
operated by Biosym or to the knowledge of Biosym by any other party, in
violation of any foreign, federal, state or local law, ordinance or regulation
relating to environmental conditions on, under or about any such facility, or
any other real property owned or leased for use by Biosym or its Subsidiaries
including without limitation, soil, ground and water or working conditions.
From the time in which Biosym or any Subsidiary, first occupied each such
facility, neither Biosym nor any Subsidiary, nor to the knowledge of Biosym any
third party has used, generated, stored or disposed of, on or under or, about
such facility or transported to or from such facility any hazardous waste,
toxic substances or similar materials ("Hazardous Materials") except for
immaterial amounts of commercially available printing and office supplies or as
components of computer equipment and monitors manufactured by third parties
transported, owned, possessed, used and disposed of in accordance with law to
the best of Biosym's knowledge. For purposes of this Agreement, the term
"Hazardous Materials" shall be deemed to include, without limitation,
substances referred to as "hazardous
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substances", "hazardous materials", "hazardous waste", "toxic substances" or
such similar or comparable definitions in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Occupational Safety and Health Act, or in equivalent foreign, state or local
legislation. There are no violations or claims of any violations by Biosym or
any Subsidiary under any foreign, federal or state laws or regulations
affecting employees or working conditions including, without limitation, the
Occupational Safety and Health Act and the regulations thereunder.
3.15 Corporate Documents and Minute Books; Officers and Directors.
All minute books and minutes of Corporate proceedings, Stock Transfer
Registers, Articles or Certificates of Incorporation and Bylaws of Biosym and
its Subsidiaries have been delivered to MSI for inspection and are correct and
complete and accurately reflect all actions and proceedings of the Shareholders
and Board of Directors of Biosym and its Subsidiaries to date including any
committees of the Board of Directors.
3.16 Bank Accounts, Loans. The Biosym Disclosure Schedule sets
forth a list of all bank accounts, lock boxes and other depositories, open
letters of credit, loans to or credit facilities in favor of Biosym and its
Subsidiaries identifying bank, branch and account number, as well as the
authorized signatories thereto, all authorized signatures for loans or other
credit facilities and the amount of any outstanding balance under any letter of
credit, loan or credit facility.
3.17 Brokers. Negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Biosym and Corning
without assistance of any broker or finder and no brokerage or finders'
commission or fee is payable by Biosym or Corning to any other party on account
of this Agreement or the transaction contemplated hereby.
3.18 Adverse Change. Since May 31, 1995, neither Biosym, nor any
of its Subsidiaries, has suffered any material adverse changes in its
financial conditions, assets, liabilities or business except changes in the
ordinary course of business, nor any damage, destruction or loss, whether or
not covered by insurance of any material portion of the assets reflected in the
Biosym Financial Statements.
3.19 Disclosure. No representation or warranty by Biosym nor any
written statement or certificate furnished to MSI pursuant hereto, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein and therein not misleading.
3.20 Proprietary Rights. In order to conduct its business as it is
presently being conducted, after due inquiry: (a) Biosym does not lack nor
does it require any right under any patent, patent application, trademark,
service xxxx, trademark or service xxxx registration, trade name, license,
copyright, intellectual property or trade secret license, assignment or royalty
agreement which it does not have or which has not been otherwise disclosed in
the Biosym Disclosure Schedule; (b) Biosym, to its knowledge, is not infringing
upon the rights of others with
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respect to any such matters and is not aware of any threatened claim or
litigation alleging such infringement. Biosym has not raised any claim and has
no knowledge that any party is infringing or otherwise using without Biosym's
consent and agreement any patent, patent application, copyright, trademark,
service xxxx or intellectual property or trade secret of Biosym which it can
protect.
3.21 Non-Assignable Rights. Except as set forth on the Biosym
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement by Biosym nor the consummation of the transactions contemplated
hereby will require the affirmative consent or approval of any third party.
3.22 Notes and Accounts Receivable. The notes and accounts
receivable of Biosym reflected on the Biosym Financial Statements are stated in
a manner consistent with Biosym's prior practices and except as otherwise noted
therein have arisen only from bona fide transactions in the ordinary course of
business. The notes and accounts receivable of Biosym which have arisen since
May 31, 1995 are considered collectible consistently with Biosym's prior
practices, except to the extent of the reserves for such accounts receivable
taken by Biosym in a manner consistent with prior practice, and all such
accounts receivable have arisen only from bona fide transactions in the
ordinary course of business.
3.23 Investment Purposes. Corning is acquiring the MSI Common
Stock and MSI Convertible Stock for its own account, not as nominee or agent,
for investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act of 1933, as amended (the "1933 Act"). Corning understands that the MSI
Common Stock and MSI Convertible Stock have not been registered under the 1933
Act by reason of a specific exemption therefrom.
ARTICLE IV. MSI's Representations and Warranties
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement which is delivered by MSI to
Biosym and Corning prior to the execution of this Agreement (the "MSI
Disclosure Schedule"), MSI and MSI Acquisition hereby severally represent and
warrant to Biosym and Corning as follows:
4.1 Organization and Existence; Capitalization.
(a) MSI is a corporation duly organized and validly existing under
the laws of the State of Delaware and has the full corporate power to carry on
its business as it is now being conducted. Copies of the Certificate of
Incorporation and the Bylaws of MSI have been delivered to Biosym and as
delivered are complete and correct as of the date hereof. MSI is qualified to
do business in each jurisdiction where the nature of such business or its
assets or properties requires it to do so except where the failure to so
qualify would not have a material adverse effect on its business, assets or
properties taken as a whole.
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(b) The authorized capital stock and the number of shares issued
and outstanding of each class of capital stock of MSI as of the date hereof,
together with the holders thereof, is set forth on the MSI Disclosures Schedule
hereto and is held of record and to the best of MSI's knowledge beneficially by
the shareholders of MSI identified in the MSI Disclosure Schedule free and
clear of all liens, charges, restrictions, claims and encumbrances. All of the
outstanding shares of capital stock of MSI are validly issued, fully paid and
non-assessable. Except as set forth on the MSI Disclosure Schedule, , there
are no outstanding options, warrants, agreements, contracts, calls, commitments
or demands of any character to which MSI is a party relating to the capital
stock of MSI that either:
(i) obligates MSI to (A) issue, redeem, sell or purchase
any capital stock in MSI or any other security of
MSI, or (B) share the profits, revenues or income of
MSI, or
(ii) restricts the transfer of, or otherwise relates to
transactions in, the capital stock of MSI that would
in any way affect the Merger or the transactions
contemplated by this Agreement.
4.2 Subsidiaries' Organization and Existence; Capitalization. A
"Subsidiary" shall mean any corporation, partnership or other entity hereof,
wherever and however organized, in which MSI owns directly or indirectly more
than fifty percent (50%) of the voting stock, equity or beneficial interest, is
a partner of, or otherwise controls the management of, by having the right or
ability to designate a majority of the directors or members of the governing
body thereof, whether by agreement or otherwise.
(a) All Subsidiaries of MSI are identified on the MSI Disclosure
Schedule and each Subsidiary is a corporation or a partnership duly organized
and validly existing under the laws of the country or state of its organization
and has the full power to carry on its business as it is now being conducted.
Copies of the Certificate or Articles of Incorporation and the Bylaws or of the
partnership agreement of each such Subsidiary, have been delivered to Biosym
and as delivered are complete and correct as of the date hereof. Each
Subsidiary is qualified to do business in each jurisdiction where the nature of
such business or its assets or properties requires it to do so, except where
the failure to so qualify would not have a material adverse effect on MSI's
business, assets or properties taken as a whole.
(b) All of the outstanding shares of capital stock of each
Subsidiary are validly issued, fully paid and non-assessable. There are no
outstanding options, agreements, warrants, contracts, calls, commitments or
demands of any character relating to the capital stock of such Subsidiary.
(c) Except in connection with the Subsidiaries identified on the
MSI Disclosure Schedule, and in the case of TEIJIN Molecular Simulations
Incorporated ("TMSI") in which MSI holds fifty percent (50%) of the voting
equity or shares, neither MSI nor its Subsidiaries own directly or indirectly
any voting stock or equity or beneficial interest in any third party and do not
have the right or ability to designate directors or members of the governing
body of any third party.
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4.3 Authority to Execute and Perform Agreement. Subject only to
approval by MSI shareholders, a true and correct list of which is set forth on
the MSI Disclosure Schedule (the "MSI Shareholders"), MSI and MSI Acquisition
have the full legal right, power and authority to enter into, execute and
deliver this Agreement and in the case of MSI the Shareholders Agreement
described in Article VI below and to perform fully their respective obligations
hereunder and thereunder. This Agreement has been duly executed and delivered
by MSI and MSI Acquisition and is the valid and binding obligation of each of
them enforceable against MSI and MSI Acquisition in accordance with its terms
assuming that this Agreement constitutes a valid and binding agreement of
Biosym and Corning, except as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought. The Boards of Directors of MSI and MSI Acquisition have approved
this Agreement and the consummation of the transactions contemplated hereby and
apart from approval by MSI Shareholders, no other corporate proceedings are
necessary to authorize this Agreement and the Shareholders Agreement or the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by MSI or MSI Acquisition of the transactions contemplated
hereby at the Closing will not:
(a) conflict with or result in a breach or default of or
constitute or result in a default under any of the terms, conditions or
provisions of the Certificate of Incorporation, Bylaws or any governing
instruments of MSI or of any Subsidiary or to the best of MSI's knowledge,
TMSI;
(b) require the further approval or consent of any federal, state,
county, local court or other governmental or regulatory body or the approval or
consent of any other person, and such other approvals or consents of any
federal, state, county, local court or other governmental or regulatory body,
the failure of which to make or obtain would materially adversely affect the
ability of MSI or MSI Acquisition to consummate the Merger; or
(c) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute a default (or an event which with
notice or lapse of time or both constitute a default) under or a violation of,
any statute, regulation, order, judgment or decree applicable to MSI or any
Subsidiary, or any material instrument, material contract or other material
agreement to which MSI or any Subsidiary or to the best of MSI's knowledge,
TMSI is a party or to which MSI or any Subsidiary or to the best of MSI
knowledge, TMSI is bound or subject.
4.4 Financial Statements.
(a) MSI has delivered to Biosym copies of the financial statements
of MSI for the fiscal years ended December 31, 1993 and December 31, 1994,
audited by the accounting firm of Xxxxxx Xxxxxxxx and which statements include
balance sheets and statements of income, shareholders equity and cash flows and
footnotes thereto, and an unaudited balance sheet and statements of income and
cash flows for the period from January 1, 1995 to June 30, 1995 (collectively
the "MSI Financial Statements"). Except as set forth in the MSI Financial
Statements
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as of the dates and for the respective periods they represent the MSI Financial
Statements fairly present the financial position of MSI and its Subsidiaries
and the results of their operations and their cash flows in all material
respects, all in conformity with GAAP, consistently applied for the periods
indicated thereon (except as may be indicated in the notes thereto) except that
the balance sheet and statements of income and cash flow dated June 30, 1995 do
not contain notes or year end adjustments required by GAAP.
(b) MSI and its Subsidiaries had as of the date of the MSI
Financial Statements, no liabilities or obligations, secured or unsecured,
including tax liabilities due or to become due, not disclosed in the MSI
Financial Statements or the MSI Disclosure Schedule attached hereto that would
in accordance with GAAP be required to be disclosed in such Financial
Statements.
(c) As of the date of this Agreement, MSI and its Subsidiaries
have no actual or contingent liabilities or obligations secured or unsecured,
including tax liabilities not disclosed to Corning and Biosym in the MSI
Financial Statements, or the MSI Disclosure Schedule, except those liabilities
incurred in the ordinary course of business consistent with past practices
since June 30, 1995 or which do not exceed $100,000 in the aggregate.
(d) MSI has delivered to Biosym copies of the unaudited financial
statements of TMSI for the fiscal year ended March 31, 1995, which statements
include a balance sheet as of such date and a statement of income for the
twelve (12) month period then ended (collectively, the "TMSI Financial
Statements"). To the best of MSI's knowledge, the TMSI Financial Statements
fairly present in all material respects the financial position of TMSI as of
such date and the results of its operations for the twelve (12) month period
then ended. To the best of MSI's knowledge, TMSI has no actual or contingent
liabilities or obligations secured or unsecured, including tax liabilities, not
disclosed to Corning and Biosym in the TMSI Financial Statements or the MSI
Disclosure Schedule, except those liabilities incurred in the ordinary course
of business consistent with past practices since March 31, 1995 or which do not
exceed $100,000 in the aggregate.
4.5 Absence of Certain Changes or Events. Except as set forth on
the MSI Disclosure Schedule, since December 31, 1994, MSI and its Subsidiaries
and to the best of MSI's knowledge, TMSI have in all material respects
conducted its business only in the ordinary course consistent with past
business practices and there have not been any:
(a) Employee Relations. Employee relations disputes, including
without limitation threatened or actual employee claims;
(b) Stock Options, Dividends, etc. (i) Change in the authorized
or issued capital stock of MSI or its Subsidiaries or TMSI, (ii) grant of any
stock option or right to purchase shares of the authorized or issued capital
stock of MSI or any of its Subsidiaries or TMSI, (iii) issuance of any security
convertible into the capital stock of MSI or any of its Subsidiaries or TMSI,
(iv) agreement by MSI or any of its Subsidiaries or TMSI to do any of the
foregoing, or (v) declaration or payment or promise to make payment of any
dividend or other distribution with respect to the capital stock of MSI or any
of its Subsidiaries or TMSI;
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(c) Sale or Pledge of Assets; Incurring of Indebtedness. (i) Sale
or lease or transfer to a third party of any assets of MSI reflected on the MSI
Financial Statements or any of its Subsidiaries (other than the customer
software licenses or sales of computer equipment to customers) having an
original cost in excess of $10,000 for any single item and $50,000 in the
aggregate, (ii) mortgage or pledge of any material properties or assets of MSI
or any of its Subsidiaries or to the best of MSI's knowledge, TMSI, (iii)
indebtedness incurred, assumed or guaranteed by MSI or any of its Subsidiaries
or to the best of MSI's knowledge, TMSI that matures more than one year from
the date such indebtedness was incurred or which obligates MSI to more than
$50,000 in the aggregate, (iv) notice of termination or termination by a third
party or notice of termination or termination by MSI or any of its Subsidiaries
or to the best of MSI's knowledge, TMSI of any lease or contract, involving the
payment or receipt by MSI or any of its Subsidiaries of an amount in excess of
$25,000 in any one instance or $50,000 in the aggregate, except notice of
termination or termination of customer software licenses and software
maintenance agreements in the ordinary course of business, or (v) entering into
by MSI or any of its Subsidiaries of a lease or other contract, other than
customer agreements entered into in the ordinary course of business, which
cannot be terminated unilaterally by MSI without cost to MSI or any of its
Subsidiaries in excess of $25,000 in any one instance or $50,000 in the
aggregate;
(d) Employee Benefit Plans and Certain Salaried Employees. A
material change in any employment contract, bonus, stock option,
profit-sharing, pension, retirement, incentive or other similar arrangement of
MSI or any of its Subsidiaries as in effect on June 30, 1995 or any increase
outside the ordinary course of business in the compensation payable or to
become payable by MSI or any of its Subsidiaries to any of its officers,
employees or agents;
(e) Change in Accounting Practice or Inventory. Material change
in any accounting practice, capitalization of software development expenses or
writedown or revaluation of any asset including computer software;
(f) Adverse Determinations. Materially adverse determination in
any litigation, action, proceeding before any court or governmental body
(domestic or foreign) relating to MSI or its Subsidiaries or to the best of
MSI's knowledge, TMSI and their respective businesses, assets or properties;
(g) Product Changes. Material changes in the type, nature,
composition or quality of its products except in the ordinary course of
business and consistent with prior practice or customary business practices
prevailing in the industry generally; acceptance of orders in material amounts
from any customer under conditions relating to price, terms of payment, time of
delivery or like matters differing from the conditions regularly and usually
specified in the ordinary course of business; or change in its selling,
pricing, advertising or personnel practices, except in the ordinary course of
business, and consistent with prior practice or customary business practices
prevailing in the industry generally;
(h) Agreements Concerning (a)-(g). Any binding or enforceable
agreement or obligation of MSI or its Subsidiaries or to the best of MSI's
knowledge, TMSI (to the extent
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paragraphs (a) through (g) above are applicable to TMSI) to make any of the
changes or cause any events described in paragraphs (a) through (g) above.
4.6 Tax Matters.
(a) Filing of Returns. (i) All federal, state, local and foreign
tax returns and tax reports required to be filed for MSI or its Subsidiaries or
to the best of MSI's knowledge, TMSI have been filed with the appropriate
taxing authorities on a timely basis, subject to any extension of such due
date, and to the best of MSI's knowledge, TMSI's returns and reports, all such
returns and reports are true, correct and complete in all material respects,
(ii) all federal, state, local and foreign taxes (including interest and
penalties) that are currently due from or relating to MSI and any rebate due to
MSI or its Subsidiaries or to the best of MSI's knowledge, TMSI (including
deferred taxes) in respect of all periods ending on or before the date hereof
have been fully paid or are adequately provided for on the books and the MSI
Financial Statements or are being contested in good faith by MSI, or TMSI as
the case may be, (iii) MSI and its Subsidiaries or to the best of MSI's
knowledge, TMSI have not received any notice of any audit by the Internal
Revenue Service or other taxing authority or notice that any issues have been
raised by or are currently pending before the Internal Revenue Service or any
other taxing authority whether or not in connection with any of the returns and
reports referred to in clause (i) above, and (iv) MSI and its Subsidiaries or
to the best of MSI's knowledge, TMSI have not given nor been requested to give
waivers or extensions of any statute of limitations relating to the payment of
any taxes referred to in this paragraph;
(b) Adjustments to Reported Tax. There are no material
adjustments to the federal, state and local and foreign tax returns and tax
reports of MSI or its Subsidiaries or to the best of MSI's knowledge, TMSI or
any resulting deficiencies or penalties proposed with respect thereto by the
Internal Revenue Service or any other taxing authority, and all deficiencies or
penalties proposed by such taxing authorities have been paid, reserved against
as shown on the MSI Financial Statements, or settled;
(c) Withholding. All federal, state, local or foreign taxes and
other charges, that MSI or its Subsidiaries are or were required by law to
withhold or to collect, have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority;
(d) No DISC, FSC or Possession Corporation. MSI has no domestic
international sales corporation within the meaning of Section 992 of the
Internal Revenue Code of 1986 as amended (the "IRC") nor any Foreign Sales
Corporation within the meaning of Section 922 of the IRC and is not an electing
corporation within the meaning of 936 of the IRC (relating to the possessions
tax credit);
(e) Tax Payments and Returns. MSI made available to Corning and
Biosym or their accountants, true and complete copies of all MSI consolidated
federal income and state and local (including the State of California) income
tax returns and all foreign, federal and state and local income tax returns
filed separately by any Subsidiary for years subsequent to December 31, 1992;
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(f) Tax Sharing Agreements. There are no tax sharing agreements
with respect to MSI or its Subsidiaries and to the best of MSI's knowledge,
TMSI concerning the payment of taxes;
(g) Tax-Exempt Property. Neither MSI nor its Subsidiaries has
made an election for federal income tax purposes to treat any of their
respective assets as tax-exempt bond financial property or tax-exempt use
property within the meaning of the IRC or is contractually obligated to a third
party to so treat the assets owned by that third party;
(h) Non-Deductible Compensation. There is no contract, plan or
agreement covering any employee or former employee of MSI or its Subsidiaries
that individually or in the aggregate would require MSI or its Subsidiaries to
make any payment that would not be deductible pursuant to the terms of Section
280G of the IRC;
(i) Liens. There are no liens for taxes (other than for taxes not
yet due and payable) upon the assets of MSI or any of its Subsidiaries;
(j) Accounting Adjustments. Neither MSI nor any of its
Subsidiaries has agreed to make, nor are they required to make, any adjustments
to their accounting methods that would have a tax impact on MSI or any of its
Subsidiaries under Section 481 of the IRC or any similar state, local or
foreign tax provisions;
(k) U.S. Real Property Holding Company. MSI is not, and has not
been, a "United States real property holding company" within the meaning of
Section 897 of the IRC;
(l) Foreign Person. MSI is not a "foreign person" as defined in
Section 1445(f)(3) of the IRC;
(m) Foreign Subsidiaries. None of MSI's foreign Subsidiaries:
(i) is engaged in a United States trade or business for federal income tax
purposes; (ii) is a passive foreign investment company within the meaning of
the IRC; or (iii) has made an election, or is required, to treat any asset as
owned by another person for tax purposes. None of the MSI foreign Subsidiaries
has an investment in United States property within the meaning of Section 956
of the IRC;
(n) Tax Elections. Neither MSI nor any of its Subsidiaries has
filed a consent under Section 341(f) of the IRC (or any corresponding provision
of state, local or foreign tax law) or agreed to have Section 341(f)(2) of the
IRC (or any corresponding provision of state, local or foreign tax law) apply
to it. Neither MSI nor any of its Subsidiaries has made and will not make a
deemed dividend election under Treasury Regulations Section 1.1502-32 or a
consent dividend under Section 565 of the IRC.
Notwithstanding any of the foregoing, no representation or warranty is
made by MSI with respect to the tax consequences that may result from the
transactions contemplated by this Agreement.
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4.7 Equipment. All of the material computer and other equipment
owned or used by MSI or its Subsidiaries are in usable operating condition, and
are, in view of their age and excluding normal wear and tear, not in need of
maintenance other than normal scheduled maintenance, and are free from any
known defects except such defects as do not substantially interfere with the
continued use thereof in the conduct of MSI's normal business operations.
Neither MSI nor any Subsidiary owns or has ever owned any buildings or other
real property. All of the material leases for office space of MSI or any
Subsidiary are valid and in full force and effect.
4.8 Products. The MSI Disclosure Schedule sets forth a
description of all computer software programs owned or licensed by MSI or its
Subsidiaries and licensed or intended to be licensed or sold to their
customers.
4.9 Contracts and Commitments. Set forth on the MSI Disclosure
Schedule hereto are complete and accurate lists as of the date hereof of the
following:
(a) Distribution, dealer or sales representation agreements,
(b) Supplier agreements or requirement contracts of MSI or any
Subsidiary not terminable without penalty on 30 days' notice which individually
are in excess of $50,000;
(c) Written consortia proposals (exclusive of consortia programs
existing as of the date of this Agreement and identified in the MSI Disclosure
Schedule) of MSI or any Subsidiary which individually are in excess of $150,000
and any grant request or proposal for a research and development contract
(including without limitation contracts for customized software development or
research services) in excess of $100,000 each;
(d) Purchase orders and purchase commitments of MSI or any
Subsidiary which individually are either (i) in excess of $50,000 or (ii) for
which the total obligation is in excess of $20,000 and which cannot be
terminated without penalty by MSI or its Subsidiaries on 90 days' notice;
(e) Personal property leases and other rental, use or service
arrangements of MSI and its Subsidiaries which either (i) cannot be terminated
without penalty by MSI or its Subsidiaries on 30 days' notice, or (ii)
individually requires payment by MSI or its Subsidiaries over its remaining
life of more than $50,000 in the aggregate;
(f) Real property leases and similar contracts and arrangements
pursuant to which MSI or any Subsidiary leases or rents any land, building,
facility, service center or other interest in realty which either (i) cannot be
terminated without penalty by MSI or such Subsidiary on 30 days' notice or (ii)
individually requires payment by MSI or its Subsidiaries over its remaining
life of more than $50,000 in the aggregate;
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(g) All indemnity or guaranty arrangements, business acquisition
agreements entered into after January 1, 1994, licensing agreements except as
described in subsection (j) or (m) below, non-compete agreements (other than
with existing or former employees), joint venture agreements, commission
agreements, closing or other agreements with tax authorities or rulings
obtained from tax authorities to which MSI or any of its Subsidiaries or to
the best of MSI's knowledge, TMSI are a party;
(h) All agreements between MSI or any Subsidiary or to the best of
MSI's knowledge, TMSI or any officer or director of MSI or its Subsidiaries on
the one hand, and any MSI Shareholder, and to the best of MSI's knowledge, any
Subsidiary of an MSI Shareholder or any entity controlling, controlled by or
under common control of an MSI Shareholder on the other hand, and all material
transactions or obligations not otherwise described in this Agreement between
MSI or any Subsidiary on the one hand or any MSI Shareholder or any Subsidiary
of an MSI Shareholder on the other since December 31, 1994, including without
limitation transfers of assets or rights, provision of services, assignment of
personnel and sharing of facilities;
(i) All other contracts, agreements, understandings, commitments,
leases, mortgages, notes, bonds, loan or credit agreements, deeds of trust,
indentures, security agreements or other instruments, whether written or oral
(other than those specifically included by subsection (a) through (g) above and
(j) through (n) below) and all amendments, consents, waivers, side letters and
commitments related thereto, to which MSI or any of its Subsidiaries is a party
and which (i) if the total obligation is in excess of $20,000 cannot be
terminated without penalty by MSI or its Subsidiaries on 30 days' notice or
(ii) individually requires payment by MSI or such Subsidiary over its remaining
life of more than $50,000;
(j) All material agreements concerning any right of first refusal,
any invention assignment from non- employees or the disposition and/or use of
any trade secrets, copyrights or other intellectual property;
(k) All contracts, agreements or grants with any foreign, federal
or state government or any agency or instrumentality thereof which require
payment by or to MSI or its Subsidiaries in excess of $50,000 or require the
rendering of substantial and material services by MSI or its Subsidiaries;
(l) Any material agreement pursuant to which MSI or its
Subsidiaries agreed not to engage in any business or compete in any line of
business in any geographic area or with any person;
(m) Any material technology or software development agreement,
arrangement or obligation, or any material technology or software cooperation
or exchange agreement, arrangement or obligation including without limitation
outstanding consortia agreements;
(n) Any effective agreement (except this Agreement and those
described herein) requiring the future disposition of any material portion of
the business or assets of MSI or its
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Subsidiaries or to the best of MSI's knowledge, TMSI or concerning the future
acquisition of assets or shares of capital stock by MSI or its Subsidiaries of
any other person.
MSI has furnished to Biosym samples of all its material software
development agreements or consortia agreements, computer software licenses,
software maintenance agreements. Items set forth pursuant to (a) through (n)
above being hereinafter collectively referred to as the "Contracts". Except
as otherwise set forth on the MSI Disclosure Schedule, neither MSI nor its
Subsidiaries is aware of any condition or event which, after notice or lapse of
time or both, would constitute a default by MSI, its Subsidiaries or any third
party, except as to matters which are immaterial to the performance of any such
Contract.
4.10 Employees; Employee Benefits. Set forth on the MSI Disclosure
Schedule hereto is a description of each material employee benefit or
compensation plan, policy or arrangement, including without limitation,
pension, retirement, deferred compensation, profit sharing, bonus or incentive,
medical, dental, health insurance and life insurance, other insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplement unemployment benefits, vacation benefits, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits, or other employee benefit
plans of MSI and each Subsidiary, under which employees of MSI or any
Subsidiary are eligible to participate or derive a benefit (collectively
"Employee Plans" and individually "Employee Plan"), copies of all of which have
previously been made available or furnished to Biosym. Except as set forth in
the MSI Disclosure Schedule or as required by foreign law, neither MSI nor any
Subsidiary is a party to, bound by, nor does it maintain or make any
contribution to any employment agreement, pension, retirement, deferred
compensation, profit sharing, bonus or incentive plan, policy or arrangement,
or any plan, policy or arrangement providing for medical, dental or other
health insurance, life insurance, other insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits, or other employee benefit plan or program
(whether or not legally binding), including, without limitation, any "employee
benefit plan" (as defined under Section 3(3) of the federal Employee Retirement
Income Security Act of 1974 ("ERISA"). Each Employee Plan complies in all
material respects with applicable laws, including, without limitation, ERISA
and the IRC where applicable. Each Employee Plan has been maintained in
material compliance with its terms, and all applicable ERISA and other material
requirements as to the filing of reports, documents and notices with
governmental agencies and the furnishing of documents to participants or
beneficiaries have been satisfied. With respect to each applicable Employee
Plan affecting U.S. employees, MSI has furnished to Biosym and Corning copies
of the most recently filed Form 5500, a summary plan description, and the most
recent Internal Revenue Service determination letters, if any, with respect to
such Employee Plan. As to each Employee Plan intended to qualify under IRC
Section 401(a) or 403(a), (i) such Employee Plan is designed to qualify and the
corresponding trust for each such Employee Plan is designed to qualify as a tax
exempt trust under IRC Section 501(a), and (ii) all contributions necessary to
meet minimum funding requirements of IRC Section 412 have been made or accrued.
Neither MSI nor any Subsidiary maintains or has ever maintained or contributed
to any Employee Plan subject to
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Title IV of ERISA (relating to defined benefit pension plans). No "reportable
event" as defined in ERISA Section 4043(b) has occurred or is continuing with
respect to any Employee Plan which is subject to ERISA Section 4043(b) if any,
and to the best of MSI's knowledge no "prohibited transaction" as defined in
IRC Section 4975 and ERISA Section 406 has occurred with respect to any
Employee Plan. Neither MSI nor any Subsidiary has ever contributed to any
"multiemployer plan" as defined in ERISA Section 3(37). All contributions and
payments accrued under each Employee Plan, determined in accordance with prior
funding and accrual practices, as adjusted to include proportional accruals for
the period ending on the Closing Date, to the extent they will not e discharged
and paid on or prior to the Closing Date, are set forth in the MSI Financial
Statements. Except as disclosed in writing to Biosym prior to the date hereof,
there has been no amendment to, written interpretation of or announcement
(whether or not written) by MSI or any subsidiary relating to, or change in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such Employee Plan above the level of the
expense incurred in 1994. No tax under Section 4980B of the IRC (which imposes
penalties for failure to continue coverage of group health plans) has been
incurred in respect of any Employee Plan that is a group health plan, as
defined in Section 5000(b)(1) of the IRC. With respect to the employees and
former employees of MSI and any subsidiary, there are no employee
post-retirement medical or health plans in effect, except as required by
Section 4980B of the IRC or as required by law.
4.11 Permits, Licenses and Compliance with Laws. All material
permits, licenses and approvals from federal, state, local and foreign
governmental and regulatory bodies held by MSI and its Subsidiaries
(collectively the "Permits") are valid and in force and sufficient for all
business presently conducted by MSI and its Subsidiaries. MSI and each of its
Subsidiaries and to the best of MSI's knowledge, TMSI is, and has been, in
substantial compliance with all foreign, federal, state and local laws,
ordinances, codes, regulations, orders, requirements, standards and procedures
which are applicable to its business, including without limitation all export
control regulations. None of MSI, any Subsidiary or to MSI's knowledge any
director, officer, employee or agent or other person acting on behalf of MSI or
a Subsidiary and to the best of MSI's knowledge, TMSI 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. None of MSI, any Subsidiary or, to MSI's knowledge, any director,
officer, employee, or agent, or other person acting on behalf of MSI or a
Subsidiary has received any unlawful contributions, payments, gifts or
expenditures.
4.12 Government Investigations and Claims. Neither MSI nor any
Subsidiary nor to the best of MSI's knowledge, TMSI, nor any officer, director,
agent or managing agent of MSI or its Subsidiaries, has been convicted of,
charged with or, to the knowledge of MSI, investigated for any violation of
federal or state law related to fraud, theft, embezzlement, breach of fiduciary
responsibility, financial misconduct, obstruction of an investigation or
controlled substances, or has been excluded or suspended from participation in
any federal or state government contracting program or has been subject to any
order or consent decree of, or criminal or civil fine or penalty imposed by,
any court or governmental agency relating to MSI, or its Subsidiaries, or their
businesses. No state of facts exists or has existed which would constitute
valid grounds for the
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assertion of a claim against MSI or a Subsidiary or to the best of MSI's
knowledge, TMSI by any governmental authority, or agency including without
limitation claims for defective pricing, cost accounting standards
noncompliance, unallowable costs or fraud. MSI and each Subsidiary are in
compliance with all requirements of its classified government contracts, if
any.
4.13 Litigation and Claims. Set forth on the MSI Disclosure
Schedule is a list and description of (i) every material claim, judicial
complaint, suit, action and judicial, regulatory, arbitral or governmental
action, proceeding or investigation pending, or to the knowledge of MSI or any
Subsidiary, threatened against or by MSI or its Subsidiaries, or any of their
respective officers, directors, agents acting on behalf of MSI, or managing
agents in relation to MSI or such Subsidiaries, as the case may be, (ii) each
such material claim, judicial complaint, suit, action, proceeding or
governmental investigation or administrative matter settled, adjudicated or
otherwise disposed of after January 1, 1994, (iii) any claim that MSI, its
business or any of its products infringes, violates or breaches any patent,
trade secret, copyright or intellectual property right of a third party or any
agreement to which MSI is a party. Neither MSI nor any of its Subsidiaries is
aware of any basis for any material claim against MSI or any Subsidiary,
whether or not such a claim has been asserted including without limitation any
claims resulting from the sale of products or services other than customary and
normal returns of product in the ordinary course of business.
4.14 Environmental and Other Matters. MSI and its Subsidiaries,
are not, nor is any facility owned or leased by MSI or its Subsidiaries,
operated by MSI or to the knowledge of MSI by any other party, in violation of
any foreign, federal, state or local law, ordinance or regulation relating to
environmental conditions on, under or about any such facility, or any other
real property owned or leased for use by MSI or its Subsidiaries including
without limitation, soil, ground and water or working conditions. From the
time in which MSI or any Subsidiary, first occupied each such facility, neither
MSI nor any Subsidiary, nor to the knowledge of MSI any third party has used,
generated, stored or disposed of, on or under or, about such facility or
transported to or from such facility any Hazardous Materials, except for
immaterial amounts of commercially available printing and office supplies or as
components of computer equipment and monitors manufactured by third parties,
transported, owned, possessed, used and disposed of in accordance with law to
the best of MSI's knowledge. There are no violations or claims of any
violations by MSI or any Subsidiary under any foreign, federal or state laws or
regulations affecting employees or working conditions including, without
limitation, the Occupational Safety and Health Act and the regulations
thereunder.
4.15 Corporate Documents and Minute Books; Officers and Directors.
Copies of all minute books and minutes of Corporate proceedings, Stock Transfer
Registers, Articles or Certificates of Incorporation and Bylaws of MSI and its
Subsidiaries have been made available to Biosym for inspection and are correct
and complete and accurately reflect all actions and proceedings of the MSI
shareholders and Board of Directors of MSI and its Subsidiaries to date
including any committees of the Board of Directors.
4.16 Bank Accounts, Loans. The MSI Disclosure Schedule sets forth
a list of all bank accounts, lock boxes and other depositories, open letters of
credit, loans to or credit facilities in
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favor of MSI and its Subsidiaries identifying bank, branch and account number,
as well as the authorized signatories thereto, all authorized signatures for
loans or other credit facilities and the amount of any outstanding balance
under any letter of credit, loan or credit facility.
4.17 Brokers. Negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by MSI without
assistance of any broker or finder and no brokerage or finders' commission or
fee is payable by MSI to any other party on account of this Agreement or the
transactions contemplated hereby.
4.18 Adverse Change. Since December 31, 1994, neither MSI, nor any
of its Subsidiaries nor to the best of MSI's knowledge, TMSI, has suffered any
material adverse changes in its financial conditions, assets, liabilities or
business except changes in the ordinary course of business, nor any damage,
destruction or loss, whether or not covered by insurance of any material
portion of the assets reflected in the MSI Financial Statements.
4.19 Disclosure. No representation or warranty by MSI nor any
written statement or certificate furnished to Corning or Biosym pursuant
hereto, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein and therein not
misleading.
4.20 Proprietary Rights. In order to conduct its business as it is
presently being conducted, after due inquiry, (a) MSI does not lack nor does it
require any right under any patent, patent application, trademark, service
xxxx, trademark or service xxxx registration, trade name, license, copyright,
intellectual property or trade secret license, assignment or royalty agreement
which it does not have or which has not been otherwise disclosed in the MSI
Disclosure Schedule, (b) MSI, to its knowledge, is not infringing upon the
rights of others with respect to any such matters and is not aware of any
threatened claim or litigation alleging such infringement. MSI has not raised
any claim and has no knowledge that any party is infringing or otherwise using
without MSI's consent and agreement any MSI patent, patent application,
copyright, trademark, service xxxx or intellectual property or trade secret of
MSI which it can protect.
4.21 Non-Assignable Rights. Except as set forth on the MSI
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement by MSI nor the consummation of the transactions contemplated hereby
will require the affirmative consent or approval of any third party.
4.22 Notes and Accounts Receivable. The notes and accounts
receivable of MSI reflected on the MSI Financial Statements are stated in a
manner consistent with MSI prior practices and except as otherwise noted
therein have arisen only from bona fide transactions in the ordinary course of
business. The notes and accounts receivable of MSI which have arisen since May
31, 1995 are considered collectible consistently with MSI prior practices,
except to the extent of the reserves for such accounts receivable taken
consistent with prior practice, and all such accounts receivable have arisen
only from bona fide transactions in the ordinary course of business.
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4.23 Continuity of Business. It is the present intention of MSI,
subsequent to the consummation of the Merger, to continue the general business
that Biosym currently conducts as more fully provided in the Shareholders
Agreement described in Section 6.1(h) below.
4.24 Investment Purposes. MSI Acquisition is acquiring the Biosym
common stock for its own account, not as nominee or agent, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the 1933 Act. MSI Acquisition
understands that the Biosym common stock have not been registered under the
1933 Act by reason of a specific exemption therefrom.
ARTICLE V. Certain Agreements
5.1 Investigations and Operations of Business of Biosym and
Subsidiaries. Between the date of this Agreement and the Closing Date:
(a) Access to Financial Records. Subject to the provisions of
that confidentiality agreement dated February 27, 1995 between MSI, Corning and
Biosym (the "Confidentiality Agreement"), from the date hereof until the
Closing Date, Biosym shall give MSI, and MSI shall give Biosym and their
respective representatives and agents appropriate access to books and records
of their respective Subsidiaries and shall cause their officers and independent
auditors to furnish each other appropriate financial and operations data,
including access by the other party and the other party's accountants to their
respective independent auditors' work papers for financial statements, with
respect to their business and properties and that of their respective
Subsidiaries as either party shall from time to time reasonably request of the
other; provided, however, that any such investigation (i) shall be conducted
upon reasonable prior notice at mutually agreed times and otherwise in such
manner as not to interfere unreasonably with the operation of the business of a
party or its Subsidiaries and (ii) shall not affect any of the representations
and warranties made hereunder. In the event the Merger is not consummated,
each party will return to the other and will cause its representatives to
return, all documents, work papers and other material obtained from such party
in connection with the transactions contemplated hereby and will hold such
material and business information derived therefrom confidential unless and
until such material or the information contained therein becomes part of the
public domain or is obtained from other sources who are entitled to disclose
such material or information without restriction in favor of the party which
disclosed such material or information.
(b) Preservation of Business. Biosym and MSI will use their best
efforts to preserve intact their business organizations, to keep available the
services of their present officers and employees and to preserve their present
relationships with persons having significant business relations with them.
(c) Operations in the Ordinary Course. Except as expressly
provided otherwise herein, Biosym and MSI and their respective Subsidiaries
shall operate their businesses only in the ordinary course and, by way of
amplification and not limitation, each of them shall not, except as may be
expressly required by this Agreement or with the written consent of the other
parties:
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(i) issue or commit to issue any capital stock or
other ownership interest in themselves or any
Subsidiary, other than pursuant to outstanding
options or other rights existing as of the date
hereof,
(ii) grant or commit to grant any options,
warrants, convertible securities or other rights to
subscribe for, purchase or otherwise acquire any
shares of theirs or their Subsidiaries' capital stock
or other ownership interest,
(iii) declare, set aside, or pay any dividend or
distribution with respect to the capital stock or
other ownership interest in themselves or any of
their Subsidiaries,
(iv) directly or indirectly redeem, purchase or
otherwise acquire or commit to acquire any capital
stock or other ownership interest in themselves or
any of their Subsidiaries,
(v) effect a split or reclassification of any of
their capital stock or that of their Subsidiaries or
any recapitalization of themselves or a Subsidiary,
(vi) enter into any research and development
agreement or other agreement, except with respect to
software license agreements and other agreements in
the ordinary course of business,
(vii) enter into any employment, consulting or
agency agreement or commitment with any person or
modify or cancel any such agreement, commitment or
contract in effect on the date hereof containing an
obligation to pay or accrue more than $75,000
annually (excluding sales commission paid at a rate
which is consistent with past practices and is in the
ordinary course of business) for any one such person,
(viii) enter into, or modify or cancel, any
agreement, contract or commitment relating to capital
expenditures,
(ix) except as provided in this Article V, enter
into, or modify or cancel, any agreement, contract,
indenture or other instrument relating to the
borrowing of money or other contracting for
indebtedness or the guarantee of any obligation for
the borrowing of money or other contracting for
indebtedness, or incur additional indebtedness under
any existing loan agreement or credit facility except
in the ordinary course of business,
(x) enter into, or modify or cancel, any
agreement, contract or commitment relating to the
disposition or acquisition of any interest in any
business enterprise,
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(xi) enter into any new line of business, or
terminate any existing line of business, or open, or
agree to open, or close, or announce the closure of,
any facility,
(xii) enter into, or modify or cancel any other
agreement, contract or commitment which is not
terminable without payment of an amount greater than
$100,000 or which agreements, contracts or
commitments are not terminable without payment of an
amount greater than $250,000 in the aggregate,
(xiii) adopt or amend or waive any conditions under
any Employee Plan, except as required by law or as
contemplated in this Agreement, or
(xiv) modify, amend, cancel or terminate any
material agreement, contract or instrument required
to be disclosed under Article III or IV.
5.2 Notifications of Breach. MSI, Biosym and Corning, as the case
may be, shall promptly notify the other of any action or inaction by either of
them or any other person which shall render inaccurate in any material respect
any of the respective representations and warranties contained herein.
5.3 Third Party Consents. Corning, Biosym and MSI shall use their
respective good faith reasonable efforts to obtain the consent or approval of
each third party whose consent or approval is required for the consummation by
it of the transactions contemplated hereby.
5.4 Maintenance of Assets. Biosym and MSI shall cause the assets
and property used by each of them in the conduct of their businesses and the
businesses of their Subsidiaries (i) to be maintained in usable operating
condition, damage by casualty and ordinary wear and tear excepted, and (ii) to
be used in the ordinary course of business consistent with past practice.
5.5 Payment of Certain Expenses. Biosym and Corning shall, prior
to the Closing, pay any fees and any estimated fees and disbursements related
to the transactions contemplated by this Agreement for which they are
respectively obligated.
5.6 Cooperation; Satisfaction of Conditions. Corning, Biosym, MSI
and MSI Acquisition shall (a) give assistance, to the extent within their
respective control, to each other in the preparation of required filings and
the seeking of required consents in any manner reasonably requested and (b) use
their respective best efforts to pursue, to the extent within their respective
control, the satisfaction of all other conditions to the consummation of the
Merger.
5.7 Certain Federal Income Tax Reporting. Corning, Biosym and MSI
agree to report the Merger as a reorganization under Sections 368(a)(2)(D) of
the IRC in all federal income tax returns and reports filed by either of them.
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5.8 Contribution to Biosym Capital. Prior to the Closing Date,
pursuant to an agreement dated August 11, 1995, Corning will contribute to
Biosym's capital all of the debt and liability for funds and accrued interest
thereon furnished to Biosym by Corning, and included as an intercompany loan
and accrued interest on the Biosym Financial Statements through the Closing
Date.
5.9 Adjustment for Net Working Capital. Within twenty-five (25)
days after the Closing, Corning's internal accountants will prepare and present
to MSI and MSI's internal accountants will prepare and present to Corning
separate statements (the "Net Working Capital Statement") setting forth the net
working capital of Biosym in the case of Corning and MSI in the case of MSI, in
each case as of the Closing Date. If within ten (10) days of receipt of the
Net Working Capital Statements neither MSI nor Corning provide written notice
to the other of any objection to the other's Net Working Capital Statement, the
statements shall be deemed accepted by both parties. Corning, if cash must be
added to Biosym's net working capital, or MSI if cash must be added to MSI net
working capital, shall pay the other party in immediately available funds the
difference between the Biosym and the MSI net working capital amounts shown on
the Net Working Capital Statements (the "Net Working Capital Adjustment")
within fifteen (15) days of receipt of the Net Working Capital Statements. Any
notice of written objection to a Net Working Capital Statement made by a party
under this Section 5.9 shall be made within ten (10) days of a party's receipt
of the other party's Net Working Capital Statement and must specifically state
the nature of the objection and its effect on the Net Working Capital
Adjustment and on any payment otherwise due hereunder, including any disputed
amount otherwise due hereunder. Notwithstanding receipt of any notice
objection to a Net Working Capital Statement made in accordance with this
Section 5.9, the party required to make any payment hereunder shall, within the
fifteen (15) days from receipt of the other party's Net Working Capital
Statement, make so much of that payment to the other party as is not in dispute
between the parties as a result of any notice of objection made under this
Section 5.9. As used in this Section 5.9, "net working capital" shall mean
current assets less current liabilities derived in the normal course of
business, not however including deferred revenues, and in the case of MSI
current assets shall include only one half the total of prepayments or advance
payments for minimums or future sales made by TMSI or of its Asian-Pacific or
Japanese distributors unrecognized as revenue as of the Closing Date and an
amount equal to $240,000 recorded as receivables to be received in connection
with the Combi Chem Inc. transaction described in the MSI Disclosure Schedule
4.5(c), all as otherwise calculated using GAAP and consistent with the
calculation of net working capital for Biosym and MSI shown on Exhibit D hereto
as of June 30, 1995. Any disagreement between the parties with the Net Working
Capital Statement or the Net Working Capital Adjustment shall be resolved by
meetings between the parties and their independent accountants; provided
however if such resolution is not reached within thirty (30) days of receipt
by a party of written notice of an objection from the other party, the parties
hereto shall submit the disagreement to a third firm of independent accountants
to be selected by agreement of Corning and MSI which shall render its written
opinion solely on the accuracy of the Net Working Capital Adjustment
calculation, its conformity with GAAP and the requirements of this section and
such opinion shall be conclusive of any dispute between the parties. The cost
of such third firm of independent accountants shall be paid by the party who
asserts a calculation of the Net Working Capital Adjustment under this Section
which is furthest from the amount determined by the third firm of independent
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accountants in its written opinion. Corning or MSI, as the case may be, shall
make payment of any sums (if any) required pursuant to the above described
written opinion within ten (10) days of receipt of any such opinion. In
addition to the foregoing, Corning shall add to any amount otherwise due from
it under this Section 5.9 (or subtract from any amount due to it under this
Section 5.9), the amount, if any, Corning is required to pay pursuant to that
certain letter agreement of even date concerning certain employee payments. At
all times in performing the procedures outlined above including without
limitation the preparation of the above described statement or the calculations
adjustment and described herein the parties shall cooperate in good faith with
one another.
5.10 Tax Indemnity. Corning shall pay or cause to be paid and hold
MSI and MSI Acquisition, their directors, officers and employees harmless for
any liability for the payment of any federal, state, local or foreign income
tax, penalties, additions to tax and interest payable by Biosym as result of an
obligation to contribute under Treasury Regulatory Section 1.1502-6 or similar
law or regulation to the payment of taxes, penalties, additions to tax and/or
interest determined on a combined or consolidated basis of Corning or any
current or former member of Corning's group of corporations filing consolidated
returns under the IRC or applicable state or foreign statute or local law, if
such payment of taxes, penalties, additions to tax and/or interest resulted
solely from the fact that Biosym participated in the filing of such combined
and consolidated returns and do not relate to or result from Biosym's income,
business, property or operations.
5.11 ERISA Indemnity. Corning shall pay or cause to be paid and
hold MSI and MSI Acquisition, their directors, officers and employees harmless
for any liability under ERISA and/or the IRC (including costs incurred with
respect to any actions, suits, investigations or proceedings instituted or
threatened to be instituted) resulting from any Employee Plan of Corning or any
entity (other than Biosym) which together with Corning would be treated as a
single employer under Section 414 of the IRC.
5.12 Post Closing Audit. Within 180 days after the Closing Date,
the independent public accountants, selected by MSI and agreed to by Corning,
will conduct an audit of Biosym's Financial Statements (including consolidated
balance sheets, statements of income, statements of cash flows) for year ended
December 30, 1994 and that portion of 1995 ending on the Closing Date. MSI and
Biosym will cooperate in such audit and make personnel reasonably available for
such purposes. Corning will use reasonable efforts to minimize the time and
attention required by Biosym and MSI management on the audit. Corning will
bear all fees and expenses of any Corning personnel assigned to provide
assistance to such accountants and of such accountants up to $70,000.
5.13 Further Assurances. MSI has caused certain of the MSI
Shareholders representing at least 65% of the outstanding shares of common
stock of MSI to execute the attached letter agreement in Exhibit E hereto
setting forth their approval of the Merger in the event that Biosym and Corning
comply with the terms and conditions of this Agreement.
ARTICLE VI. Conditions of Merger
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6.1 Conditions of Obligations of MSI. The obligations of MSI to
consummate the Merger are subject to the fulfillment or satisfaction on and as
of the Closing Date, of each of the following conditions (any one or more of
which may be waived by MSI, but only in a writing signed by the president of
MSI or one of its vice presidents):
(a) Representations and Warranties of Corning and Biosym to be
True; Performance by Corning and Biosym. The representations and warranties of
Corning and Biosym contained in Article III shall be true and correct at the
Closing Date with the same effect as though made at such time, except insofar
as such representations and warranties are given as of a particular date, or
except to the extent waived hereunder or affected by the transactions
contemplated or permitted herein; provided, however, that any inaccuracy of a
representation or warranty, on the date hereof or on the Closing Date, shall
not result in the non-satisfaction of this Section 6.1(a) unless any such
inaccuracy or inaccuracies, either (i) individually or in the aggregate,
constitute facts or circumstances having or which could reasonably be expected
to have a Material Adverse Effect on Biosym or (ii) are willful and intentional
representations that constitute common law fraud. For purposes of this
Agreement, a "Material Adverse Effect," with respect to any person or entity,
means a material adverse effect on the condition (financial or otherwise),
business, properties, assets, liabilities (including contingent liabilities) or
results of operations of such person or entity and its subsidiaries, taken as a
whole. Corning and Biosym shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date; and Corning and Biosym shall have delivered to
MSI a certificate in form and substance satisfactory to MSI, dated the Closing
Date and signed by the respective Presidents or Vice Presidents to the
knowledge of such individual officers after due inquiry, to all such effects.
(b) No Legal Proceedings. No injunction shall have been obtained,
and no suit, action or other proceeding shall be pending before any court or
governmental agency in which it is sought to investigate, challenge, restrain
or prohibit the consummation of the transactions contemplated hereby or
involving a claim that the consummation of the transactions contemplated hereby
would result in a violation of any law, decree or regulation of any government
or agency thereof having jurisdiction.
(c) Statutory Requirements and Biosym Shareholder Approval. All
statutory requirements for the valid consummation by Biosym and of the
transactions contemplated by this Agreement shall have been fulfilled,
including without limitation any required Biosym shareholder approval; all
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities, required to be obtained in order to
permit consummation by Biosym and MSI of the transactions contemplated by this
Agreement and to permit the businesses presently carried on by Biosym to
continue substantially unimpaired immediately following the Closing Date, shall
have been obtained and shall be in full force and effect.
(d) Third Party Consents. All consents and approvals of the
parties listed in Biosym Disclosure Schedule ____ shall have been obtained,
including without limitation the landlord's
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consent or waiver of consent for the assignment of Biosym's lease of real
property at 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx.
(e) Opinion of Counsel for Biosym. MSI shall have received from
Xxxxxxx X. Xxxxxx, Assistant General Counsel of Corning, an opinion, dated the
Closing Date, substantially in form attached hereto as Exhibit F. In rendering
such opinion such counsel may rely, to the extent such counsel deems such
reliance necessary or appropriate, upon opinions of local counsel, reasonably
satisfactory to MSI as to matters of law and, as to matters of fact, upon
certificates of public officials and of any officer or officers of Biosym
provided the extent of such reliance is specified in such opinion.
(f) Resignations of Biosym Directors. Biosym shall have delivered
to MSI resignations of its Directors effective as of the Closing Date.
(g) Share Certificates. Tender of share certificates for all
outstanding stock of Biosym.
(h) Shareholders Agreement. Corning shall have executed and
delivered the Shareholders Agreement between Corning, MSI and certain MSI
shareholders listed in Schedule 4.1(n), substantially in the form of Exhibit G
hereto (the "Shareholders Agreement").
(i) Credit Facility. Execution of a revolving credit and loan
agreement in substantially the form of Exhibit H hereto.
(j) Contribution of Debt. Biosym shall have provided evidence
that the debt described in Section 5.8 was contributed to the capital of
Biosym.
(k) Tax Opinion. MSI shall have received the opinion of Xxxxxxx,
Phleger & Xxxxxxxx stating that the Merger and the transactions contemplated
hereby constitute a business reorganization under that Section 368 of the IRC.
(l) Certified Resolutions. Corning and Biosym shall have
delivered to MSI true and complete copies of the resolutions or actions by
written consent of their respective Boards of Directors and the stockholder of
Biosym pursuant to which the execution and consummation of this Agreement were
duly and validly authorized, certified by the respective Secretaries or
Assistant Secretaries to be in full force and effect as of the Closing Date.
6.2 Conditions of Obligations of Biosym. The obligations of
Biosym and Corning to consummate the Merger are subject to the fulfillment or
satisfaction, on and as of the Closing Date, of each of the following
conditions (any one or more of which may be waived by Biosym and Corning, but
only in a writing signed by the president of Biosym and Corning or one of their
respective vice presidents):
(a) Representations and Warranties of MSI and MSI Acquisition to
be True; Performance by MSI and MSI Acquisition. The representations and
warranties of MSI contained
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in Article IV shall be true and correct at the Closing Date with the same
effect as though made at such time, except insofar as such representations and
warranties are given as of a particular date or except to the extent waived
hereunder or affected by the transactions contemplated or permitted herein;
provided, however, that any inaccuracy of a representation or warranty, on the
date hereof or on the Closing Date, shall not result in the non-satisfaction of
this Section 6.2(a) unless any such inaccuracy or inaccuracies, either (i)
individually or in the aggregate, constitute facts or circumstances having or
which could reasonably be expected to have a Material Adverse Effect on MSI, or
(ii) are willful and intentional misrepresentations that constitute common law
fraud. For purposes of this Agreement, a "Material Adverse Effect", with
respect to any person or entity, means a material adverse effect on the
condition (financial or otherwise), business, properties, assets, liabilities
(including contingent liabilities) or results of operations of such person or
entity and its subsidiaries, taken as a whole. MSI shall have performed in all
material respects all obligations and complied in all material respects with
all covenants and conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing Date; and MSI shall have
delivered to Biosym a certificate in form and substance satisfactory to Biosym,
dated the Closing Date and signed by MSI's President or one of its Vice
Presidents to the knowledge of such officer after due inquiry, to all such
effects.
(b) No Legal Proceedings. No injunction shall have been obtained,
or no suit, action or other proceedings shall be pending before any court or
governmental agency in which it is sought to investigate, challenge, restrain
or prohibit the consummation of the transactions contemplated hereby, or in
which it is sought to obtain damages in connection therewith, or involving a
claim that the consummation of the transactions contemplated hereby would
result in a violation of any law, decree or regulation of any government or
agency thereof having jurisdiction.
(c) Statutory Requirements and MSI Shareholder Approval. All
statutory requirements for the valid consummation by MSI of the transactions
contemplated by this Agreement shall have been fulfilled, including without
limitation any required MSI Shareholder approval; all authorizations, consents
and approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit consummation by Biosym
and MSI of the transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
(d) Third Party Consents. All consents and approvals of the
parties listed in the MSI Disclosure Schedule ____, shall have been obtained.
(e) Opinion of Counsel for MSI. Biosym shall have received from
Xxxxxx Xxxxxx, Corporate Counsel of MSI, an opinion, dated the Closing Date,
substantially in the form attached hereto as Exhibit I. In rendering such
opinion such counsel may rely, to the extent such counsel deems such reliance
necessary or appropriate, upon opinions of local counsel reasonably
satisfactory to Biosym as to matters of law and, as to matters of fact, upon
certificates of public officials and of any officer or officers of MSI,
provided the extent of such reliance is specified in the opinion.
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(f) Tax Opinion. Corning and Biosym shall have received the
opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx stating that the Merger and the
transactions contemplated hereby constitute a business reorganization under
Section 368 of the IRC.
(g) Shareholders Agreement. Execution and delivery of the
Shareholders Agreement by MSI and certain MSI Shareholders.
(h) Share Certificates. Tender of share certificates for
5,776,558 shares of MSI Common Stock and for 1,467,825 shares of MSI Non-Voting
Convertible Stock.
(i) Certified Resolutions. MSI and MSI Acquisition shall have
delivered to Corning true and complete copies of the resolutions or actions by
written consent of their respective Board of Directors and the shareholder of
MSI Acquisition pursuant to which the execution and consummation of this
Agreement were duly and validly authorized, certified by their respective
Secretaries or Assistant Secretaries to be in full force and effect as of the
Closing Date.
(j) Restated Certificate of Incorporation. MSI shall have adopted
a Restated Certificate of Incorporation concerning the MSI Common Stock and MSI
Convertible Stock substantially as sent to MSI shareholders for approval on
August 2, 1995.
ARTICLE VII. Termination of Obligations and Waivers of Conditions;
Payment of Expenses
7.1 Termination of Agreement and Abandonment of Merger. Anything
herein to the contrary notwithstanding, this Agreement and the Merger
contemplated hereby may be terminated as follows, and in no other manner:
(a) Mutual Consent. At any time before the Closing Date by mutual
written consent of Biosym and MSI;
(b) Expiration Date. By either MSI or Biosym on written notice if
the Closing shall not have occurred by August 18, 1995 (which date may be
extended by mutual written agreement of MSI and Biosym); or
(c) Unilateral. By either party in the event it is not in
material breach of its obligations under this Agreement (the "Non-Breaching
Party"), and if there has been a breach by the other party (the "Breaching
Party") of (a) any of its representations and warranties hereunder such that
Section 6.1(a) (in the case of Biosym and Corning) and Section 6.2(a) (in the
case of MSI) will not be satisfied or (b) any of their respective covenants or
agreements contained in this Agreement such that Section 6.1(a) (in the case of
Biosym and Corning) and Section 6.2(a) (in the case of MSI and MSI Acquisition)
will not be satisfied, and, in both case (a) and case (b), such breach, if
capable of being cured, has not been cured at no material additional cost to
the Non-Breaching Party within ten (10) days (but in no event later than the
Effective Date) after written notice to the Breaching Party.
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7.2 Effect of Termination. In the event that this Agreement shall
be terminated pursuant to Section 7.1, all obligations of the parties hereto
under this Agreement shall terminate (except those under Sections 5.1(a)
concerning the return of information and 7.3 concerning payment of expenses and
under the Confidentiality Agreement dated February 27,, 1995 between Biosym and
MSI, which shall survive termination) and there shall be no liability of any
party to another (except by reason of a default hereunder which has not been
waived).
7.3 Payment of Expenses. If the Merger does not close, each of
the parties hereto will pay all of its own costs and expenses incident to their
respective negotiation and preparation of this Agreement and to their
performance of and compliance with all agreements and conditions contained
herein or therein on their part to be performed or complied with, including the
fees, expenses and disbursements of counsel and auditors. In addition, Corning
shall pay all legal fees incurred by Biosym in connection with the consummation
of the Merger.
ARTICLE VIII. Miscellaneous
8.1 Amendments. This Agreement and any Exhibit attached hereto
may be amended at any time by an instrument in writing signed respectively by
an authorized officer of, or individually by, each of the parties hereto,
making reference to this Agreement and expressing the plan or intention to
amend or modify it.
8.2 Further Instruments and Actions. Each party shall execute and
deliver such instruments and take such other action as shall be reasonably
required, or as shall be reasonably requested by any other party, in order to
carry out all transactions, agreements and covenants contemplated in this
Agreement, at or prior to the Closing Date.
8.3 Survival and Limitation of Representations and Warranties.
All claims under the respective representations and warranties of MSI and
Biosym contained herein and in any instrument delivered by them hereunder shall
be made no later than twelve (12) months after the Closing Date, except that
claims in connection with representations and warranties in Sections 3.6 or 4.6
may be made not later than the applicable statute of limitations for the
underlying tax liabilities described therein. The respective representations,
warranties and covenants of MSI and Biosym in this Agreement shall expire and
be terminated and extinguished twelve (12) months after the Closing Date;
provided however, the obligations of Corning under Sections 5.10 and 5.11 shall
survive for the relevant statutory period.
(b) No claim for damages arising out of any breach of the
representations and warranties in Article III or IV shall be made unless it is
brought in good faith and in the aggregate the damage or loss for all such
breaches is in excess of $250,000. All claims arising out of breach of the
representations and warranties in Article III may be set off against claims
arising out of a breach of the representations and warranties of Article IV and
claims arising out of a breach of the representations and warranties in Article
IV may be set off against claims arising out of breach of the representations
and warranties of Article III.
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8.4 Arbitration. All disputes arising in connection with this
Agreement, the Merger or transactions contemplated herein, excluding however
disagreements described in Section 5.11 between the parties which are not
resolved by means of direct negotiations between them shall be finally settled
by arbitration in accordance with this Section 8.4. The arbitration shall be
held in or around Chicago, Illinois and shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association (AAA)
by three arbitrators, appointed by consent of Corning and MSI, which consent
shall not be unreasonably withheld or delayed. If the parties cannot agree
upon the arbitrators, either may apply to the AAA to appoint the arbitrators.
The arbitrators shall resolve the dispute within 60 days after the dispute is
submitted to them but shall not be empowered to award exemplary or punitive
damages. Any decision by the arbitrators shall be binding upon the parties and
may be entered as a final judgment in any court having jurisdiction. The cost
of any arbitration proceeding shall be borne by the parties as the arbitrators
shall determine if the parties have not otherwise agreed. The arbitrators
shall render their final decision in writing to the parties, which decision
shall explain the reasons therefor.
8.5 Publicity. MSI and Biosym agree that all press releases,
announcements and other publicity concerning this Agreement shall be subject to
the prior approval by both of them except to the extent required by law or
applicable regulation.
8.6 Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the
substantive laws of the State of Delaware.
8.7 Notices. Any notices or other communications required or
permitted thereunder shall be sufficiently given if hand delivered or sent by
registered mail or certified mail, postage prepaid, or by overnight courier or
delivery service addressed, if to Biosym: c/o Corning Incorporated, Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx 00000, Attention: Secretary, cc: General
Counsel, and if to MSI: Molecular Simulations Inc., 00 Xxx Xxxxxxx Xxxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000, Attention: President, cc:
Corporate Counsel, or such other address as shall be furnished in writing by
any of the parties, and any such notice or communication shall be deemed to
have been given as of the date so mailed (except that a notice of change of
address shall not be deemed to have been given until received by the
addressee).
8.8 No Assignment. This Agreement may not be assigned, by
operation of law or otherwise, and any attempt to do so shall be null and void.
8.9 Headings. The descriptive headings of the several Articles,
Sections and paragraphs of this Agreement are inserted for convenience only and
do not constitute part of this Agreement.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties hereto and delivered to each of the other parties hereto.
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8.11 Waiver. Any failure of either party to insist upon
performance of any provision of this Agreement shall not constitute a waiver of
performance of the same obligation at a different time or any other right which
such party may have under this Agreement.
8.12 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances shall continue in full force and
effect and in no way be affected, impaired or invalidated.
8.13 Entire Agreement, Modification and Interpretation. This
Agreement, including the Schedules and Exhibits attached hereto and the
documents referred to herein, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and shall supersede
all previous negotiations, commitments, writings or letters of intent with
respect to such subject matter. This Agreement may not be amended, modified or
waived except by a subsequent written agreement duly signed by the authorized
representatives of the parties hereto. No principle of construction or
interpretation shall be applied to construe this Agreement or any part of it
against the party which drafted the Agreement.
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
MOLECULAR SIMULATIONS INC.
By: /s/ Molecular Simulations Inc.
------------------------------
MSI ACQUISITION INC.
By: /s/ MSI Acquisition Inc.
------------------------------
BIOSYM TECHNOLOGIES, INC.
By: /s/ Biosym Technologies, Inc.
------------------------------
CORNING INCORPORATED
By: /s/ Corning Incorporated
-------------------------------
