EXHIBIT 2.1
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and among
CLINICAL DATA, INC.,
SAFARI ACQUISITION CORPORATION
and
GENAISSANCE PHARMACEUTICALS, INC.
Dated as of June 20, 2005
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER...............................................1
1.1 Effective Time of the Merger.................................1
1.2 Closing......................................................2
1.3 Amendment of Company Charter.................................2
1.4 Amendment of Parent Charter..................................2
1.5 Effects of the Merger........................................2
ARTICLE II CONVERSION OF SECURITIES.................................3
2.1 Conversion of Capital Stock..................................3
2.2 Exchange of Certificates.....................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............8
3.1 Organization, Standing and Power; Subsidiaries...............8
3.2 Capitalization..............................................10
3.3 Authority; No Conflict; Required Filings and Consents.......12
3.4 SEC Filings; Financial Statements; Information Provided.....14
3.5 No Undisclosed Liabilities; Indebtedness....................15
3.6 Absence of Certain Changes or Events........................16
3.7 Taxes.......................................................16
3.8 Owned and Leased Real Properties............................18
3.9 Intellectual Property.......................................18
3.10 Agreements, Contracts and Commitments; Government Contracts.20
3.11 Litigation; Product Liability...............................21
3.12 Environmental Matters.......................................22
3.13 Employee Benefit Plans......................................23
3.14 Compliance With Laws........................................25
3.15 Permits.....................................................25
3.16 Labor Matters...............................................26
3.17 Insurance...................................................26
3.18 Assets......................................................26
3.19 Customers and Suppliers.....................................27
3.20 Opinion of Financial Advisor................................27
3.21 Section 203 of the DGCL Not Applicable......................27
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3.22 Brokers; Schedule of Fees and Expenses......................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
TRANSITORY SUBSIDIARY...................................27
4.1 Organization, Standing and Power............................28
4.2 Capitalization..............................................29
4.3 Authority; No Conflict; Required Filings and Consents.......30
4.4 SEC Filings; Financial Statements; Information Provided.....31
4.5 Absence of Certain Changes or Events........................32
4.6 Intellectual Property.......................................33
4.7 Agreements, Contracts and Commitments.......................33
4.8 Litigation; Product Liability...............................34
4.9 Compliance With Laws........................................34
4.10 Permits.....................................................34
4.11 Operations of the Transitory Subsidiary.....................34
4.12 Opinion of Financial Advisor................................35
4.13 Brokers; Schedule of Fees and Expenses......................35
ARTICLE V CONDUCT OF BUSINESS.....................................35
5.1 Covenants of the Company....................................35
5.2 Confidentiality.............................................38
ARTICLE VI ADDITIONAL AGREEMENTS...................................38
6.1 No Solicitation.............................................38
6.2 Joint Proxy Statement/Prospectus; Registration Statement....41
6.3 Nasdaq Quotation............................................42
6.4 Access to Information.......................................42
6.5 Stockholders Meetings.......................................42
6.6 Legal Conditions to the Merger..............................44
6.7 Public Disclosure...........................................45
6.8 Section 368(a) Reorganization...............................45
6.9 Affiliate Legends...........................................45
6.10 Nasdaq Stock Market Listing.................................46
6.11 Company Stock Plans and Company Warrants....................46
6.12 Indemnification.............................................47
6.13 Notification of Certain Matters.............................48
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6.14 Exemption from Liability Under Section 16(b)................48
ARTICLE VII CONDITIONS TO MERGER....................................49
7.1 Conditions to Each Party's Obligation To Effect the Merger..49
7.2 Additional Conditions to Obligations of the Parent and the
Transitory Subsidiary.......................................50
7.3 Additional Conditions to Obligations of the Company.........51
ARTICLE VIII TERMINATION AND AMENDMENT...............................52
8.1 Termination.................................................52
8.2 Effect of Termination.......................................53
8.3 Fees and Expenses...........................................54
8.4 Amendment...................................................55
8.5 Extension; Waiver...........................................56
ARTICLE IX MISCELLANEOUS...........................................56
9.1 Nonsurvival of Representations and Warranties...............56
9.2 Notices.....................................................56
9.3 Entire Agreement............................................57
9.4 No Third Party Beneficiaries................................57
9.5 Assignment..................................................57
9.6 Severability................................................57
9.7 Counterparts and Signature..................................58
9.8 Interpretation..............................................58
9.9 Governing Law...............................................58
9.10 Remedies....................................................58
9.11 Submission to Jurisdiction..................................59
9.12 Waiver of Jury Trial........................................59
Schedule A Parties to Parent Voting Agreements
Schedule B Parties to Company Voting Agreements
Exhibit A Form of Parent Voting Agreement
Exhibit B Form of Company Voting Agreement
Exhibit C Terms of Parent Series A Preferred Stock
Exhibit D Certificate of Incorporation of the Surviving Corporation
Exhibit E By-laws of the Transitory Subsidiary
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TABLE OF DEFINED TERMS
REFERENCE IN
TERMS AGREEMENT
----- ---------
Acquisition Proposal Section 6.1(f)
Adjusted Warrant Section 6.11(d)
Affiliate Section 3.2(d)
Agreement Preamble
Alternative Acquisition Agreement Section 6.1(b)(ii)
Antitrust Laws Section 6.6(b)
Antitrust Order Section 6.6(b)
CERCLA Section 3.12(f)
Certificate of Merger Section 1.1
Certificates Section 2.2(a)
CIBC World Markets Section 3.20
Closing Section 1.2
Closing Date Section 1.2
Code Preamble
Common Exchange Ratio Section 2.1(c)
Company Preamble
Company Balance Sheet Section 3.4(b)
Company Board Section 3.3(a)
Company Common Stock Section 2.1(b)
Company Disclosure Schedule Article III
Company Employee Plans Section 3.13(a)
Company Insiders Section 6.16(c)
Company Intellectual Property Section 3.9(b)
Company Leases Section 3.8(b)
Company Material Adverse Effect Section 3.1(a)
Company Material Contracts Section 3.10(a)
Company Permits Section 3.15
Company Preferred Stock Section 2.1(b)
Company SEC Reports Section 3.4(a)
Company Stock Options Section 3.2(c)
Company Stock Plans Section 3.2(c)
Company Stockholder Approval Section 3.3(a)
Company Stockholders Meeting Section 3.4(c)
Company Third Party Intellectual Property Section 3.9(b)
Company Voting Agreements Preamble
Company Voting Proposal Section 3.3(a)
Company Warrants Section 3.2(c)
Confidential Business Information Section 3.9(a)
Confidentiality Agreement Section 5.2
Costs Section 6.12(a)
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REFERENCE IN
TERMS AGREEMENT
----- ---------
Covered Parties Section 6.12(a)
Dissenting Shares Section 2.1(e)(i)
DGCL Preamble
Effective Time Section 1.1
Employee Benefit Plan Section 3.13(a)
Environmental Law Section 3.12(f)
ERISA Affiliate Section 3.13(a)
ERISA Section 3.13(a)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Exchange Act Section 3.3(c)
GAAP Section 3.4(b)
Governmental Entity Section 3.3(c)
Insurance Policies Section 3.17
Intellectual Property Section 3.9(a)
Joint Proxy Statement/Prospectus Section 3.4(c)
Liens Section 3.2(f)
Materials of Environmental Concern Section 3.12(g)
Merger Preamble
New Offer Section 6.1(b)(iii)
Ordinary Course of Business Section 3.2(d)
Outside Date Section 8.1(b)
Parent Preamble
Parent Balance Sheet Section 4.4(b)
Parent Board Section 4.3(a)
Parent Common Stock Section 2.1(c)
Parent Disclosure Schedule Article IV
Parent Intellectual Property Section 4.6(b)
Parent Material Adverse Effect Section 4.1
Parent Material Contracts Section 4.7
Parent Permits Section 4.10
Parent Preferred Stock Section 1.4
Parent Third Party Intellectual Property Section 4.6(b)
Parent SEC Reports Section 4.4(a)
Parent Series A Preferred Stock Section 1.4
Parent Stockholder Approval Section 4.3(a)
Parent Stockholders Meeting Section 3.4(c)
Parent Stock Plans Section 4.2(b)
Parent Voting Agreements Preamble
Parent Voting Proposal Section 3.4(c)
Preferred Exchange Ratio Section 2.1(d)
Publicly Available Software Section 3.9(g)
Registration Statement Section 3.4(c)
Regulation M-A Filing Section 3.4(c)
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REFERENCE IN
TERMS AGREEMENT
----- ---------
Representatives Section 6.1(a)
Rule 145 Affiliates Section 6.9
SEC Section 3.3(c)
Section 16 Information Section 6.14(b)
Securities Act Section 3.2(d)
Specified Time Section 6.1(a)
Subsidiary Section 3.1(b)
Superior Proposal Section 6.1(f)
Surviving Corporation Section 1.5
Tax Returns Section 3.7(a)
Taxes Section 3.7(a)
Transitory Subsidiary Preamble
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 20,
2005, is by and among Clinical Data, Inc., a Delaware corporation (the
"Parent"), Safari Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Parent (the "Transitory Subsidiary"), and
Genaissance Pharmaceuticals, Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Parent and the Company deem it
advisable and in the best interests of each corporation and their respective
stockholders that the Transitory Subsidiary merge into the Company;
WHEREAS, the transaction shall be effected through a merger (the "Merger")
of the Transitory Subsidiary into the Company in accordance with the terms of
this Agreement and the General Corporation Law of the State of Delaware (the
"DGCL"), as a result of which the Company shall become a wholly owned subsidiary
of the Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the Company's willingness to enter into this
Agreement, the stockholders of the Parent listed on Schedule A have entered into
Stockholder Agreements, dated as of the date of this Agreement, in the form
attached hereto as Exhibit A (the "Parent Voting Agreements"), pursuant to which
such stockholders have, among other things, agreed to give the Company a proxy
to vote all of the shares of capital stock of the Parent that such stockholders
own;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the Parent's willingness to enter into this
Agreement, the stockholders of the Company listed on Schedule B have entered
into Stockholder Agreements, dated as of the date of this Agreement, in the form
attached hereto as Exhibit B (the "Company Voting Agreements"), pursuant to
which such stockholders have, among other things, agreed to give the Parent a
proxy to vote all of the shares of capital stock of the Company that such
stockholders own; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
Parent, the Transitory Subsidiary and the Company agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, prior to the Closing, the Parent shall prepare, and on the Closing
Date or as soon as practicable thereafter the Parent shall cause to be filed
with the Secretary of State of the State of Delaware, a certificate of merger
(the "Certificate of Merger") in such form as is required by, and executed by
the Company in accordance with, the relevant provisions of the DGCL and shall
make all other filings required under the DGCL. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such later time as is established by the
Parent and the Company and set forth in the Certificate of Merger (the
"Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") shall take place at
10:00 a.m., Eastern time, on a date to be specified by the Parent and the
Company (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than delivery of items to be delivered at the Closing and other than
satisfaction of those conditions that by their nature are to be satisfied at the
Closing, it being understood that the occurrence of the Closing shall remain
subject to the delivery of such items and the satisfaction or waiver of such
conditions at the Closing), at the offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and
Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless another date, place or
time is agreed to in writing by the Parent and the Company.
1.3 Amendment of Company Charter. Prior to the Effective Time, the Company
shall amend its Certificate of Incorporation by further amending its Certificate
of Designation dated October 29, 2003 to provide that the effects of the Merger
shall not be considered a redemption or deemed liquidation pursuant to the terms
of such Certificate of Designation, as amended.
1.4 Amendment of Parent Charter. Immediately prior to the Effective Time,
the Parent shall cause its Certificate of Incorporation to be amended by the
filing of a Certificate of Designations designating a new series of its
preferred stock, $.01 par value per share (the "Parent Preferred Stock"), with
the rights, preferences and privileges as set forth in the Terms of Parent
Series A Preferred Stock attached as Exhibit C (as so designated, the "Parent
Series A Preferred Stock"), which shall be exchanged in accordance with Article
II hereof.
1.5 Effects of the Merger. At the Effective Time (i) the separate existence
of the Transitory Subsidiary shall cease and the Transitory Subsidiary shall be
merged with and into the Company (the Company following the Merger is sometimes
referred to herein as the "Surviving Corporation"), (ii) the Certificate of
Incorporation of the Company, as amended prior to the Effective Time and in
accordance with Section 1.3 above, shall be further amended and restated to read
in its entirety as set forth on Exhibit D hereto, and, as so amended, shall be
the Certificate of Incorporation of the Surviving Corporation, until further
amended in accordance with the DGCL, (iii) the officers and directors of the
Transitory Subsidiary shall be the officers and directors of the Surviving
Corporation, and (iv) the By-laws of the Transitory Subsidiary, a copy of which
is attached hereto as Exhibit E, shall be amended to change all references to
the name of the Transitory Subsidiary to refer to the name of the Company, and,
as so amended, such By-laws shall be the By-laws of the Surviving Corporation,
until further amended in accordance with the DGCL. The Merger shall have the
effects set forth in Section 259 of the DGCL. In addition, effective as of the
Effective Time, Parent shall take all reasonable steps to increase its Board of
Directors to seven (7) members and to appoint Xxxxxx Xxxxx, Xxxxx Xxxxx and Skip
Xxxxx to the Board of Directors of Parent.
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ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of the
capital stock of the Company or capital stock of the Transitory Subsidiary:
(a) Capital Stock of the Transitory Subsidiary. Each share of the
common stock of the Transitory Subsidiary issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock, $.01 par value per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
of common stock, $.001 par value per share ("Company Common Stock"), and
preferred stock, $.001 par value per share ("Company Preferred Stock"), of the
Company that are owned by the Company as treasury stock or by any wholly-owned
Subsidiary of the Company and any shares of Company Common Stock or Company
Preferred Stock owned by the Parent, the Transitory Subsidiary or any other
wholly-owned Subsidiary of the Parent immediately prior to the Effective Time
shall be cancelled and shall cease to exist and no stock of the Parent or other
consideration shall be delivered in exchange therefor.
(c) Exchange Ratio for Company Common Stock. Subject to Section 2.2,
each share of Company Common Stock (other than (i) shares to be cancelled in
accordance with Section 2.1(b) and (ii) Dissenting Shares (defined in Section
2.1(e)) issued and outstanding immediately prior to the Effective Time shall be
automatically converted into the right to receive 0.065 shares (the "Common
Exchange Ratio") of common stock, $.01 par value per share, of the Parent
("Parent Common Stock") upon surrender of the certificate representing such
share of Company Common Stock in the manner provided in Section 2.2. As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and
each holder of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right to
receive the shares of Parent Common Stock pursuant to this Section 2.1(c) and
any cash in lieu of fractional shares of Parent Common Stock to be issued or
paid in consideration therefor upon the surrender of such certificate in
accordance with Section 2.2, without interest.
(d) Exchange Ratio for Company Preferred Stock. Subject to Section
2.2, each share of Company Preferred Stock (other than (i) shares to be
cancelled in accordance with Section 2.1(b) and (ii) Dissenting Shares (defined
in Section 2.1 (e))) issued and outstanding immediately prior to the Effective
Time shall be automatically converted into the right to receive that number of
shares as calculated in accordance with Section 1 of the Terms of Parent Series
A Preferred Stock attached hereto as Exhibit C (such formula, the "Preferred
Exchange Ratio") of Parent Series A Preferred Stock upon surrender of the
certificate(s) representing all such shares of Company Preferred Stock in the
manner provided in Section 2.2. As of the Effective Time, all such shares of
Company Preferred Stock shall no longer be outstanding and shall automatically
be cancelled and shall cease to exist, and the holder of the certificate(s)
representing such shares of Company Preferred Stock shall cease to have any
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rights with respect thereto, except the right to receive the shares of Parent
Series A Preferred Stock pursuant to this Section 2.1(d).
(e) Dissenting Shares.
(i) Shares of Company Common Stock and Company Preferred Stock
held by stockholders entitled to appraisal rights under Section 262 of the DGCL,
who have properly exercised and perfected appraisal rights with respect thereto
in accordance with Section 262 (collectively, "Dissenting Shares") and who have
not withdrawn their demand for appraisal in accordance with Section 262, shall
not be converted into the right to receive shares of Parent Common Stock or
Parent Series A Preferred Stock, as the case may be. From and after the
Effective Time, a stockholder who has properly exercised such appraisal rights
shall no longer retain any rights of a stockholder of the Company or the
Surviving Corporation, except those provided under the DGCL.
(ii) Holders of no more than four percent (4%) of the Company's
total outstanding capital stock (which shall consist of the Company Common Stock
and the Company Preferred Stock outstanding on the date hereof), on an
as-converted basis, shall exercise appraisal rights in accordance with Section
262 of the DGCL. The shareholders parties to the Company Voting Agreements shall
have affirmatively waived such appraisal rights in their respective Company
Voting Agreements. This Agreement may be terminated in accordance with Section
8.1(f)(i), at the election of the Parent, if the Dissenting Shares are greater
than such percentage.
(iii) The Company shall give the Parent (A) prompt notice of any
written demands under Section 262 of the DGCL with respect to any shares of
capital stock of the Company, any withdrawal of any such demands, and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
right to participate in all negotiations and proceedings with respect to any
demands under Section 262 with respect to any shares of capital stock of the
Company. The Company shall cooperate with the Parent concerning, and shall not,
except with the prior written consent of the Parent, voluntarily make any
payment with respect to, or offer to settle or settle, any such demands.
(f) Adjustments to Exchange Ratios. The Common Exchange Ratio and
Preferred Exchange Ratio shall be adjusted to reflect fully the effect of any
reclassification, stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Parent Common Stock or
Parent Series A Preferred Stock or Company Common Stock or Company Preferred
Stock), reorganization, recapitalization or other like change with respect to
Parent Common Stock or Parent Series A Preferred Stock or Company Common Stock
or Company Preferred Stock occurring (or for which a record date is established)
after the date hereof and prior to the Effective Time.
(g) Unvested Stock. At the Effective Time, any shares of Parent Common
Stock issued in accordance with Section 2.1(c) with respect to any unvested
shares of Company Common Stock awarded to employees, directors or consultants
pursuant to any of the Company's plans or arrangements and outstanding
immediately prior to the Effective Time shall remain subject to the same terms,
restrictions and vesting schedule as in effect immediately prior to the
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Effective Time, except to the extent by their terms such unvested shares of
Company Common Stock vest at the Effective Time. The Company shall not take or
permit any action which would accelerate vesting of any unvested shares, except
to the extent required by their terms as in effect on the date hereof. Copies of
the relevant agreements governing such shares and the vesting thereof have been
provided to the Parent. All outstanding rights which the Company may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock shall be assigned to the Parent in the Merger and shall thereafter
be exercisable by the Parent upon the same terms and conditions in effect
immediately prior to the Effective Time, except that the shares purchasable
pursuant to such rights and the purchase price payable per share shall be
appropriately adjusted to reflect the Exchange Ratio. The Company shall take all
steps necessary to cause the foregoing provisions of this Section 2.1(g) to
occur.
(h) Treatment of Company Stock Options and Company Warrants. Following
the Effective Time, Company Stock Options and Company Warrants shall be treated
in the manner set forth in Section 6.11.
2.2 Exchange of Certificates. The procedures for exchanging outstanding
shares of Company Common Stock or Company Preferred Stock for Parent Common
Stock or Parent Series A Preferred Stock pursuant to the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, the Parent shall deposit
with the Parent's transfer agent or another bank or trust company designated by
the Parent and reasonably acceptable to the Company (the "Exchange Agent"), for
the benefit of the holders of shares of Company Common Stock and/or Company
Preferred Stock, for exchange in accordance with this Section 2.2, through the
Exchange Agent, (i) certificates representing the shares of Parent Common Stock
and Parent Series A Preferred Stock (such shares of Parent Common Stock and
shares of Parent Series A Preferred Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time,
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.1 in exchange for outstanding shares of Company Common Stock and
Company Preferred Stock, respectively, (ii) cash in an amount sufficient to make
payments for fractional shares of Parent Common Stock required pursuant to
Section 2.2(e), and (iii) any dividends or distributions to which holders of
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock and/or Company Preferred Stock (the
"Certificates") whose shares were converted pursuant to Section 2.1 into the
right to receive shares of Parent Common Stock or Parent Series A Preferred
Stock, as the case may be, may then be entitled pursuant to Section 2.2(c).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as the Parent may reasonably specify) and
(ii) instructions for effecting the surrender of the Certificates in exchange
for shares of Parent Common Stock or Parent Series A Preferred Stock, as the
case may be, (plus cash in lieu of fractional shares, if any, of Parent Common
Stock and, any dividends or distributions on either Parent Common Stock or
Parent Series A Preferred Stock, as provided below). Upon surrender of a
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Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock or Parent Series A Preferred Stock, as the case
may be, which such holder has the right to receive pursuant to the provisions of
this Article II plus cash in lieu of fractional shares pursuant to Section
2.2(e) and any dividends or distributions then payable pursuant to Section
2.2(c), and the Certificate so surrendered shall immediately be cancelled. In
the event of a transfer of ownership of Company Common Stock or Company
Preferred Stock which is not registered in the transfer records of the Company,
shares of Parent Common Stock or Parent Series A Preferred Stock, as the case
may be, pursuant to Section 2.1(c) and (d) plus cash in lieu of fractional
shares pursuant to Section 2.2(e) and any dividends or distributions then
payable pursuant to Section 2.2(c) may be issued or paid to a person other than
the person in whose name the Certificate so surrendered is registered, if such
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender shares of Parent Common Stock or Parent Series A Preferred Stock, as
the case may be, pursuant to Section 2.1(c) and (d) plus cash in lieu of
fractional shares pursuant to Section 2.2(e) and any dividends or distributions
then payable pursuant to Section 2.2(c) as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock or Parent Series A Preferred Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be issued and paid to the record holder of the
Certificate, at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time previously paid with
respect to such whole shares of Parent Common Stock or Parent Series A Preferred
Stock, without interest, and, at the appropriate payment date, the amount of
dividends or other distributions having a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender that are
payable with respect to such whole shares of Parent Common Stock or Parent
Series A Preferred Stock.
(d) No Further Ownership Rights in Company Capital Stock. All shares
of Parent Common Stock and Parent Series A Preferred Stock issued upon the
surrender for exchange of Certificates in accordance with the terms hereof
(including any cash or dividends or other distributions paid pursuant to
Sections 2.2(c) or 2.2(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to such shares of Company Common
Stock and/or Company Preferred Stock, and from and after the Effective Time
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock or Company
Preferred Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Article II.
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(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock or Parent Series A Preferred Stock
shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests otherwise issuable shall not entitle the owner
thereof to vote or to any other rights of a stockholder of the Parent.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock converted pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock (after
taking into account all Certificates delivered by such holder and the aggregate
number of shares of Company Common Stock and/or Company Preferred Stock
represented thereby) shall receive, in lieu thereof, cash (without interest) in
an amount equal to such fractional part of a share of Parent Common Stock
multiplied by the average of the last reported sales prices of Parent Common
Stock at the 4:00 p.m., Eastern time, end of regular trading hours on The Nasdaq
Stock Market or The Nasdaq Small Cap Market, as applicable, during the ten
consecutive trading days ending on the last trading day prior to the Effective
Time. The number of shares of Parent Series A Preferred Stock to be issued in
accordance with Section 2.1(d) hereof shall be fixed and, accordingly, no
fractional shares shall result in such exchange.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock and/or
Company Preferred Stock for 180 days after the Effective Time shall be delivered
to the Parent, upon demand, and any holder of Company Common Stock or Company
Preferred Stock who has not previously complied with this Section 2.2 shall
thereafter look only to the Parent, as a general unsecured creditor, for payment
of its claim for Parent Common Stock or Parent Series A Preferred Stock, as the
case may be, any cash in lieu of fractional shares of Parent Common Stock, and
any dividends or distributions with respect to Parent Common Stock and Parent
Series A Preferred Stock.
(g) No Liability. To the extent permitted by applicable law, none of
the Parent, the Transitory Subsidiary, the Company, the Surviving Corporation or
the Exchange Agent shall be liable to any holder of shares of Company Common
Stock, Company Preferred Stock, Parent Common Stock or Parent Series A Preferred
Stock, as the case may be, for such shares (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to one year after the Effective Time (or immediately
prior to such earlier date on which any shares of Parent Common Stock or Parent
Series A Preferred Stock, and any cash payable to the holder of such Certificate
or any dividends or distributions payable to the holder of such Certificate
pursuant to this Article II would otherwise escheat to or become the property of
any Governmental Entity), any such shares of Parent Common Stock, Parent Series
A Preferred Stock or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) Withholding Rights. Each of the Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock or Company Preferred Stock such amounts as it reasonably determines
that it is required to deduct and withhold with respect to the making of such
payment under the Code, or any other applicable provision of law. To the extent
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that amounts are so withheld by the Surviving Corporation or the Parent, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock or Company Preferred Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or the Parent, as the case may
be.
(i) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, and an indemnity
agreement and the posting by such person of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and the Transitory
Subsidiary that the statements contained in this Article III are true and
correct, except as expressly set forth herein or in the disclosure schedule
delivered by the Company to the Parent and the Transitory Subsidiary on or
before the date of this Agreement (the "Company Disclosure Schedule"). The
Company Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify (1) the corresponding paragraph in
this Article III and (2) the other paragraphs in this Article III. Disclosure of
any fact or item in any section of the attached Company Disclosure Schedule
referenced by a particular section of the Agreement shall, should the existence
of the fact or item or its contents be relevant to any other section of the
attached Disclosure Schedules, be deemed to be disclosed with respect to such
other section of the attached Disclosure Schedules whether or not an explicit
cross reference appears.
3.1 Organization, Standing and Power; Subsidiaries.
(a) Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted, and is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction listed in Section
3.1 of the Company Disclosure Schedule, which jurisdictions constitute the only
jurisdictions in which the character of the properties it owns, operates or
leases or the nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in good standing,
individually or in the aggregate, that have not had, and are not reasonably
likely to have, a Company Material Adverse Effect. For purposes of this
Agreement, the term "Company Material Adverse Effect" means any material adverse
change, event, circumstance or development with respect to, or material adverse
effect on, (i) the business, intellectual property rights, assets, financial
condition or results of operations of the Company and its Subsidiaries, taken as
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a whole, (ii) the ability of the Company to consummate the transactions
contemplated by this Agreement or (iii) the ability of the Parent to operate the
business of the Company and each of its Subsidiaries immediately after the
Closing; provided, however, that none of the following (individually or in
combination) shall be deemed to constitute, or shall be taken into account in
determining whether there has been or would be, a Company Material Adverse
Effect: (A) any adverse change or effect resulting from or relating to general
business, economic or financial market conditions; (B) any adverse change or
effect resulting from or relating to conditions generally affecting the industry
or sector in which the Company or any of its Subsidiaries operates or competes;
(C) any adverse change or effect resulting from or relating to any acts of
terrorism or war or any armed hostilities; (D) any reduction in the Company's
consolidated gross revenues for (i) the quarter ended June 30, 2005, compared to
the quarter ended June 30, 2004, equal to or less than 20%, and (ii) each
quarterly period in 2005 thereafter measured against the corresponding prior
year period equal to or less than 10%; (E) any non-material disruption in any
relationship with any supplier or partner, or any non-material impairment of the
terms with any licensor or licensee, in areas of the Company's business that are
related to its Familion test, Long QT technology, TPMT technology, HAP database
and Decogen Informatics System; (F) any adverse change or effect resulting from
or relating to a claim, action or proceeding resulting from or relating to the
announcement or pendency of the Merger or any of the other transactions
contemplated by this Agreement; (G) any adverse change or effect resulting from
or relating to the taking of any action to which Parent shall have consented;
(H) any adverse change or effect resulting from or relating to any breach by
Parent of any provision of this Agreement or any other action by Parent or any
Subsidiary of Parent; or (I) any adverse change or effect resulting from or
relating to changes in GAAP (as defined herein) which are published and released
for the industry in which the Company operates (but specifically excluding any
changes in GAAP and accounting policies of the Company which are implemented by
the Company after the date hereof). An adverse change in the stock price of the
Company Common Stock shall not, in and of itself, be deemed to have a Company
Material Adverse Effect. For the avoidance of doubt, the parties agree that the
terms "material", "materially" or "materiality" as used in this Agreement with
an initial lower case "m" shall have their respective customary and ordinary
meanings, without regard to the meanings ascribed to Company Material Adverse
Effect in the prior sentence of this paragraph or Parent Material Adverse Effect
in Section 4.1.
(b) Section 3.1(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of all of the Company's Subsidiaries and the
Company's direct or indirect equity interest therein. Except as set forth in
Section 3.1(b) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries directly or indirectly owns any equity, membership,
partnership or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity, membership, partnership or similar
interest in, any corporation, partnership, joint venture, limited liability
company or other business association or entity, whether incorporated or
unincorporated, and neither the Company, nor any of its Subsidiaries, has, at
any time, been a general partner or managing member of any general partnership,
limited partnership, limited liability company or other entity. As used in this
Agreement, the term "Subsidiary" means, with respect to a party, any
corporation, partnership, joint venture, limited liability company or other
business association or entity, whether incorporated or unincorporated, of which
(i) such party or any other Subsidiary of such party is a general partner or a
managing member (excluding partnerships, the general partnership interests of
which held by such party and/or one or more of its Subsidiaries do not have a
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majority of the voting interest in such partnership), (ii) such party and/or one
or more of its Subsidiaries holds voting power to elect a majority of the board
of directors or other governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or indirectly, owns or
controls more than 50% of the equity, membership, partnership or similar
interests.
(c) The Company has delivered to the Parent complete and accurate
copies of the Certificate of Incorporation and By-laws of the Company and of the
charter, by-laws or other organizational documents of each Subsidiary of the
Company.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 58,000,000
shares of Company Common Stock and 1,000,000 shares of Company Preferred Stock,
of which 460,000 shares are designated Series A Preferred Stock. The rights and
privileges of each class of the Company's capital stock are as set forth in the
Company's Certificate of Incorporation. As of June 15, 2005, (i) 35,348,497
shares of Company Common Stock were issued and outstanding, (ii) 66,070 shares
of Company Common Stock were held in the treasury of the Company or by
Subsidiaries of the Company, and (iii) 460,000 shares of Series A Preferred
Stock were issued or outstanding.
(b) Section 3.2(b) of the Company Disclosure Schedule lists all issued
and outstanding shares of Company Common Stock that constitute restricted stock
or that are otherwise subject to a repurchase or redemption right or right of
first refusal in favor of the Company; the name of the applicable stockholder,
the lapsing schedule for any such shares, including the extent to which any such
repurchase or redemption right or right of first refusal has lapsed as of the
date of this Agreement, whether (and to what extent) the lapsing will be
accelerated in any way by the transactions contemplated by this Agreement or by
termination of employment or change in position following consummation of the
Merger, and whether such holder has the sole power to vote and dispose of such
shares.
(c) Section 3.2(c) of the Company Disclosure Schedule lists the number
of shares of Company Common Stock reserved for future issuance pursuant to stock
options granted and outstanding as of the date of this Agreement and the plans
or other arrangements under which such options were granted (collectively, the
"Company Stock Plans") and sets forth a complete and accurate list of all
holders of outstanding options to purchase shares of Company Common Stock (such
outstanding options, the "Company Stock Options") under the Company Stock Plans,
indicating with respect to each Company Stock Option, the number of shares of
Company Common Stock subject to such Company Stock Option, the relationship of
the holder to the Company, and the exercise price, the date of grant, vesting
schedule and the expiration date thereof, including the extent to which any
vesting has occurred as of the date of this Agreement, and whether (and to what
extent) the vesting of such Company Stock Options will be accelerated in any way
by the transactions contemplated by this Agreement or by the termination of
employment or engagement or change in position of any holder thereof following
consummation of the Merger. Section 3.2(c) of the Company Disclosure Schedule
shows the number of shares of Company Common Stock reserved for future issuance
pursuant to warrants or other outstanding rights (other than Company Stock
Options) to purchase shares of Company Common Stock outstanding as of the date
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of this Agreement (such outstanding warrants or other rights, the "Company
Warrants") and the agreement or other document under which such Company Warrants
were granted and sets forth a complete and accurate list of all holders of
Company Warrants indicating the number and type of shares of Company Common
Stock subject to each Company Warrant, and the exercise price, the date of grant
and the expiration date thereof. The Company has provided to the Parent accurate
and complete copies of all Company Stock Plans, the forms of all stock option
agreements evidencing Company Stock Options and all Company Warrants.
(d) Except (x) as set forth in this Section 3.2, and (y) as reserved
for future grants under Company Stock Plans, (i) there are no equity securities
of any class of the Company or any of its Subsidiaries (other than equity
securities of any such Subsidiary that are directly or indirectly owned by the
Company), or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding and (ii) there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound obligating the Company
or any of its Subsidiaries to issue, exchange, transfer, deliver or sell, or
cause to be issued, exchanged, transferred, delivered or sold, additional shares
of capital stock or other equity interests of the Company or any of its
Subsidiaries or any security or rights convertible into or exchangeable or
exercisable for any such shares or other equity interests, or obligating the
Company or any of its Subsidiaries to grant, extend, accelerate the vesting of,
otherwise modify or amend or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Neither the Company nor any of
its Subsidiaries has outstanding any stock appreciation rights, phantom stock,
performance based rights or similar rights or obligations. There are no
obligations, contingent or otherwise, of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of the Company or any of its Subsidiaries or to provide funds
to or make any material investment (in the form of a loan, capital contribution
or otherwise) in the Company or any Subsidiary of the Company or any other
entity, other than guarantees of bank obligations of Subsidiaries of the Company
entered into in the ordinary course of business consistent with past practice
(the "Ordinary Course of Business") and listed in Section 3.2(d) of the Company
Disclosure Schedule. Other than the Company Voting Agreements, neither the
Company nor any of its Affiliates is a party to or is bound by any, and to the
knowledge of the Company, there are no, agreements or understandings with
respect to the voting (including voting trusts and proxies) or sale or transfer
(including agreements imposing transfer restrictions) of any shares of capital
stock or other equity interests of the Company or any of its Subsidiaries. For
purposes of this Agreement, the term "Affiliate" when used with respect to any
party shall mean any person who is an "affiliate" of that party within the
meaning of Rule 405 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). Except as contemplated by this Agreement, there are no
registration rights, and there is no rights agreement, "poison pill"
anti-takeover plan or other agreement or understanding to which the Company or
any of its Subsidiaries is a party or by which it or they are bound with respect
to any equity security of any class of the Company or any of its Subsidiaries or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its Subsidiaries.
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(e) All outstanding shares of Company Common Stock are, and all shares
of Company Common Stock subject to issuance as specified in Section 3.2(c)
above, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Company's Certificate of Incorporation or By-laws or any agreement to which the
Company is a party or is otherwise bound.
(f) All of the outstanding shares of capital stock and other equity
securities or interests of each of the Company's Subsidiaries are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights and all such shares are owned, of record and beneficially, by the Company
or another Subsidiary of the Company free and clear of all mortgages, security
interests, pledges, liens, charges or encumbrances of any nature ("Liens") and
agreements in respect of, or limitations on, the Company's voting rights.
3.3 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and, subject only to the adoption of this Agreement
and the approval of the Merger (the "Company Voting Proposal") by the Company's
stockholders under the DGCL and as set forth in Section 3.3(d) (the "Company
Stockholder Approval"), to consummate the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, the Board of
Directors of the Company (the "Company Board"), at a meeting duly called and
held (i) unanimously approved this Agreement, (ii) determined that the Merger is
fair and in the best interests of the Company and its stockholders, (iii)
declared the advisability of, approved and adopted this Agreement in accordance
with the provisions of the DGCL, (iv) directed that this Agreement and the
Merger be submitted to the stockholders of the Company for their adoption and
approval and resolved to recommend that the stockholders of the Company vote in
favor of the adoption of this Agreement and the approval of the Merger, and (v)
to the extent necessary, adopted a resolution having the effect of causing the
Company not to be subject to any state takeover law (including Section 203 of
the DGCL) or similar law that might otherwise apply to the Merger and any other
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement by the Company have been duly authorized by all necessary corporate
action on the part of the Company, subject only to the required receipt of the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, enforceable in accordance with its terms. Other than the Company
Stockholder Approval, no other approvals, consents, waivers or other conditions
are required for the consummation of the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions contemplated by
this Agreement shall not, (i) conflict with, or result in any violation or
breach of, any provision of the Certificate of Incorporation or By-laws of the
Company or of the charter, by-laws, or other organizational document of any
Subsidiary of the Company, (ii) conflict with, or result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
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any obligation or loss of any material benefit) under, require a consent or
waiver under, constitute a change in control under, require the payment of a
penalty under or result in the imposition of any Lien on the Company's or any of
its Subsidiary's assets under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract or other agreement,
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound,
(iii) cause the Company or any Subsidiary to become liable for the payment of
any recordation or stock transfer Tax, or (iv) subject to obtaining the Company
Stockholder Approval and compliance with the requirements specified in clauses
(i) through (v) of Section 3.3(c), conflict with or violate any permit,
concession, franchise, license, judgment, injunction, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
clauses (ii) and (iii) of this Section 3.3(b) for any such conflicts,
violations, breaches, defaults, terminations, cancellations, accelerations or
losses that, individually or in the aggregate, are not reasonably likely to have
a Company Material Adverse Effect. Section 3.3(b) of the Company Disclosure
Schedule lists all material consents, waivers and approvals under any of the
Company's or any of its Subsidiaries' agreements, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
(c) No consent, approval, license, permit, order or authorization of,
or registration, declaration, notice or filing with, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority, agency or instrumentality or any stock market or stock
exchange on which shares of Company Common Stock are listed for trading (a
"Governmental Entity") is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (i) the filing of the Certificate of
Merger with the Delaware Secretary of State and appropriate corresponding
documents with the appropriate authorities of other states in which the Company
is qualified as a foreign corporation to transact business, (ii) the filing of
the Joint Proxy Statement/Prospectus with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iii) the filing of such reports, schedules or materials
under Section 13 of or Rule 14a-12 under the Exchange Act and materials under
Rule 165 and Rule 425 under the Securities Act as may be required in connection
with this Agreement and the transactions contemplated hereby, (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and (v) such
other consents, licenses, permits, orders, authorizations, filings, approvals
and registrations which, if not obtained or made, would be reasonably likely,
individually or in the aggregate, to have a Company Material Adverse Effect.
(d) The affirmative vote of (i) the holders of a majority of the
outstanding shares of capital stock (on the record date) at the Company
Stockholders Meeting, and (ii) 66 2/3% of the shares of outstanding Series A
Preferred Stock are the only votes of the holders of any class or series of the
Company's capital stock or other securities necessary for the adoption of this
Agreement and for the consummation by the Company of the other transactions
contemplated by this Agreement. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote.
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3.4 SEC Filings; Financial Statements; Information Provided.
(a) The Company has filed all registration statements, forms, reports
and other documents required to be filed by the Company with the SEC since
January 1, 2004 and has made available to the Parent copies of all registration
statements, forms, reports and other documents filed by the Company with the SEC
since such date, all of which are publicly available on the SEC's XXXXX system.
All such registration statements, forms, reports and other documents (including
those that the Company may file after the date hereof until the Closing) are
referred to herein as the "Company SEC Reports." The Company SEC Reports (i)
were or will be filed on a timely basis, (ii) at the time filed, were or will be
prepared in compliance in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Company SEC Reports,
and (iii) did not or will not at the time they were or are filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in the light of the circumstances under
which they were made, not misleading. No Subsidiary of the Company is subject to
the reporting requirements of Section 13(a) or Section 15(d) of the Exchange
Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules) contained or to be contained in the
Company SEC Reports at the time filed (i) complied or will comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were or will be
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited interim financial statements, as permitted by the
SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented or will
fairly present the consolidated financial position of the Company and its
Subsidiaries as of the dates indicated and the consolidated results of its
operations and cash flows for the periods indicated, consistent with the books
and records of the Company and its Subsidiaries, except that the unaudited
interim financial statements do not contain footnotes and were or are subject to
normal and recurring year-end adjustments. The consolidated, unaudited balance
sheet of the Company as of March 31, 2005 is referred to herein as the "Company
Balance Sheet."
(c) The information to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the registration statement on Form
S-4 to be filed by the Parent pursuant to which shares of Parent Common Stock
issued in connection with the Merger shall be registered under the Securities
Act (the "Registration Statement"), or to be included or supplied by or on
behalf of the Company for inclusion in any filing pursuant to Rule 165 and Rule
425 under the Securities Act or Rule 14a-12 under the Exchange Act (each a
"Regulation M-A Filing"), shall not at the time the Registration Statement or
any Regulation M-A Filing is filed with the SEC, at any time the Registration
Statement is amended or supplemented, or at the time the Registration Statement
is declared effective by the SEC (as applicable), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading. The
information to be supplied by or on behalf of the Company for inclusion in the
joint proxy statement/prospectus to be sent to the stockholders of the Company
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and the Parent (the "Joint Proxy Statement/Prospectus") in connection with (i)
the meeting of the Company's stockholders to consider the Company Voting
Proposal (the "Company Stockholders Meeting"), and (ii) the meeting of the
Parent's stockholders (the "Parent Stockholders Meeting") to consider the
issuance of shares of Parent Common Stock pursuant to the Merger (the "Parent
Voting Proposal") shall not, on the date the Joint Proxy Statement/Prospectus is
first mailed to stockholders of the Company or the Parent, or at the time of the
Company Stockholders Meeting or the Parent Stockholders Meeting or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement/Prospectus not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting or the Parent Stockholders Meeting
which has become false or misleading. If at any time prior to the Effective Time
any fact or event relating to the Company or any of its Affiliates which should
be set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement/Prospectus should be discovered by the Company or
should occur, the Company shall promptly inform the Parent of such fact or
event.
3.5 No Undisclosed Liabilities; Indebtedness.
(a) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, and except for normal and recurring liabilities incurred
since the date of the Company Balance Sheet in the Ordinary Course of Business,
the Company and its Subsidiaries do not have any liabilities, either accrued,
contingent or otherwise (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due, that,
individually or in the aggregate, are reasonably likely to have a Company
Material Adverse Effect.
(b) Section 3.5(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its Subsidiaries in an aggregate principal
amount in excess of $20,000 is outstanding or may be incurred and the respective
principal amounts outstanding thereunder as of the date of this Agreement. For
purposes of this Section, "indebtedness" means, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person or creditors
for raw materials, inventory, services and supplies incurred in the Ordinary
Course of Business), (F) all capitalized lease obligations of such person, (G)
all obligations of others secured by any lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (I) all letters
of credit issued for the account of such person, and (J) all guarantees and
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arrangements having the economic effect of a guarantee by such person of any
indebtedness of any other person. All of the outstanding indebtedness of the
type described in this Section 3.5(b) of the Company and each of its
Subsidiaries may be prepaid by the Company or its Subsidiary at any time without
the consent or approval of, or prior notice to, any other person, and without
payment of any premium or penalty.
3.6 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, since the date of
the Company Balance Sheet, the Company and its Subsidiaries have conducted their
respective businesses only in the Ordinary Course of Business and, since such
date, there has not been (i) any change, event, circumstance, development or
effect that, individually or in the aggregate, has had, or is reasonably likely
to have, a Company Material Adverse Effect; or (ii) any other action or event
that would have required the consent of the Parent pursuant to Section 5.1 of
this Agreement had such action or event occurred after the date of this
Agreement.
3.7 Taxes.
(a) The Company and each of its Subsidiaries has filed all Tax Returns
that it was required to file, and all such Tax Returns were correct and complete
except for any errors or omissions that, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect. The Company and
each of its Subsidiaries has paid on a timely basis all Taxes that are shown to
be due on any such Tax Returns. The unpaid Taxes of the Company and its
Subsidiaries for Tax periods through the date of the Company Balance Sheet do
not exceed the accruals and reserves for Taxes set forth on the Company Balance
Sheet exclusive of any accruals and reserves for "deferred taxes" or similar
items that reflect timing differences between Tax and financial accounting
principles. All Taxes that the Company or any of its Subsidiaries is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Entity. For
purposes of this Agreement, (i) "Taxes" means all taxes, charges, fees, levies
or other similar assessments or liabilities, including income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, services, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof and (ii) "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Parent correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries since December 31, 2001. The Company has made available to the
Parent correct and complete copies of all other Tax Returns of the Company and
its Subsidiaries together with all related examination reports and statements of
deficiency for all periods from and after December 31, 2001. No examination or
audit of any Tax Return of the Company or any of its Subsidiaries by any
Governmental Entity is currently in progress or, to the knowledge of the
Company, threatened or contemplated. Neither the Company nor any of its
Subsidiaries has been informed by any Governmental Entity that the Governmental
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Entity believes that the Company or any of its Subsidiaries was required to file
any Tax Return that was not filed. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations with respect to Taxes or
agreed to an extension of time with respect to a Tax assessment or deficiency.
(c) Neither the Company nor any of its Subsidiaries: (i) is a
"consenting corporation" within the meaning of Section 341(f) of the Code, and
none of the assets of the Company or any of its Subsidiaries is subject to an
election under Section 341(f) of the Code; (ii) has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code;
(iii) has made any payments, is obligated to make any payments, or is a party to
any agreement that could obligate it to make any payments that may be treated as
an "excess parachute payment" under Section 280G of the Code; (iv) has any
actual or potential liability for any Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of law in any jurisdiction), or as a transferee or successor,
by contract, or otherwise; or (v) is or has been required to make a basis
reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).
(d) None of the assets of the Company or any of its Subsidiaries: (i)
is property that is required to be treated as being owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code; (ii) is
"tax-exempt use property" within the meaning of Section 168(h) of the Code; or
(iii) directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code.
(e) Neither the Company nor any of its Subsidiaries has undergone, or
will undergo as a result of the transactions contemplated by the Agreement, a
change in its method of accounting resulting in an adjustment to its taxable
income pursuant to Section 481(a) of the Code.
(f) No state or federal "net operating loss" of the Company or any of
its Subsidiaries determined as of the Closing Date is subject to limitation on
its use pursuant to Section 382 of the Code or comparable provisions of state
law as a result of any "ownership change" within the meaning of Section 382(g)
of the Code or comparable provisions of any state law occurring prior to the
Closing Date.
(g) Neither the Company nor any of its Subsidiaries (i) is or has ever
been a member of a group of corporations with which it has filed (or been
required to file) consolidated, combined or unitary Tax Returns, other than a
group of which only the Company and its Subsidiaries are or were members or (ii)
is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement.
(h) To the Company's knowledge, after consulting with its tax
advisors, neither the Company nor any Affiliate has taken or agreed to take any
action which would prevent the Merger from constituting a transaction qualifying
as a reorganization under Section 368(a) of the Code.
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3.8 Owned and Leased Real Properties.
(a) Neither the Company nor any of its Subsidiaries owns or has ever
owned any real property.
(b) Section 3.8(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of all real property leased, subleased or licensed by
the Company or any of its Subsidiaries (collectively "Company Leases") and the
location of the premises. Neither the Company nor any of its Subsidiaries nor,
to the Company's knowledge, any other party to any Company Lease, is in default
under any of the Company Leases, except where the existence of such defaults,
individually or in the aggregate, has not had, and is not reasonably likely to
have, a Company Material Adverse Effect. Each of the Company Leases is in full
force and effect and is enforceable in accordance with its terms and shall not
cease to be in full force and effect as a result of the transactions
contemplated by this Agreement. Neither the Company nor any of its Subsidiaries
leases, subleases or licenses any real property to any person other than the
Company and its Subsidiaries. The Company has provided the Parent with complete
and accurate copies of all Company Leases.
3.9 Intellectual Property.
(a) The Company and its Subsidiaries own, or license or otherwise
possess legally enforceable rights to use, all Intellectual Property used or
necessary to conduct the business of the Company and its Subsidiaries as
currently conducted (excluding generally commercially available, off-the-shelf
software programs licensed pursuant to shrinkwrap or "click-and-accept"
licenses), the absence of which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect. For purposes of this
Agreement, the term "Intellectual Property" means (i) patents, patent rights,
trademarks (including goodwill associated therewith), service marks, trade
names, domain names, copyrights, designs and trade secrets, (ii) applications
for and registrations of such patents, trademarks, service marks, trade names,
domain names, copyrights (whether registered or unregistered, or published or
unpublished) and designs, (iii) processes, formulae, methods, schematics,
technology, know-how, computer software programs and applications, and (iv)
other tangible or intangible proprietary or confidential information and
materials (including ideas, research and development, know-how, schematics,
technology, formulae, laboratory notebooks, results of tests or studies,
compositions, DNA markers, genotypes, databases (including the "DecoGen"
bioinformatics system), computer programs and software (whether in object or
source code), algorithms, processes and techniques, technical data and
compilations, designs, drawings, specifications), and (v) customer and supplier
lists, pricing and cost information, financial and accounting data, and business
and marketing plans and proposals (such items in this clause (v) collectively,
"Confidential Business Information").
(b) The execution and delivery of this Agreement and consummation of
the Merger will not result in the breach of, or create on behalf of any third
party the right to terminate or modify, (i) any license, sublicense or other
agreement relating to any Intellectual Property owned by the Company that is
material to the business of the Company and its Subsidiaries, taken as a whole,
as described in or filed as an exhibit to the Company's SEC Reports (the
"Company Intellectual Property") or (ii) any license, sublicense and other
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agreement as to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use
any third party Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole, including software that is used
in the manufacture of, incorporated in, or forms a part of any product or
service sold or licensed by or expected to be sold or licensed by the Company or
any of its Subsidiaries (the "Company Third Party Intellectual Property").
Section 3.9(b)(i) of the Company Disclosure Schedule sets forth a complete and
accurate list of the Company Intellectual Property (other than unregistered
copyrights, trade secrets and confidential information) and Section 3.9(b)(ii)
sets forth a complete and accurate list of all Company Third Party Intellectual
Property.
(c) All patents and registrations and applications for trademarks,
service marks and copyrights which are held by the Company or any of its
Subsidiaries and which are material to the business of the Company and its
Subsidiaries, taken as a whole, are valid and subsisting. The Company and its
Subsidiaries have taken reasonable measures to protect the proprietary nature of
the Company Intellectual Property. To the knowledge of the Company, no other
person or entity is infringing, violating or misappropriating any of the Company
Intellectual Property or Company Third Party Intellectual Property.
(d) None of the (i) products currently sold or licensed by the Company
or any of its Subsidiaries to third parties or (ii) business or activities
(including research and development) currently conducted by the Company or any
of its Subsidiaries infringes, violates or constitutes a misappropriation of,
any Intellectual Property of any third party. Neither the Company nor any of its
Subsidiaries has received any written complaint, claim or notice alleging any
such infringement, violation or misappropriation that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
The Company has not received any written notice of any infringement by or
misappropriation by others of Company Intellectual Property, or any violation of
the confidentiality of any of its Confidential Business Information. To the
Company's knowledge, the Company is not making unlawful or unauthorized use of
any Intellectual Property of any past or present employees or consultants of the
Company; provided, however, no representation is made under this sentence with
respect to Confidential Business Information.
(e) The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of Company Intellectual
Property, including its Confidential Business Information. All employees of the
Company have executed a nondisclosure and assignment of inventions agreements
sufficient to protect the confidentiality and value of the Company Intellectual
Property.
(f) The activities of the Company's employees on behalf of the Company
do not violate any agreements or arrangements known to the Company which any
such employees have with former employers or any other entity to whom such
employees may have rendered consulting services. All officers of the Company
have entered into non-competition agreements providing that they will not
compete with the Company for one year from the date of termination.
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(g) The Company Intellectual Property does not include any Publicly
Available Software and the Company has not used Publicly Available Software in
whole or in part in the development of any part of the Company Intellectual
Property in a manner that may subject the Company Intellectual Property in whole
or in part, to all or part of the license obligations of any Publicly Available
Software. "Publicly Available Software" means each of (i) any software that
contains, or is derived in any manner (in whole or in part) from, any software
that is distributed as free software, open source software (e.g., Linux), or
similar licensing and distribution models; and (ii) any software that requires
as a condition of use, modification, and/or distribution of such software that
such software or other software incorporated into, derived from, or distributed
with such software; (a) be disclosed or distributed in source code form; (b) be
licensed for the purpose of making derivative works; or (c) be redistributable
at no or minimal charge. Publicly Available Software includes, without
limitation, software licensed or distributed under any of the following licenses
or distribution models similar to any of the following: (a) GNU General Public
License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic License (e.g.,
PERL), (c) the Mozilla Public License, (d) the Netscape Public License, (e) the
Sun Community Source License (SCSL), the Sun Industry Source License (SISL), and
the Apache Server License.
3.10 Agreements, Contracts and Commitments; Government Contracts.
(a) Section 3.10(a) of the Company Disclosure Schedules sets forth a
complete and accurate list of all contracts and agreements (collectively, the
"Company Material Contracts") that are material to the business, assets,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole. The Company has provided the Parent with a
complete and accurate copy of each Company Material Contract. Each Company
Material Contract is in full force and effect and is enforceable in accordance
with its terms. Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any other party to any Company Material Contract is in
violation of or in default under (nor does there exist any condition which, upon
the passage of time or the giving of notice or both, would cause such a
violation of or default under) (x) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or other
contract, arrangement or understanding to which it is a party or by which it or
any of its properties or assets is bound, except for violations or defaults
that, individually or in the aggregate, have not had, and are not reasonably
likely to have, a Company Material Adverse Effect or (y) any Company Material
Contract.
(b) Section 3.10(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of each contract or agreement to which the Company or
any of its Subsidiaries is a party or bound with any Affiliate of the Company
(other than any Subsidiary which is a direct or indirect wholly owned Subsidiary
of the Company). Complete and accurate copies of all the agreements, contracts
and arrangements set forth in Section 3.10(b) of the Company Disclosure Schedule
have heretofore been furnished to the Parent. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has entered into any transaction with any Affiliate of
the Company or any of its Subsidiaries or any transaction that would be subject
to proxy statement disclosure pursuant to Item 404 of Regulation S-K.
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(c) There is no non-competition or other similar agreement,
commitment, judgment, injunction or order to which the Company or any of its
Subsidiaries is a party or is subject that has or could reasonably be expected
to have the effect of prohibiting or impairing in any material respect the
conduct of the business of the Company or any of its Subsidiaries as currently
conducted. Neither the Company nor any of its Subsidiaries has entered into (or
is otherwise bound by) any agreement under which it is restricted in any
material respect from selling, licensing or otherwise distributing any of its
technology or products, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or any segment of the market or line of business.
(d) Neither the Company nor any of its Subsidiaries is a party to any
agreement under which a third party would be entitled to receive a license or
any other right to intellectual property of the Parent or any of the Parent's
Affiliates following the Closing.
(e) Neither the Company nor any of its Subsidiaries is or has been
suspended or debarred from bidding on contracts or subcontracts with any
Governmental Entity; no such suspension or debarment has been initiated or, to
the Company's knowledge, threatened; and the consummation of the transactions
contemplated by this Agreement will not result in any such suspension or
debarment that, individually or in the aggregate, is reasonably likely to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has been audited or investigated or is now being audited or, to the Company's
knowledge, investigated by the U.S. Government Accounting Office, the U.S.
Department of Defense or any of its agencies, the Defense Contract Audit Agency,
the U.S. Department of Justice, the Inspector General of any U.S. Governmental
Entity, any similar agencies or instrumentalities of any foreign Governmental
Entity, or any prime contractor with a Governmental Entity nor, to the Company's
knowledge, has any such audit or investigation been threatened. To the Company's
knowledge, there is no valid basis for (a) the suspension or debarment of the
Company or any of its Subsidiaries from bidding on contracts or subcontracts
with any Governmental Entity or (b) any claim pursuant to an audit or
investigation by any of the entities named in the foregoing sentence that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has any
agreements, contracts or commitments which require it to obtain or maintain a
security clearance with any Governmental Entity.
3.11 Litigation; Product Liability. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, there is no action, suit,
proceeding, claim, arbitration or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries that, individually or in the aggregate, has had, or is reasonably
likely to have, a Company Material Adverse Effect. There are no material
judgments, orders or decrees outstanding against the Company or any of its
Subsidiaries. No product liability claims have been asserted or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries relating to products or product candidates developed, tested,
manufactured, marketed, distributed or sold by the Company or any of its
Subsidiaries.
-21-
3.12 Environmental Matters.
(a) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, each of the Company and its Subsidiaries has complied
with all applicable Environmental Laws, except for violations of Environmental
Laws that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect. There is no
pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company or any of its
Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations arising from the release of any Materials of
Environmental Concern into the environment.
(c) Neither the Company nor any of its Subsidiaries is a party to or
bound by any court order, administrative order, consent order or other agreement
between the Company and any Governmental Entity entered into in connection with
any legal obligation or liability arising under any Environmental Law.
(d) Set forth in Section 3.12(d) of the Company Disclosure Schedule is
a list of all documents (whether in hard copy or electronic form) that contain
any environmental reports, investigations and audits relating to premises
currently or previously owned or operated by the Company or any of its
Subsidiaries (whether conducted by or on behalf of the Company or any of its
Subsidiaries or a third party, and whether done at the initiative of the Company
or any of its Subsidiaries or directed by a Governmental Entity or other third
party) which were issued or conducted during the past five years and which the
Company has possession of or access to. A complete and accurate copy of each
such document has been provided to the Parent.
(e) The Company is not aware of any material environmental liability
of any solid or hazardous waste transporter or treatment, storage or disposal
facility that has been used by the Company or any of its Subsidiaries.
(f) For purposes of this Agreement, "Environmental Law" means any
federal, state or local law, statute, rule or regulation or the common law
relating to the environment or occupational health and safety, including any
statute, regulation, administrative decision or order pertaining to (i)
treatment, storage, disposal, generation and transportation of industrial, toxic
or hazardous materials or substances or solid or hazardous waste; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release or threatened release into the environment of industrial, toxic or
hazardous materials or substances, or solid or hazardous waste, including
emissions, discharges, injections, spills, escapes or dumping of pollutants,
contaminants or chemicals; (v) the protection of wild life, marine life and
wetlands, including all endangered and threatened species; (vi) storage tanks,
vessels, containers, abandoned or discarded barrels and other closed
receptacles; (vii) health and safety of employees and other persons; and (viii)
manufacturing, processing, using, distributing, treating, storing, disposing,
transporting or handling of materials regulated under any law as pollutants,
contaminants, toxic or hazardous materials or substances or oil or petroleum
products or solid or hazardous waste. As used above, the terms "release" and
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"environment" shall have the meaning set forth in the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA").
(g) For purposes of this Agreement, "Materials of Environmental
Concern" means any chemicals, pollutants or contaminants, hazardous substances
(as such term is defined under CERCLA), solid wastes and hazardous wastes (as
such terms are defined under the Resource Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products or any other material subject
to regulation under any Environmental Law.
3.13 Employee Benefit Plans.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all Employee Benefit Plans maintained, or
contributed to, by the Company, any of the Company's Subsidiaries or any of
their ERISA Affiliates (together, the "Company Employee Plans"). For purposes of
this Agreement, the following terms shall have the following meanings: (i)
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of the Company or any of its
Subsidiaries or an ERISA Affiliate; (ii) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended; and (iii) "ERISA Affiliate" means any
entity which is, or at any applicable time was, a member of (1) a controlled
group of corporations (as defined in Section 414(b) of the Code), (2) a group of
trades or businesses under common control (as defined in Section 414(c) of the
Code), or (3) an affiliated service group (as defined under Section 414(m) of
the Code or the regulations under Section 414(o) of the Code), any of which
includes or included the Company or a Subsidiary.
(b) With respect to each Company Employee Plan, the Company has
furnished to the Parent, a complete and accurate copy of (i) such Company
Employee Plan (or a written summary of any unwritten plan), (ii) the most recent
annual report (Form 5500) filed with the IRS, (iii) each trust agreement, group
annuity contract and summary plan description, if any, relating to such Company
Employee Plan, (iv) the most recent financial statements for each Company
Employee Plan that is funded, (v) all personnel, payroll and employment manuals
and policies, (vi) all employee handbooks and (vii) all reports regarding the
satisfaction of the nondiscrimination requirements of Sections 410(b), 401(k)
and 401(m) of the Code.
(c) Each Company Employee Plan has been administered in all material
respects in accordance with ERISA, the Code and all other applicable laws and
the regulations thereunder and in accordance with its terms and each of the
Company, the Company's Subsidiaries and their ERISA Affiliates has in all
material respects met its obligations with respect to such Company Employee Plan
and has made all required contributions thereto (or reserved such contributions
on the Company Balance Sheet). The Company, each Subsidiary of the Company, each
ERISA Affiliate and each Company Employee Plan are in compliance in all material
-23-
respects with the currently applicable provisions of ERISA and the Code and the
regulations thereunder (including Section 4980 B of the Code, Subtitle K,
Chapter 100 of the Code and Sections 601 through 608 and Section 701 et seq. of
ERISA). All filings and reports as to each Company Employee Plan required to
have been submitted to the Internal Revenue Service or to the United States
Department of Labor have been timely submitted. With respect to the Company
Employee Plans, no event has occurred, and to the knowledge of the Company,
there exists no condition or set of circumstances in connection with which the
Company or any of its Subsidiaries could be subject to any material liability
under ERISA, the Code or any other applicable law.
(d) With respect to the Company Employee Plans, there are no benefit
obligations for which contributions have not been made or properly accrued and
there are no benefit obligations which have not been accounted for by reserves,
or otherwise properly footnoted in accordance with GAAP, on the financial
statements of the Company. The assets of each Company Employee Plan which is
funded are reported at their fair market value on the books and records of such
Employee Benefit Plan.
(e) All the Company Employee Plans that are intended to be qualified
under Section 401(a) of the Code have received determination letters from the
Internal Revenue Service to the effect that such Company Employee Plans are
qualified and the plans and trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended or operated since
the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost. Each Company Employee Plan which
is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has
been tested for compliance with, and satisfies the requirements of Section
401(k)(3) and Section 401(m)(2) of the Code, as the case may be, for each plan
year ending prior to the Closing Date.
(f) Neither the Company, any of the Company's Subsidiaries nor any of
their ERISA Affiliates has (i) ever maintained a Company Employee Plan which was
ever subject to Section 412 of the Code or Title IV of ERISA or (ii) ever been
obligated to contribute to a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA). No Company Employee Plan is funded by, associated with or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code. No Company Employee Plan holds securities
issued by the Company, any of the Company's Subsidiaries or any of their ERISA
Affiliates.
(g) Each Company Employee Plan is amendable and terminable
unilaterally by the Company and any of the Company's Subsidiaries which are a
party thereto or covered thereby at any time without liability to the Company or
any of its Subsidiaries as a result thereof (other than for benefits accrued
through the date of termination or amendment and reasonable administrative
expenses related thereto) and no Company Employee Plan, plan documentation or
agreement, summary plan description or other written communication distributed
generally to employees by its terms prohibits the Company or any of its
Subsidiaries from amending or terminating any such Company Employee Plan. The
investment vehicles used to fund the Company Employee Plans may be changed at
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any time without incurring a material sales charge, surrender fee or other
similar expense.
(h) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, neither the Company nor any of its Subsidiaries is a
party to any oral or written (i) agreement with any stockholders, director,
executive officer or other key employee of the Company or any of its
Subsidiaries (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
or any of its Subsidiaries of the nature of any of the transactions contemplated
by this Agreement, (B) providing any term of employment or compensation
guarantee or (C) providing severance benefits or other benefits after the
termination of employment of such director, executive officer or key employee;
(ii) agreement, plan or arrangement under which any person may receive payments
from the Company or any of its Subsidiaries that may be subject to the tax
imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code, without regard to
Section 280G(b)(4); or (iii) agreement or plan binding the Company or any of its
Subsidiaries, including any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan or severance benefit plan, any of the
benefits of which shall be increased, or the vesting of the benefits of which
shall be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which shall be
calculated on the basis of any of the transactions contemplated by this
Agreement. The Company has provided to the Parent the information necessary to
accurately calculate any excise tax due under Section 4999 of the Code as a
result of the transactions contemplated by this Agreement for which the Company
or the Parent may directly or indirectly become liable and the amount of
deductions that may be disallowed under Section 280G of the Code as a result of
the transactions contemplated by this Agreement.
(i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
applicable law.
3.14 Compliance With Laws. The Company and each of its Subsidiaries has
complied with, is not in violation of, and has not received any written notice
alleging any violation with respect to, any applicable provisions of any
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its properties or assets, except for failures to
comply or violations that, individually or in the aggregate, have not had, and
are not reasonably likely to have, a Company Material Adverse Effect.
3.15 Permits. The Company and each of its Subsidiaries have all permits,
licenses and franchises from Governmental Entities required to conduct their
businesses as now being conducted (the "Company Permits"), except for such
permits, licenses and franchises the absence of which, individually or in the
aggregate, has not had, and is not reasonably likely to have, a Company Material
Adverse Effect. The Company and each of its Subsidiaries are in compliance with
the terms of the Company Permits, except for such failures to comply that,
individually or in the aggregate, have not had, and are not reasonably likely to
have, a Company Material Adverse Effect. No Company Permit shall cease to be
effective as a result of the consummation of the transactions contemplated by
this Agreement.
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3.16 Labor Matters.
(a) Section 3.16(a) of the Company Disclosure Schedule contains a list
of all employees of the Company and each of its Subsidiaries, along with the
position and the annual rate of compensation of each such person. Each current
employee of the Company or any of its Subsidiaries has entered into a
confidentiality and assignment of inventions agreement with the Company, a copy
or form of which has previously been delivered to the Parent. Neither the
Company nor any of its Subsidiaries is a party to or otherwise bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. Neither the Company nor any of its
Subsidiaries is the subject of any proceeding asserting that the Company or any
of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect, nor is there pending or, to the knowledge of the
Company, threatened, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries. Section
3.16(a) of the Company Disclosure Schedule lists all employees of the Company
who are not citizens of the United States.
(b) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, no employee of the Company or any of its Subsidiaries
(i) has an employment agreement with the Company or any of its Subsidiaries,
(ii) to the Company's knowledge is in violation of any term of any patent
disclosure agreement, non-competition agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be employed by
the Company or any of its Subsidiaries because of the nature of the business
conducted by the Company or any of its Subsidiaries or to the use of trade
secrets or proprietary information of others, or (iii) in the case of any key
employee or group of key employees, has given notice to the Company or any of
its Subsidiaries that such employee or any employee in a group of key employees
intends to terminate his or her employment with the Company.
3.17 Insurance. Each of the Company and its Subsidiaries maintains
insurance policies (the "Insurance Policies") with reputable insurance carriers
against all risks of a character and in such amounts as are usually insured
against by similarly situated companies in the same or similar businesses. Each
Insurance Policy is in full force and effect and is valid, outstanding and
enforceable, and all premiums due thereon have been paid in full. None of the
Insurance Policies shall terminate or lapse (or be affected in any other
materially adverse manner) by reason of the transactions contemplated by this
Agreement. The Company and each of its Subsidiaries have complied in all
material respects with the provisions of each Insurance Policy under which it is
the insured party. No insurer under any Insurance Policy has canceled or
generally disclaimed liability under any such policy or indicated any intent to
do so or not to renew any such policy. All material claims under the Insurance
Policies have been filed in a timely fashion.
3.18 Assets. The Company or one of its Subsidiaries owns or leases all
tangible assets necessary for the conduct of their businesses as presently
conducted. All of such tangible assets which are owned, are owned free and clear
of all Liens except for (i) Liens which are disclosed in the Company SEC Reports
filed prior to the date of this Agreement and (ii) other Liens that,
individually and in the aggregate, do not materially interfere with the ability
of the Company or its Subsidiaries to conduct their business as currently
conducted, and have not had, and are not reasonably likely to have, a Company
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Material Adverse Effect. The tangible assets of the Company and its
Subsidiaries, taken as a whole, are free from material defects, have been
maintained in accordance with normal industry practice, are in good operating
condition and repair (subject to normal wear and tear) and are suitable for the
purpose for which they are presently used.
3.19 Customers and Suppliers. No customer of the Company or any of its
Subsidiaries that represented 5% or more of the Company's consolidated revenues
in the fiscal year ended December 31, 2004 or in the three-month period ended
March 31, 2005 has indicated to the Company or any of its Subsidiaries that it
will stop, or decrease the rate of, buying materials, products or services from
the Company or any of its Subsidiaries. No material supplier or exclusive
supplier of the Company or any of its Subsidiaries has indicated to the Company
or any of its Subsidiaries that it will stop, or decrease the rate of, supplying
materials, products or services to them.
3.20 Opinion of Financial Advisor. The financial advisor of the Company,
CIBC World Markets Corp. ("CIBC World Markets"), has delivered to the Company an
opinion to the effect that, as of the date of such opinion and subject to the
assumptions and qualifications set forth therein, the Common Exchange Ratio is
fair, from a financial point of view to the holders of Company Common Stock. A
copy of such opinion will be delivered to the Parent for informational purposes
only promptly after receipt by the Company.
3.21 Section 203 of the DGCL Not Applicable. The Company Board has taken
all actions necessary so that the restrictions contained in Section 203 of the
DGCL applicable to a "business combination" (as defined in Section 203) shall
not apply to the execution, delivery or performance of this Agreement, the
Company Voting Agreements or the consummation of the Merger or the other
transactions contemplated by this Agreement or the Company Voting Agreements.
3.22 Brokers; Schedule of Fees and Expenses. No agent, broker, investment
banker, financial advisor or other firm or person is or shall be entitled, as a
result of any action, agreement or commitment of the Company or any of its
Affiliates, to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with any of the transactions contemplated by this
Agreement, except CIBC World Markets, whose fees and expense shall be paid by
the Company. The Company has delivered to the Parent a complete and accurate
copy of all agreements pursuant to which CIBC World Markets is entitled to any
fees and expenses in connection with any of the transactions contemplated by
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
TRANSITORY SUBSIDIARY
The Parent and the Transitory Subsidiary represent and warrant to the
Company that the statements contained in this Article IV are true and correct,
except as expressly set forth herein or in the disclosure schedule delivered by
the Parent and the Transitory Subsidiary to the Company on or before the date of
this Agreement (the "Parent Disclosure Schedule"). The Parent Disclosure
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Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article IV and the disclosure in any
paragraph shall qualify (1) the corresponding paragraph in this Article IV and
(2) the other paragraphs in this Article IV. Disclosure of any fact or item in
any section of the Parent Disclosure Schedule referenced by a particular section
of the Agreement shall, should the existence of the fact or item or its contents
be relevant to any other section of the Parent Disclosure Schedule, be deemed to
be disclosed with respect to such other section of the Parent Disclosure
Schedule whether or not an explicit cross reference appears.
4.1 Organization, Standing and Power. Each of the Parent and the Transitory
Subsidiary is a corporation duly organized, validly existing and in corporate
good standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties it owns, operates or
leases or the nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in good standing,
individually or in the aggregate, that have not had, and are not reasonably
likely to have, a Parent Material Adverse Effect. For purposes of this
Agreement, the term "Parent Material Adverse Effect" means any material adverse
change, event, circumstance or development with respect to, or any material
adverse effect on, (i) the business, assets, financial condition or results of
operations of the Parent and its Subsidiaries, taken as a whole, or (ii) the
ability of the Parent or the Transitory Subsidiary to consummate the
transactions contemplated by this Agreement; provided, however, that none of the
following (individually or in combination) shall be deemed to constitute, or
shall be taken into account in determining whether there has been or would be, a
Parent Material Adverse Effect: (A) any adverse change or effect resulting from
or relating to general business, economic or financial market conditions; (B)
any adverse change or effect resulting from or relating to conditions generally
affecting the industry or sector in which the Parent or any of its Subsidiaries
operates or competes; (C) any adverse change or effect resulting from or
relating to any acts of terrorism or war or any armed hostilities; (D) any
adverse change or effect (including, without limitation, any adverse change or
effect resulting from or relating to a cancellation of or delay in customer
orders, a reduction in sales, a loss of employees, an action taken by a
competitor, a disruption in any relationship with any supplier, licensor,
licensee, partner, employee or other person or a claim, action or proceeding)
resulting from or relating to the announcement or pendency of the Merger or any
of the other transactions contemplated by this Agreement; (E) any adverse change
or effect resulting from or relating to the taking of any action contemplated by
this Agreement or any action to which the Company shall have consented; (F) any
adverse change or effect resulting from or relating to any breach by the Company
of any provision of this Agreement or any other action by the Company or any
Subsidiary of the Company; (G) any failure to meet internal, published or other
estimates, predictions, projections or forecasts of revenues, net income or any
other measure of financial performance; (H) any adverse change or effect
resulting from or relating to changes in laws or interpretations thereof by
courts or other Governmental Entities; or (I) any adverse change or effect
resulting from or relating to changes in GAAP (as defined herein) which are
published and released for the industry in which the Parent operates (but
specifically excluding any changes in GAAP and accounting policies of the Parent
which are implemented by the Parent after the date hereof). An adverse change in
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the stock price of the Parent Common Stock shall not, in and of itself, be
deemed to have a Parent Material Adverse Effect.
4.2 Capitalization.
(a) The authorized capital stock of the Parent consists of 12,000,000
shares of Parent Common Stock and 1,500,000 shares of Parent Preferred Stock, of
which 250,000 shares are designated Series A Nonvoting, Convertible Preferred
Stock. The rights and privileges of each class of the Parent's capital stock are
set forth in the Parent's Certificate of Incorporation. As of the close of
business on June 17, 2005, 4,404,695 shares of Parent Common Stock were issued
and outstanding and no shares of Parent Preferred Stock were issued or
outstanding. No material change in such capitalization has occurred between June
17, 2005 and the date of this Agreement.
(b) Section 4.2(b) of the Parent Disclosure Schedule sets forth a
complete and accurate list, as of the date of this Agreement, of: (i) all stock
option plans or other stock or equity-related plans of the Parent (the "Parent
Stock Plans"), indicating for each Parent Stock Plan the number of shares of
Parent Common Stock issued to date under such Plan, the number of shares of
Parent Common Stock subject to outstanding options under such Plan and the
number of shares of Parent Common Stock reserved for future issuance under such
Plan; and (ii) the number of shares of Parent capital stock, and the class or
series of such shares, subject to any outstanding warrants or other contractual
rights to purchase or acquire capital stock of the Parent. The Parent has
provided to the Company complete and accurate copies of all Parent Stock Plans
and standard forms of stock option agreements used thereunder. Except as set
forth in this Section 4.2 or the Parent Disclosure Schedule, (i) no
subscription, warrant, option, convertible security or other right (contingent
or otherwise) to purchase or acquire any shares of capital stock of the Parent
is authorized or outstanding, (ii) the Parent has no obligation (contingent or
otherwise) to issue any subscription, warrant, option, convertible security or
other such right, or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of the Parent, (iii) the
Parent has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or to make any other distribution in respect thereof, and (iv)
there are no outstanding or authorized stock appreciation, phantom stock or
similar rights with respect to the Parent.
(c) All outstanding shares of Parent Common Stock are, and all shares
of Parent Common Stock and Parent Series A Preferred Stock issuable pursuant to
Sections 2.1(c) and (d) in connection with the Merger, when issued on the terms
and conditions of this Agreement, will be, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Parent's Certificate of Incorporation or By-laws or any agreement to which the
Parent is a party or is otherwise bound.
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4.3 Authority; No Conflict; Required Filings and Consents.
(a) Each of the Parent and the Transitory Subsidiary has all requisite
corporate power and authority to enter into this Agreement and, subject only to
the approval of the Parent Voting Proposal by the Parent's stockholders under
the rules of The Nasdaq Stock Market (the "Parent Stockholder Approval") and the
vote of the Parent, as sole stockholder of the Transitory Subsidiary (which vote
will occur by a consent in lieu of a meeting immediately after the execution of
this Agreement), to consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Board of Directors of the
Parent (the "Parent Board"), at a meeting duly called and held (i) determined
that the Merger is fair and in the best interests of the Parent and its
stockholders, (ii) directed that the Parent Voting Proposal be submitted to the
stockholders of the Parent for their approval and resolved to recommend that the
stockholders of the Parent vote in favor of the Parent Voting Proposal and (iii)
to the extent necessary, adopted a resolution having the effect of causing the
Parent not to be subject to any state takeover law or similar law that might
otherwise apply to the Merger and any other transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by the Parent and the Transitory
Subsidiary have been duly authorized by all necessary corporate action on the
part of each of the Parent and the Transitory Subsidiary (other than the
adoption of this Agreement by the Parent in its capacity as the sole stockholder
of the Transitory Subsidiary, which shall occur immediately after the execution
and delivery of this Agreement), subject only to the required receipt of the
Parent Stockholder Approval. This Agreement has been duly executed and delivered
by each of the Parent and the Transitory Subsidiary and constitutes the valid
and binding obligation of each of the Parent and the Transitory Subsidiary,
enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement by each of the Parent
and the Transitory Subsidiary do not, and the consummation by the Parent and the
Transitory Subsidiary of the transactions contemplated by this Agreement shall
not, (i) conflict with, or result in any violation or breach of, any provision
of the Certificate of Incorporation or By-laws of the Parent or the Transitory
Subsidiary, (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, require a consent or waiver under,
constitute a change in control under, require the payment of a penalty under or
result in the imposition of any Lien on the Parent's or the Transitory
Subsidiary's assets under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract or other agreement,
instrument or obligation to which the Parent or the Transitory Subsidiary is a
party or by which any of them or any of their properties or assets may be bound,
or (iii) subject to obtaining the Parent Stockholder Approval and compliance
with the requirements specified in clauses (i) through (viii) of Section 4.3(c),
conflict with or violate any permit, concession, franchise, license, judgment,
injunction, order, decree, statute, law, ordinance, rule or regulation
applicable to the Parent or the Transitory Subsidiary or any of its or their
properties or assets, except in the case of clauses (ii) and (iii) of this
Section 4.3(b) for any such conflicts, violations, breaches, defaults,
terminations, cancellations, accelerations or losses that, individually or in
the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect.
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(c) No consent, approval, license, permit, order or authorization of,
or registration, declaration, notice or filing with, any Governmental Entity is
required by or with respect to the Parent or the Transitory Subsidiary in
connection with the execution and delivery of this Agreement by the Parent or
the Transitory Subsidiary or the consummation by the Parent or the Transitory
Subsidiary of the transactions contemplated by this Agreement, except for (i)
the filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate corresponding documents with the appropriate authorities of other
states in which the Company is qualified as a foreign corporation to transact
business, (ii) the filing of the Registration Statement with the SEC in
accordance with the Securities Act, (iii) the filing of the Joint Proxy
Statement/Prospectus with the SEC in accordance with the Exchange Act, (iv) the
filing of such reports, schedules or materials under Section 13 of or Rule
14a-12 under the Exchange Act and materials under Rule 165 and Rule 425 under
the Securities Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws, (vii) such other consents, licenses, permits,
orders, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely, individually or in the
aggregate, to have a Parent Material Adverse Effect and (viii) the filing with
The Nasdaq Stock Market of a Notification Form for Listing of Additional Shares
with respect to the shares of Parent Common Stock issuable in connection with
the Merger.
(d) The affirmative vote of the holders of a majority of the shares of
Parent Common Stock present or represented by proxy and voting at the Parent
Stockholders Meeting is the only vote of the holders of any class or series of
the Parent's capital stock or other securities necessary for approval of the
Parent Voting Proposal and for the consummation by the Parent of the other
transactions contemplated by this Agreement. There are no bonds, debentures,
notes or other indebtedness of the Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Parent may vote.
4.4 SEC Filings; Financial Statements; Information Provided.
(a) The Parent has filed all registration statements, forms, reports
and other documents required to be filed by the Parent with the SEC since
January 1, 2004 and has made available to the Company copies of all registration
statements, forms, reports and other documents filed by the Parent with the SEC
since such date, all of which are publicly available on the SEC's XXXXX system.
All such registration statements, forms, reports and other documents (including
those that the Parent may file after the date hereof until the Closing) are
referred to herein as the "Parent SEC Reports." The Parent SEC Reports (i) were
or will be filed on a timely basis, (ii) at the time filed, were or will be
prepared in compliance in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Parent SEC Reports, and
(iii) did not or will not at the time they were or are filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Parent SEC Reports or necessary in order to make the statements
in such Parent SEC Reports, in the light of the circumstances under which they
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were made, not misleading. No Subsidiary of the Parent is subject to the
reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes and schedules) contained or to be contained in the
Parent SEC Reports at the time filed (i) complied or will comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) were or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by the SEC on
Form 10-Q under the Exchange Act) and (iii) fairly presented or will fairly
present the consolidated financial position of the Parent and its Subsidiaries
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, consistent with the books and records of the
Parent and its Subsidiaries, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount. The consolidated,
unaudited balance sheet of the Parent as of March 31, 2005 is referred to herein
as the "Parent Balance Sheet."
(c) The information in the Registration Statement or in any Regulation
M-A Filing (except, in each case, for information supplied by or on behalf of
the Company for inclusion or incorporation by reference in the Registration
Statement or Regulation M-A Filing, as to which the Parent makes no
representation and which shall not constitute part of the Parent SEC Reports for
purposes of this Agreement) shall not at the time the Registration Statement or
any Regulation M-A Filing is filed with the SEC, at any time the Registration
Statement is amended or supplemented, or at the time the Registration Statement
is declared effective by the SEC (as applicable), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading. The
information to be supplied by or on behalf of the Parent for inclusion in the
Joint Proxy Statement/Prospectus (which shall be deemed to include all
information about or relating to the Parent, the Parent Voting Proposal and the
Parent Stockholders Meeting) shall not, on the date the Joint Proxy
Statement/Prospectus is first mailed to stockholders of the Company or the
Parent, or at the time of the Company Stockholders Meeting or the Parent
Stockholders Meeting or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement/Prospectus not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Stockholders Meeting or the Parent
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any fact or event relating to the Parent or any of its
Affiliates which should be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement/Prospectus should be
discovered by the Parent or should occur, the Parent shall promptly inform the
Company of such fact or event.
4.5 Absence of Certain Changes or Events. Except as disclosed in the Parent
SEC Reports filed prior to the date of this Agreement, since the date of the
Parent Balance Sheet, there has not been any event, change, circumstance,
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development or effect that, individually or in the aggregate, has had, or is
reasonably likely to have, a Parent Material Adverse Effect.
4.6 Intellectual Property.
(a) The Parent and its Subsidiaries own, or license or otherwise
possess legally enforceable rights to use, all Intellectual Property used or
necessary to conduct the business of the Parent and its Subsidiaries as
currently conducted (excluding generally commercially available, off-the-shelf
software programs licensed pursuant to shrinkwrap or "click-and-accept"
licenses), the absence of which, individually or in the aggregate, is reasonably
likely to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement and consummation of
the Merger will not result in the breach of, or create on behalf of any third
party the right to terminate or modify, (i) any license, sublicense or other
agreement relating to any Intellectual Property owned by the Parent that is
material to the business of the Parent and its Subsidiaries, taken as a whole
(the "Parent Intellectual Property") or (ii) any license, sublicense and other
agreement as to which the Parent or any of its Subsidiaries is a party and
pursuant to which the Parent or any of its Subsidiaries is authorized to use any
third party Intellectual Property that is material to the business of the Parent
and its Subsidiaries, taken as a whole, including software that is used in the
manufacture of, incorporated in, or forms a part of any product or service sold
by or expected to be sold by the Parent or any of its Subsidiaries (the "Parent
Third Party Intellectual Property"). Section 4.6(b)(i) of the Parent Disclosure
Schedule sets forth a complete and accurate list of the Parent Intellectual
Property (other than unregistered copyrights, trade secrets and confidential
information) and Section 4.6(b)(ii) sets forth a complete and accurate list of
all Parent Third Party Intellectual Property.
(c) All patents and registrations and applications for trademarks,
service marks and copyrights which are held by the Parent or any of its
Subsidiaries and which are material to the business of the Parent and its
Subsidiaries, taken as a whole, are valid and subsisting. The Parent and its
Subsidiaries have taken reasonable measures to protect the proprietary nature of
the Parent Intellectual Property. To the knowledge of the Parent, no other
person or entity is infringing, violating or misappropriating any of the Parent
Intellectual Property or Parent Third Party Intellectual Property, except for
infringements, violations or misappropriations that, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect.
(d) None of the (i) products currently sold by the Parent or any of
its Subsidiaries or (ii) business or activities currently conducted by the
Parent or any of its Subsidiaries infringes, violates or constitutes a
misappropriation of, any Intellectual Property of any third party, except for
such infringements, violations and misappropriation that, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect.
Neither the Parent nor any of its Subsidiaries has received any written
complaint, claim or notice alleging any such infringement, violation or
misappropriation.
4.7 Agreements, Contracts and Commitments. Section 4.7 of the Parent
Disclosure Schedules sets forth a complete and accurate list of all contracts
and agreements (collectively, the "Parent Material Contracts") that are material
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to the business, assets, financial condition or results of operations of the
Parent and its Subsidiaries, taken as a whole. The Parent has provided the
Company with a complete and accurate copy of each Parent Material Contract,
except for those Parent Material Contracts that are available in the Parent SEC
Reports. Each Parent Material Contract is in full force and effect and is
enforceable in accordance with its terms. Neither the Parent nor any of its
Subsidiaries nor, to the Parent's knowledge, any other party to any Parent
Material Contract is in violation of or in default under (nor does there exist
any condition which, upon the passage of time or the giving of notice or both,
would cause such a violation of or default under) (x) any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or other contract, arrangement or understanding to which it
is a party or by which it or any of its properties or assets is bound, except
for violations or defaults that, individually or in the aggregate, have not had,
and are not reasonably likely to have, a Parent Material Adverse Effect or (y)
any Parent Material Contract.
4.8 Litigation; Product Liability. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, there is no action, suit,
proceeding, claim, arbitration or investigation pending or, to the knowledge of
the Parent, threatened against or affecting the Parent or any of its
Subsidiaries that, individually or in the aggregate, has had, or is reasonably
likely to have, a Parent Material Adverse Effect. There are no material
judgments, orders or decrees outstanding against the Parent or any of its
Subsidiaries. No product liability claims have been asserted or, to the
knowledge of the Parent, threatened against the Parent or any of its
Subsidiaries relating to products or product candidates developed, tested,
manufactured, marketed, distributed or sold by the Parent or any of its
Subsidiaries.
4.9 Compliance With Laws. The Parent and each of its Subsidiaries has
complied with, is not in violation of, and has not received any written notice
alleging any violation with respect to, any applicable provisions of any
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its properties or assets, except for failures to
comply or violations that, individually or in the aggregate, have not had, and
are not reasonably likely to have, a Parent Material Adverse Effect.
4.10 Permits. The Parent and each of its Subsidiaries have all permits,
licenses and franchises from Governmental Entities required to conduct their
businesses as now being conducted (the "Parent Permits"), except for such
permits, licenses and franchises the absence of which, individually or in the
aggregate, has not had, and is not reasonably likely to have, a Parent Material
Adverse Effect. The Parent and each of its Subsidiaries are in compliance with
the terms of the Parent Permits, except for such failures to comply that,
individually or in the aggregate, have not had, and are not reasonably likely to
have, a Parent Material Adverse Effect. No Parent Permit shall cease to be
effective as a result of the consummation of the transactions contemplated by
this Agreement.
4.11 Operations of the Transitory Subsidiary. The Transitory Subsidiary was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement.
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4.12 Opinion of Financial Advisor. The financial advisor of the Parent,
X.X. Xxxxxxxxx + Co., LLC, has delivered to the Parent an opinion dated the date
of this Agreement to the effect, as of such date, that the total consideration
paid in the Merger is fair to the Parent from a financial point of view, a
signed copy of which opinion has been, or will be within three days following
the date of this Agreement, delivered to the Company.
4.13 Brokers; Schedule of Fees and Expenses. No agent, broker, investment
banker, financial advisor or other firm or person is or shall be entitled, as a
result of any action, agreement or commitment of the Parent or any of its
Affiliates, to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with any of the transactions contemplated by this
Agreement, except X.X. Xxxxxxxxx + Co., LLC, whose fees and expense shall be
paid by the Parent.
ARTICLE V
CONDUCT OF BUSINESS
5.1 Covenants of the Company. Except as expressly provided herein, as set
forth in Schedule 5.1 hereto or as consented to in writing by the Parent (which
consent shall not be unreasonably withheld), from and after the date of this
Agreement until the earlier of the termination of this Agreement in accordance
with its terms or the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, act and carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted, pay
its debts and Taxes and perform its other obligations when due (subject to good
faith disputes over such debts, Taxes or obligations), comply with all
applicable laws, rules and regulations, and use reasonable efforts, consistent
with past practices, to maintain and preserve its and each Subsidiary's business
organization, assets and properties, keep available the services of its present
officers and employees and preserve its advantageous business relationships with
customers, strategic partners, suppliers, distributors and others having
business dealings with it to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, from and after the date of this Agreement until the earlier of
the termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, do any of the following without the prior written
consent of the Parent (which consent shall not be unreasonably withheld):
(a) (A) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, securities or other property) in respect of, any
of its capital stock (other than dividends and distributions by a direct or
indirect wholly-owned Subsidiary of the Company to its parent); (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or any of its other securities; or (C) purchase,
redeem or otherwise acquire any shares of its capital stock or any other of its
securities or any rights, warrants or options to acquire any such shares or
other securities, except, in the case of this clause (C), for the acquisition of
shares of Company Common Stock (1) from holders of Company Options in full or
partial payment of the exercise price payable by such holder upon exercise of
Company Options to the extent required under the terms of such Company Options
as in effect on the date hereof; or (2) from former employees, directors and
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consultants in accordance with agreements providing for the repurchase of shares
at their original issuance price in connection with any termination of services
to the Company or any of its Subsidiaries.
(b) issue, deliver, sell, grant, pledge or otherwise dispose of or
encumber any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities (other than the issuance of shares of Company Common
Stock pursuant to the June 30, 2005 exercise date under the Company's employee
stock purchase plan or upon the exercise of Company Stock Options or Company
Warrants outstanding on the date of this Agreement in accordance with their
present terms);
(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents, except as expressly provided by
this Agreement;
(d) acquire (A) by merging or consolidating with, or by purchasing all
or a substantial portion of the assets or any stock of, or by any other manner,
any business or any corporation, partnership, joint venture, limited liability
company, association or other business organization or division thereof or (B)
any assets that are material, in the aggregate, to the Company and its
Subsidiaries, taken as a whole, except purchases of inventory and components in
the Ordinary Course of Business;
(e) except in the Ordinary Course of Business, sell, lease, license,
pledge, or otherwise dispose of or encumber any properties or assets of the
Company or of any of its Subsidiaries;
(f) whether or not in the Ordinary Course of Business, sell, dispose
of or otherwise transfer any assets material to the Company and its
Subsidiaries, taken as a whole (including any accounts, leases, contracts or
intellectual property or any assets or the stock of any of its Subsidiaries, but
excluding the sale or non-exclusive license of products in the Ordinary Course
of Business);
(g) except for a confidentiality agreement as permitted by Section
6.1, enter into an agreement with respect to any merger, consolidation,
liquidation or business combination, or any acquisition or disposition of all or
substantially all of the assets or securities of the Company or any of its
Subsidiaries;
(h) (A) incur or suffer to exist any indebtedness for borrowed money
other than such indebtedness which existed as of May 31, 2005 or guarantee any
such indebtedness of another person, (B) issue, sell or amend any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, (C) make any loans, advances (other
than routine advances to employees of the Company and its Subsidiaries in the
Ordinary Course of Business) or capital contributions to, or investment in, any
other person, other than the Company or any of its direct or indirect wholly
owned Subsidiaries; provided however, that the Company may, in the Ordinary
Course of Business, continue to invest in debt securities maturing not more than
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90 days after the date of investment or (D) enter into any hedging agreement or
other financial agreement or arrangement designed to protect the Company or its
Subsidiaries against fluctuations in commodities prices or exchange rates;
(i) make any capital expenditures or other expenditures with respect
to property, plant or equipment in excess of $50,000 in the aggregate for the
Company and its Subsidiaries, taken as a whole, other than as set forth in the
Company's budget for capital expenditures made available to the Parent or the
specific capital expenditures disclosed and set forth in Section 3.5 of the
Company Disclosure Schedule;
(j) make any changes in accounting methods, principles or practices,
except insofar as may have been required by GAAP or, except as so required,
change any assumption underlying, or method of calculating, any bad debt,
contingency or other reserve;
(k) pay, discharge, settle or satisfy any claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the Ordinary
Course of Business or in accordance with their terms as in effect on the date of
this Agreement, of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company SEC
Reports filed prior to the date of this Agreement (to the extent so reflected or
reserved against) or incurred since the date of such financial statements in the
Ordinary Course of Business;
(l) except in the Ordinary Course of Business, modify, amend or
terminate any material contract or agreement to which the Company or any of its
Subsidiaries is party, or knowingly waive, release or assign any material rights
or claims (including any write-off or other compromise of any accounts
receivable of the Company or any of its Subsidiaries);
(m) (A) except in the Ordinary Course of Business enter into any
material contract or agreement relating to the rendering of services or the
distribution, sale or marketing by third parties of the products, of, or
products licensed by, the Company or any of its Subsidiaries or (B) license any
material intellectual property rights to or from any third party;
(n) except as required to comply with applicable law or agreements,
plans or arrangements existing on the date hereof, (A) take any action with
respect to, adopt, enter into, terminate or amend any employment, severance or
similar agreement or benefit plan for the benefit or welfare of any current or
former director, officer, employee or consultant or any collective bargaining
agreement, (B) increase in any material respect the compensation or fringe
benefits of, or pay any bonus to, any director, officer, employee or consultant
(except for annual increases of the salaries of non-officer employees in the
Ordinary Course of Business), (C) amend or accelerate the payment, right to
payment or vesting of any compensation or benefits, including any outstanding
options or restricted stock awards, (D) pay any material benefit not provided
for as of the date of this Agreement under any benefit plan, (E) grant any
awards under any bonus, incentive, performance or other compensation plan or
arrangement or benefit plan, including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any benefit plans
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or agreements or awards made thereunder, or (F) take any action other than in
the Ordinary Course of Business to fund or in any other way secure the payment
of compensation or benefits under any employee plan, agreement, contract or
arrangement or benefit plan;
(o) make or rescind any material Tax election, settle or compromise
any material Tax liability or materially amend any Tax return;
(p) initiate, compromise or settle any material litigation or
arbitration proceeding;
(q) open or close any facility or office;
(r) fail to maintain insurance at levels substantially comparable to
levels existing as of the date of this Agreement;
(s) fail to pay accounts payable and other obligations in the Ordinary
Course of Business; or
(t) authorize any of, or commit or agree, in writing or otherwise, to
take any of, the foregoing actions or any action which would make any
representation or warranty of the Company in this Agreement untrue or incorrect
in any material respect, or would materially impair or prevent the satisfaction
of any conditions in Article VII hereof.
5.2 Confidentiality. The parties acknowledge that the Parent and the
Company have previously executed a confidentiality agreement, dated as of April
11, 2005, as amended on May 19, 2005 (the "Confidentiality Agreement"), which
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms, except as expressly modified herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 No Solicitation.
(a) No Solicitation or Negotiation. Except as set forth in this
Section 6.1, the Company shall not, nor shall it authorize or permit or
encourage any of its Subsidiaries or any of its or their directors, officers,
employees, investment bankers, attorneys, accountants or other advisors or
representatives (such directors, officers, employees, investment bankers,
attorneys, accountants, other advisors and representatives, collectively,
"Representatives") to directly or indirectly:
(i) solicit, initiate, induce or encourage any inquiries or
solicitations for the making of any proposal or offer that constitutes, or could
reasonably be expected to lead to, any Acquisition Proposal; or
(ii) enter into, encourage, permit, indicate receptivity to,
continue or otherwise participate in any discussions or negotiations regarding,
furnish to any person any information with respect to, assist or participate in
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any effort or attempt by any person with respect to, or otherwise cooperate in
any way with, any Acquisition Proposal.
Notwithstanding the foregoing, prior to the adoption of this Agreement at the
Company Stockholders Meeting (the "Specified Time"), the Company may, if such
actions are required by the fiduciary obligations of the Company Board, as
determined in good faith by the Company Board after consultation with outside
counsel, in response to a Superior Proposal or a bona fide, unsolicited written
Acquisition Proposal made or received after the date of this Agreement that the
Company Board determines in good faith, after consultation with outside counsel
and a nationally recognized independent financial advisor, could reasonably be
expected to lead to a Superior Proposal, in each case that did not result from a
breach by the Company of this Section 6.1, and subject to compliance with
Section 6.1(c), (x) furnish information with respect to the Company to the
person making such Superior Proposal or Acquisition Proposal and its
Representatives pursuant to a confidentiality agreement not less restrictive of
the other party than the Confidentiality Agreement and (y) participate in
discussions or negotiations (including solicitation of a revised Superior
Proposal or Acquisition Proposal) with such person and its Representatives
regarding any Superior Proposal or Acquisition Proposal.
(b) No Change in Recommendation or Alternative Acquisition Agreement.
Neither the Company Board nor any committee thereof shall:
(i) except as set forth in this Section 6.1, withdraw or modify,
or publicly propose to withdraw or modify, in a manner adverse to the Parent or
the Transitory Subsidiary, the approval or recommendation by the Company Board
or any such committee of this Agreement or the Merger;
(ii) cause or permit the Company to enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or similar agreement (an "Alternative Acquisition
Agreement") constituting or relating to any Acquisition Proposal (other than a
confidentiality agreement referred to in Section 6.1(a) entered into in the
circumstances referred to in Section 6.1(a)); or
(iii) adopt, approve or recommend, or publicly propose to adopt,
approve or recommend, any Acquisition Proposal.
Notwithstanding the foregoing, the Company Board may (x) withdraw or modify the
recommendation by the Company Board or any committee thereof of this Agreement
and the Merger, and (y) in the event the withdrawal or modification is in
response to a Superior Proposal, approve or recommend such Superior Proposal and
terminate this Agreement, if, in the case of each of clauses (x) and (y), the
Company Board determines in good faith, after consultation with outside counsel,
that such actions are required by its fiduciary obligations, but, in the event
the withdrawal or modification is in response to a Superior Proposal, such
withdrawal or modification shall occur only (A) at a time that is after the
third business day following the Parent's receipt of written notice advising the
Parent that the Company Board desires to withdraw or modify the recommendation
due to the existence of a Superior Proposal or an Acquisition Proposal
reasonably likely to lead to a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal and identifying the person making such
Superior Proposal and (B) if the Parent does not make, within 48 hours falling
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within two business days of receipt of such written notice, a binding written
offer (a "New Offer") to amend the terms of this Agreement to include terms that
are, as determined in good faith by the Company Board, at least as favorable to
the stockholders of the Company as such Acquisition Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such 48-hour period. If Parent shall have made a New Offer as
contemplated by the foregoing clause (B), then the Company Board may not change
its recommendation pursuant to this Section 6.1(b) and terminate this Agreement
pursuant to this Section 8.1(i) unless the Company Board shall have determined
that such Acquisition Proposal is a Superior Proposal as compared with the
Parent's New Offer. Nothing in this Section 6.1 shall be deemed to (A) permit
the Company to take any action described in clauses (ii) or (iii) of the first
sentence of this Section 6.1(b), or (B) affect any obligation of the Company
under this Agreement or (C) limit the Company's obligation to call, give notice
of, convene and hold the Company Stockholders Meeting, regardless of whether the
Company Board has withdrawn or modified its recommendation of this Agreement and
the Merger.
(c) Notices to the Parent; Additional Negotiations. The Company shall
promptly (and in any event within one business day) advise the Parent orally,
with written confirmation to follow promptly (and in any event within one
business day), of any Acquisition Proposal or any request for nonpublic
information in connection with any Acquisition Proposal, or of any inquiry with
respect to, or that could reasonably be expected to lead to, any Acquisition
Proposal, the material terms and conditions of any such Acquisition Proposal or
inquiry and the identity of the person making any such Acquisition Proposal or
inquiry. The Company shall not take any action with respect to, providing any
information to or participating in discussions or negotiations with the person
or entity making any Superior Proposal until three business days after the
Company has first notified the Parent of such Acquisition Proposal as required
by the preceding sentence. The Company shall keep the Parent reasonably informed
of any such Acquisition Proposal or inquiry, on a reasonably prompt basis (and
in any event within one business day) and shall (i) promptly notify the Parent
of the status, or any changes thereto, of any such Acquisition Proposal or
inquiry, and (ii) provide to the Parent as soon as practicable after receipt or
delivery thereof copies of all correspondence and other written material sent or
provided to the Company from any third party in connection with any Acquisition
Proposal or sent or provided by the Company to any third party in connection
with any Superior Proposal. As promptly as practicable following the provision
of any information to a third party in connection with any such Superior
Proposal or inquiry, the Company shall furnish a copy of such information to the
Parent.
(d) Certain Permitted Disclosure. Nothing contained in this Section
6.1 or in Section 6.5 shall be deemed to prohibit the Company from taking and
disclosing to its stockholders a position with respect to a tender offer
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any required disclosure to the Company's stockholders if, in the good faith
judgment of the Company Board, after consultation with outside counsel, failure
to so disclose would be inconsistent with its obligations under applicable law;
provided, however, that, except as set forth in Section 6.1(b), in no event
shall the Company Board or any committee thereof withdraw or modify, or publicly
propose to withdraw or modify, its position with respect to this Agreement or
the Merger.
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(e) Cessation of Ongoing Discussions. The Company shall, and shall
cause its Subsidiaries and its and their Representatives to, cease immediately
all discussions and negotiations regarding any proposal that constitutes, or
could reasonably be expected to lead to, an Acquisition Proposal.
(f) Definitions. For purposes of this Agreement:
"Acquisition Proposal" means (i) any inquiry, proposal or offer
for a merger, consolidation, dissolution, sale of substantial assets, tender
offer, recapitalization, share exchange or other business combination involving
the Company or any of its Subsidiaries, (ii) any proposal for the issuance by
the Company or any of its Subsidiaries of over 10% of its equity securities
(iii) any proposal or offer to acquire in any manner, directly or indirectly,
over 10% of the equity securities or consolidated total assets of the Company,
in each case other than the transactions contemplated by this Agreement or (iv)
except for the sale or non-exclusive license of products in the Ordinary Course
of Business, any divestiture of any Subsidiary or division or business unit,
including by way of sale of assets or capital stock, license of Intellectual
Property, or by merger, consolidation or otherwise.
"Superior Proposal" means any unsolicited, bona fide written
proposal made by a third party to acquire substantially all the equity
securities or assets of the Company, pursuant to a tender or exchange offer, a
merger, a consolidation or a sale of its assets, on terms which the Company
Board (after consultation with a nationally recognized independent financial
advisor and after taking into account all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions, and conditions to consummation) determines in its good faith
judgment that such proposal is (a) financially superior to the transactions
contemplated by this Agreement and for which financing, to the extent required,
is then fully committed or determined to be available by the Company Board and
(b) reasonably likely to be consummated.
6.2 Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement,
the Parent, in cooperation with the Company, shall prepare and file with the SEC
the Registration Statement, in which the Joint Proxy Statement/Prospectus shall
be included as a prospectus. Each of the Parent and the Company shall respond to
any comments of the SEC and shall use its respective reasonable best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filings, and the Parent and the Company shall
cause the Joint Proxy Statement/Prospectus to be mailed to their respective
stockholders at the earliest practicable time after the Registration Statement
is declared effective under the Securities Act. Each of the Parent and the
Company shall notify the other promptly upon the receipt of any comments from
the SEC or its staff or any other government officials and of any request by the
SEC or its staff or any other government officials for amendments or supplements
to the Registration Statement, the Joint Proxy Statement/Prospectus or any
filing pursuant to Section 6.2(b) or for additional information and shall supply
the other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Joint Proxy Statement/Prospectus, the Merger or any filing
pursuant to Section 6.2(b). Each of the Parent and the Company shall use its
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reasonable best efforts to cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 6.2 to comply in
all material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Joint Proxy
Statement/Prospectus, the Registration Statement or any filing pursuant to
Section 6.2(b), the Parent or the Company, as the case may be, shall promptly
inform the other of such occurrence and cooperate in filing with the SEC or its
staff or any other government officials, and/or mailing to stockholders of the
Company, such amendment or supplement.
(b) The Parent and the Company shall promptly make all necessary
filings with respect to the Merger under the Securities Act, the Exchange Act,
applicable state blue sky laws and the rules and regulations thereunder.
6.3 Nasdaq Quotation. The Parent and the Company each agree to continue the
quotation of Parent Common Stock and Company Common Stock, respectively, on The
Nasdaq Small Cap Market and The Nasdaq Stock Market, respectively, during the
term of this Agreement; provided, however, that the Parent may phase-up the
listing of the Parent Common Stock from The Nasdaq Small Cap Stock Market to The
Nasdaq Stock Market without the consent of the Company and without violating
this Section 6.3.
6.4 Access to Information. Each of the Parent and the Company shall (and
shall cause each of its Subsidiaries to) afford to the other party's officers,
employees, accountants, counsel and other representatives, reasonable access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments, personnel and records and,
during such period, each of the Parent and the Company shall (and shall cause
their respective Subsidiaries to) furnish promptly to the other party (a) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its business,
properties, assets and personnel as the other party may reasonably request. Each
of the Parent and the Company will hold any such information which is nonpublic
in confidence in accordance with the Confidentiality Agreement.
6.5 Stockholders Meetings.
(a) The Company, acting through the Company Board, shall take all
actions in accordance with applicable law, its Certificate of Incorporation and
By-laws and the rules of The Nasdaq Stock Market to promptly and duly call, give
notice of, convene and hold as promptly as practicable, and in any event within
45 days after the declaration of effectiveness of the Registration Statement,
the Company Stockholders Meeting for the purpose of considering and voting upon
the Company Voting Proposal. Subject to Section 6.1(b), to the fullest extent
permitted by applicable law, (i) the Company Board shall recommend approval and
adoption of the Company Voting Proposal by the stockholders of the Company and
include such recommendation in the Joint Proxy Statement/Prospectus, and (ii)
neither the Company Board nor any committee thereof shall withdraw or modify, or
propose or resolve to withdraw or modify in a manner adverse to the Parent, the
recommendation of the Company Board that the Company's stockholders vote in
favor of the Company Voting Proposal. Subject to the Company Board's duty of
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disclosure, the Company shall use best efforts to solicit from its stockholders
proxies in favor of the Company Voting Proposal and shall take all other action
necessary or advisable to secure the vote or consent of the stockholders of the
Company required by the rules of The Nasdaq Stock Market or the DGCL to obtain
such approvals. Notwithstanding anything to the contrary contained in this
Agreement, the Company, after consultation with the Parent, may adjourn or
postpone the Company Stockholders Meeting to the extent necessary to ensure that
any required supplement or amendment to the Joint Proxy Statement/Prospectus is
provided to the Company's stockholders or, if as of the time for which the
Company Stockholders Meeting is originally scheduled (as set forth in the Joint
Proxy Statement/Prospectus) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company Stockholders Meeting.
(b) The Parent, acting through the Parent Board, shall take all
actions in accordance with applicable law, its Certificate of Incorporation and
By-laws and the rules of The Nasdaq Small Cap Stock Market to promptly and duly
call, give notice of, convene and hold as promptly as practicable after the
declaration of effectiveness of the Registration Statement, the Parent
Stockholders Meeting for the purpose of considering and voting upon the Parent
Voting Proposal. To the fullest extent permitted by applicable law, unless the
Parent Board determines in good faith, after consultation with outside counsel,
that its fiduciary obligations require it to do otherwise, (i) the Parent Board
shall recommend approval and adoption of the Parent Voting Proposal by the
stockholders of the Parent and include such recommendation in the Joint Proxy
Statement/Prospectus, and (ii) neither the Parent Board nor any committee
thereof shall withdraw or modify, or propose or resolve to withdraw or modify in
a manner adverse to the Company, the recommendation of the Parent Board that the
Parent's stockholders vote in favor of the Parent Voting Proposal. Subject to
the Parent Board's duty of disclosure, the Parent shall use best efforts to
solicit from its stockholders proxies in favor of the Parent Voting Proposal and
shall take all other action necessary or advisable to secure the vote or consent
of the stockholders of the Parent required by the rules of The Nasdaq Small Cap
Stock Market to obtain such approvals. Notwithstanding anything to the contrary
contained in this Agreement, the Parent, after consultation with the Company,
may adjourn or postpone the Parent Stockholders Meeting to the extent necessary
to ensure that any required supplement or amendment to the Joint Proxy
Statement/Prospectus is provided to the Parent's stockholders or, if as of the
time for which the Parent Stockholders Meeting is originally scheduled (as set
forth in the Joint Proxy Statement/Prospectus) there are insufficient shares of
Parent Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Parent Stockholders Meeting.
(c) The Company shall call, give notice of, convene and hold the
Company Stockholders Meeting in accordance with this Section 6.5 and shall
submit the Company Voting Proposal to its stockholders for the purpose of acting
upon such proposal whether or not (i) the Company Board at any time subsequent
to the date hereof determines, in the manner permitted by Section 6.1(b) that
the Company Voting Proposal is no longer advisable or recommends that the
stockholders of the Company reject such proposal, or (ii) any actual, potential
or purported Acquisition Proposal or Superior Proposal has been commenced,
disclosed, announced or submitted to the Company.
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(d) The Parent shall call, give notice of, convene and hold the Parent
Stockholders Meeting in accordance with this Section 6.5, shall submit the
Parent Voting Proposal to its stockholders for the purpose of acting upon such
proposal whether or not the Parent Board at any time subsequent to the date
hereof determines, in the manner permitted by Section 6.5(b), that the Parent
Voting Proposal is no longer advisable or recommends that the stockholders of
the Parent reject such proposal.
6.6 Legal Conditions to the Merger.
(a) Subject to the terms hereof, including Section 6.6(b), the Company
and the Parent shall each use its reasonable efforts to (i) take, or cause to be
taken, all actions, and do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated hereby as promptly
as practicable, (ii) as promptly as practicable, obtain from any Governmental
Entity or any other third party any consents, licenses, permits, waivers,
approvals, authorizations, or orders required to be obtained or made by the
Company or the Parent or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under (A) the Securities Act
and the Exchange Act, and any other applicable federal or state securities laws,
and (B) any other applicable law and (iv) execute or deliver any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. The Company and the Parent
shall cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, accepting all
reasonable additions, deletions or changes suggested in connection therewith.
The Company and the Parent shall use their respective reasonable efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy
Statement/Prospectus and the Registration Statement) in connection with the
transactions contemplated by this Agreement. For the avoidance of doubt, the
Parent and the Company agree that nothing contained in this Section 6.6(a) shall
modify or affect their respective rights and responsibilities under Section
6.6(b).
(b) Subject to the terms hereof, the Parent and the Company agree, and
shall cause each of their respective Subsidiaries, to cooperate and to use their
respective best efforts to obtain any government clearances or approvals
required for Closing under the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal,
state or foreign law or, regulation or decree designed to prohibit, restrict or
regulate actions for the purpose or effect of monopolization or restraint of
trade (collectively "Antitrust Laws"), to respond to any government requests for
information under any Antitrust Law, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Antitrust Order")
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by this Agreement under any Antitrust Law. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
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presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any Antitrust Law. The Parent shall be entitled to direct
any proceedings or negotiations with any Governmental Entity relating to any of
the foregoing, provided that it shall afford the Company a reasonable
opportunity to participate therein. Notwithstanding anything in this Agreement
to the contrary, neither the Parent nor any of its Affiliates shall be under any
obligation to (i) make proposals, execute or carry out agreements or submit to
orders providing for the sale or other disposition or holding separate (through
the establishment of a trust or otherwise) of any material assets of the Parent
or any of its Affiliates or the Company or any of its Affiliates or the holding
separate of the shares of Company Common Stock (or shares of stock of the
Surviving Corporation) or imposing or seeking to impose any material limitation
on the ability of the Parent or any of its Affiliates to conduct their business
or own such assets or to acquire, hold or exercise full rights of ownership of
the shares of Company Common Stock (or shares of stock of the Surviving
Corporation) or (ii) take any action under this Section if the United States
Department of Justice or the United States Federal Trade Commission authorizes
its staff to seek a preliminary injunction or restraining order to enjoin
consummation of the Merger.
(c) Each of the Company and the Parent shall give (or shall cause
their respective Subsidiaries to give) any notices to third parties, and use,
and cause their respective Subsidiaries to use, their reasonable efforts to
obtain any third party consents related to or required in connection with the
Merger that are (A) necessary to consummate the transactions contemplated
hereby, (B) disclosed or required to be disclosed in the Company Disclosure
Schedule or the Parent Disclosure Schedule, as the case may be, or (C) required
to prevent the occurrence of an event that may have a Company Material Adverse
Effect or a Parent Material Adverse Effect prior to or after the Effective Time,
it being understood that neither the Company nor the Parent shall be required to
make materially burdensome payments in connection with the fulfillment of its
obligations under this Section 6.6.
6.7 Public Disclosure. Except as may be required by law or stock market
regulations, (i) the press release announcing the execution of this Agreement
shall be issued only in such form as shall be mutually agreed upon by the
Company and the Parent and (ii) the Parent and the Company shall each use its
reasonable efforts to consult with the other party before issuing any other
press release or otherwise making any public statement with respect to the
Merger or this Agreement.
6.8 Section 368(a) Reorganization. The Parent and the Company shall each
use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code. The parties hereto hereby
adopt this Agreement as a plan of reorganization.
6.9 Affiliate Legends. Section 6.9 of the Company Disclosure Schedule sets
forth a list of those persons who are, in the Company's reasonable judgment,
"affiliates" of the Company within the meaning of Rule 145 promulgated under the
Securities Act ("Rule 145 Affiliates"). The Company shall notify the Parent in
writing regarding any change in the identity of its Rule 145 Affiliates prior to
the Closing Date. The Parent shall be entitled to place appropriate legends on
the certificates evidencing any shares of Parent Common Stock to be received by
Rule 145 Affiliates of the Company in the Merger reflecting the restrictions set
forth in Rule 145 promulgated under the Securities Act and to issue appropriate
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stop transfer instructions to the transfer agent for Parent Common Stock
(provided that such legends or stop transfer instructions shall be removed one
year after the Effective Time, upon the request of any holder of shares of
Parent Common Stock issued pursuant to the Merger if such holder is not then a
Rule 145 Affiliate of the Parent).
6.10 Nasdaq Stock Market Listing. The Parent shall, if required by the
rules of The Nasdaq Stock Market, file with The Nasdaq Stock Market a
Notification Form for Listing Additional Shares with respect to the shares of
Parent Common Stock issuable in connection with the Merger, including upon the
issuance of assumed Company Stock Options and Company Warrants.
6.11 Company Stock Plans and Company Warrants.
(a) At the Effective Time, each outstanding Company Stock Option under
Company Stock Plans, whether vested or unvested, and the Company Stock Plans
themselves, insofar as they relate to outstanding Company Stock Options, shall
be assumed by the Parent and shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under the Company Stock
Option immediately prior to the Effective Time, the same number of shares of
Parent Common Stock as the holder of the Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time (rounded down to the nearest
whole number), at a price per share (rounded up to the nearest whole cent) equal
to the quotient of (y) the aggregate exercise price for the shares of Company
Common Stock purchasable pursuant to the Company Stock Option immediately prior
to the Effective Time divided by (z) the aggregate number of shares of Parent
Common Stock deemed purchasable pursuant to the Company Stock Option in
accordance with the foregoing. Such Company Stock Options shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section after giving effect to the Merger).
(b) As soon as practicable after the Effective Time, the Parent shall
deliver to the participants in the Company Stock Plans an appropriate notice
setting forth such participants' rights pursuant to the Company Stock Options,
as provided in this Section 6.11.
(c) The Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of the Company Stock Options assumed in accordance with this
Section. As soon as practicable after the Effective Time, the Parent shall file
a registration statement on Form S-8 (or any successor form) or another
appropriate form with respect to the shares of Parent Common Stock subject to
such options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
(d) At the Effective Time, by virtue of the Merger, each Company
Warrant outstanding immediately prior to the Effective Time shall be
automatically assumed by the Parent and converted into a warrant to acquire, on
the same terms and conditions as were applicable under such Company Warrant, the
same number of shares of Parent Common Stock (rounded down to the nearest whole
share) as the holder of such Company Warrant would have been entitled to receive
pursuant to the Merger had such holder exercised such Company Warrant in full
immediately prior to the Effective Time, at a price per share (rounded up to the
nearest whole cent) of Parent Common Stock equal to (A) the aggregate exercise
price for the shares of Company Common Stock otherwise purchasable pursuant to
such Company Warrant divided by (B) the aggregate number of shares of Parent
Common Stock deemed purchasable pursuant to such Company Warrant in accordance
with the foregoing (each, as so adjusted, an "Adjusted Warrant"). Prior to the
Effective Time, the Parent shall take all necessary actions for the assumption
of the Company Warrants and their conversion into Adjusted Warrants, including
the reservation of Parent Common Stock in a number at least equal to the number
of shares of Parent Common Stock that will be subject to the Adjusted Warrants.
(e) The Company Board shall, prior to or as of the Effective Time,
take all necessary actions, pursuant to and in accordance with the terms of
Company Stock Plans and the instruments evidencing the Company Stock Options, to
provide for the conversion of the (i) Company Stock Options into options to
acquire Parent Common Stock in accordance with this Section and (ii) the Company
Warrants into warrants to acquire Parent Common Stock in accordance with this
Section.
(f) The Company shall terminate its Employee Stock Purchase Plan in
accordance with its terms as of or prior to the Effective Time.
6.12 Indemnification.
(a) From the Effective Time through the sixth anniversary of the date
on which the Effective Time occurs, each of the Parent and the Surviving
Corporation shall, jointly and severally, indemnify and hold harmless each
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, a director or officer of the Company or any
of its subsidiaries (the "Covered Parties"), against all claims, losses,
liabilities, damages, judgments, fines and reasonable fees, costs and expenses,
including attorneys' fees and disbursements (collectively, "Costs"), incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to (i) the fact that the Covered Party is or was an officer or director of the
Company or any of its subsidiaries or (ii) matters existing or occurring at or
prior to the Effective Time (including this Agreement and the transactions and
actions contemplated hereby), whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under applicable law. Each
Covered Party will be entitled to advancement of expenses incurred in the
defense of any claim, action, suit, proceeding or investigation from each of the
Parent and the Surviving Corporation, jointly and severally, within ten business
days of receipt by the Parent or the Surviving Corporation, as the case may be,
from the Covered Party of a request therefor; provided that any person to whom
expenses are advanced provides an undertaking, to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification; and provided further, that the Parent and the
Surviving Corporation shall not be obligated to advance any expenses if the
subject Covered Party has initiated or participated in any litigation or
proceeding against the Parent or the Surviving Corporation (other than for
enforcement of its rights hereunder), or the Parent or the Surviving Corporation
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has initiated in good faith any litigation or proceeding against the Covered
Party (whether as a plaintiff, or as a defendant advancing any counterclaim).
(b) The certificate of incorporation and By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation of present and former
directors, officers, employees and agents of the Company and its subsidiaries
than are presently set forth in the certificate of incorporation and By-laws of
the Company.
(c) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or after
the Effective Time) is made against any Covered Party, on or prior to the sixth
anniversary of the Effective Time, the provisions of this Section 6.12 shall
continue in effect until the final disposition of such claim, action, suit,
proceeding or investigation.
(d) The covenants contained in this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Covered Parties and their
respective heirs and legal representatives and shall not be deemed exclusive of
any other rights to which a Covered Party is entitled, whether pursuant to law,
contract or otherwise.
(e) In the event that the Parent or the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors or assigns of the Parent
or the Surviving Corporation, as the case may be, shall succeed to the
obligations set forth in this Section 6.12.
6.13 Notification of Certain Matters. The Parent shall give prompt notice
to the Company, and the Company shall give prompt notice to the Parent, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) (i) any representation or warranty
of such party contained in this Agreement that is qualified as to materiality to
be untrue or inaccurate in any respect or (ii) any other representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect, in each case at any time from and after the date of this
Agreement until the Effective Time, or (b) any material failure of the Parent
and the Transitory Subsidiary or the Company, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement.
6.14 Exemption from Liability Under Section 16(b).
(a) The Board of Directors of the Parent, or a committee thereof
consisting of non-employee directors (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution in advance of
the Effective Time providing that the receipt by the Company Insiders of Parent
Common Stock in exchange for shares of Company Common Stock, and of options to
purchase Parent Common Stock upon assumption and conversion of Company Stock
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Options, in each case pursuant to the transactions contemplated hereby and to
the extent such securities are listed in the Section 16 Information, is intended
to be exempt pursuant to Rule 16b-3 under the Exchange Act.
(b) For purposes of this Agreement, "Section 16 Information" means
information regarding the Company Insiders and the number of shares of Company
Common Stock or other Company equity securities deemed to be beneficially owned
by each such Company Insider and expected to be exchanged for Parent Common
Stock, or options to purchase Parent Common Stock, in each case, in connection
with the Merger, which shall be provided by the Company to the Parent within 10
business days after the date of this Agreement.
(c) For purposes of this Agreement, "Company Insiders" means those
officers and directors of the Company who are subject to the reporting
requirements of Section 16(a) of the Exchange Act as listed in the Section 16
Information.
ARTICLE VII
CONDITIONS TO MERGER
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approvals. The Company Voting Proposal shall have been
approved and adopted at the Company Stockholders Meeting, at which a quorum is
present, by the requisite vote of the stockholders of the Company under
applicable law and the Company's Certificate of Incorporation and By-laws. The
Parent Voting Proposal shall have been approved at the Parent Stockholders
Meeting, at which a quorum is present, by the requisite vote of the stockholders
of the Parent under applicable law, the rules of The Nasdaq Stock Market and the
Parent's Certificate of Incorporation and By-laws.
(b) Governmental Approvals. Other than the filing of the Certificate
of Merger, all authorizations, consents, orders or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any Governmental
Entity in connection with the Merger and the consummation of the other
transactions contemplated by this Agreement, the failure of which to file,
obtain or occur is reasonably likely to have, directly or indirectly, a Parent
Material Adverse Effect or a Company Material Adverse Effect, shall have been
filed, been obtained or occurred on terms and conditions which would not
reasonably be likely to have a Parent Material Adverse Effect or a Company
Material Adverse Effect.
(c) Registration Statement; Joint Proxy Statement/Prospectus. The
Registration Statement shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceeding for that purpose, and no similar proceeding
with respect to the Joint Proxy Statement/Prospectus, shall have been initiated
or threatened in writing by the SEC or its staff.
(d) No Injunctions. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any order,
executive order, stay, decree, judgment or injunction (preliminary or permanent)
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or statute, rule or regulation which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger or
the other transactions contemplated by this Agreement.
(e) Nasdaq. The Parent, if required by the rules of The Nasdaq Small
Cap Stock Market, shall have filed with The Nasdaq Stock Market a Notification
Form for Listing of Additional Shares with respect to the shares of Parent
Common Stock issuable in connection with the Merger.
7.2 Additional Conditions to Obligations of the Parent and the Transitory
Subsidiary. The obligations of the Parent and the Transitory Subsidiary to
effect the Merger shall be subject to the satisfaction on or prior to the
Closing Date of each of the following additional conditions, any of which may be
waived, in writing, exclusively by the Parent and the Transitory Subsidiary:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement and in any certificate or other
writing delivered by the Company pursuant hereto shall be true and correct as of
the Closing Date as though made on and as of the Closing Date (except (i) to the
extent such representations and warranties are specifically made as of a
particular date, in which case such representations and warranties shall be true
and correct as of such date, (ii) for changes contemplated by this Agreement and
(iii) where the failure to be true and correct (without regard to any
materiality or Company Material Adverse Effect qualifications contained
therein), individually or in the aggregate, has not had, and is not reasonably
likely to have, a Company Material Adverse Effect); and the Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement on or prior to the Closing Date; and the Parent shall
have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(c) Tax Opinion. The Parent shall have received a written opinion from
XxXxxxxxx Will & Xxxxx LLP to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; provided that if XxXxxxxxx Will & Xxxxx LLP does not render
such opinion, this condition shall nonetheless be deemed satisfied if Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP renders such opinion to the Parent (it being
agreed that the Parent and the Company shall each provide reasonable
cooperation, including making reasonable representations, to XxXxxxxxx Will &
Xxxxx LLP or Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, as the case may be, to
enable them to render such opinion).
(d) Third Party Consents. The Company shall have obtained (i) all
consents and approvals of third parties referred to in Section 3.3(b) of the
Company Disclosure Schedule, including the confirmation referenced therein, and
(ii) any other required consent or approval of any third party (other than a
Governmental Entity) the failure of which to obtain, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect.
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(e) No Restraints. There shall not be instituted or pending any action
or proceeding by any Governmental Entity (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by the Parent or any of its
Subsidiaries of all or any portion of the business of the Company or any of its
Subsidiaries or of the Parent or any of its Subsidiaries or to compel the Parent
or any of its Subsidiaries to dispose of or hold separate all or any portion of
the business or assets of the Company or any of its Subsidiaries or of the
Parent or any of its Subsidiaries, (ii) seeking to impose or confirm limitations
on the ability of the Parent or any of its Subsidiaries effectively to exercise
full rights of ownership of the shares of Company Common Stock (or shares of
stock of the Surviving Corporation) including the right to vote any such shares
on any matters properly presented to stockholders or (iii) seeking to require
divestiture by the Parent or any of its Subsidiaries of any such shares.
(f) Resignations. The Parent shall have received copies of the
resignations, effective as of the Effective Time, of each director of the
Company and its Subsidiaries.
(g) D&O Insurance. The Company shall have obtained "tail" coverage on
director and officers insurance for a period of at least twelve months from the
Effective Time.
(h) Material Adverse Effect. The Company shall not have suffered a
Company Material Adverse Effect.
7.3 Additional Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of each of the following additional conditions, any of
which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. The representations and warranties
of the Parent and the Transitory Subsidiary set forth in this Agreement and in
any certificate or other writing delivered by the Parent or the Transitory
Subsidiary pursuant hereto shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except (i) to the extent such
representations and warranties are specifically made as of a particular date, in
which case such representations and warranties shall be true and correct as of
such date, (ii) for changes contemplated by this Agreement and (iii) where the
failure to be true and correct (without regard to any materiality or Parent
Material Adverse Effect qualifications contained therein), individually or in
the aggregate, has not had, and is not reasonably likely to have, a Parent
Material Adverse Effect); and the Company shall have received a certificate
signed on behalf of the Parent by the chief executive officer or the chief
financial officer of the Parent to such effect.
(b) Performance of Obligations of the Parent and the Transitory
Subsidiary. The Parent and the Transitory Subsidiary shall have performed in all
material respects all obligations required to be performed by them under this
Agreement on or prior to the Closing Date; and the Company shall have received a
certificate signed on behalf of the Parent by the chief executive officer or the
chief financial officer of the Parent to such effect.
(c) Tax Opinion. The Company shall have received the opinion of Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code; provided that if Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and
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Xxxx LLP does not render such opinion, this condition shall nonetheless be
deemed satisfied if XxXxxxxxx Will & Xxxxx LLP renders such opinion to the
Company (it being agreed that the Parent and the Company shall each provide
reasonable cooperation, including making reasonable representations, to Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP or XxXxxxxxx Will & Xxxxx LLP, as the case
may be, to enable them to render such opinion).
(d) In accordance with Section 1.4, the Parent shall have amended its
Certificate of Incorporation to designate the rights, preferences and privileges
of certain shares of Parent Preferred Stock as Parent Series A Preferred Stock
issuable in accordance with Article II hereof.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time (with respect to Sections 8.1(b) through 8.1(j), by written
notice by the terminating party to the other party), whether before or, subject
to the terms hereof, after adoption of this Agreement by the stockholders of the
Company, the stockholders of the Parent or the sole stockholder of the
Transitory Subsidiary:
(a) by mutual written consent of the Parent, the Transitory Subsidiary
and the Company; or
(b) by either the Parent or the Company if the Merger shall not have
been consummated by November 30, 2005 (the "Outside Date") (provided that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been a principal cause of or resulted in the failure of the Merger
to occur on or before the Outside Date); or
(c) by either the Parent or the Company if a Governmental Entity of
competent jurisdiction shall have issued a nonappealable final order, decree or
ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the Merger
(provided the right to terminate this Agreement under this Section 8.1(c) shall
not be available to any party whose material failure to fulfill any of its
obligations hereunder has been the principle cause of or resulted in such order,
decree, ruling or action); or
(d) by either the Parent or the Company, if at the Company
Stockholders Meeting (including any adjournment or postponement thereof
permitted by this Agreement) at which a vote on the Company Voting Proposal is
taken, the requisite vote of the stockholders of the Company in favor of the
Company Voting Proposal shall not have been obtained; or
(e) by either the Parent or the Company, if at the Parent Stockholders
Meeting (including any adjournment or postponement thereof permitted by this
Agreement) at which a vote on the Parent Voting Proposal is taken, the requisite
vote of the stockholders of the Parent in favor of the Parent Voting Proposal
shall not have been obtained; or
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(f) by the Parent, if, prior to the adoption and approval of the
Company Voting Proposal by the stockholders of the Company at the Company
Stockholders Meeting: (i) the Dissenting Shares are greater than four percent
(4%) of the total capital stock of the Company outstanding on the date hereof,
on an as-converted basis; (ii) the Company Board (or any committee thereof)
shall have failed to recommend approval of the Company Voting Proposal in the
Joint Proxy Statement/Prospectus or shall have withdrawn or knowingly modified
in a material adverse manner its recommendation of the Company Voting Proposal;
(iii) the Company Board (or any committee thereof) shall have failed to
reconfirm its recommendation of the Company Voting Proposal within ten (10)
business days after the Parent requests in writing that the Company Board (or
any committee thereof) do so; (iv) the Company Board (or any committee thereof)
shall have approved or recommended to the stockholders of the Company an
Acquisition Proposal (other than the Merger); (v) a tender offer or exchange
offer for outstanding shares of Company Common Stock shall have been commenced
(other than by the Parent or an Affiliate of the Parent) and the Company Board
(or any committee thereof) recommends that the stockholders of the Company
tender their shares in such tender or exchange offer or, within ten (10)
business days after the commencement of such tender or exchange offer, fails to
recommend against acceptance of such offer; or (vi) the Company shall have
breached its obligations under Section 6.1 or Section 6.5; or
(g) by the Parent, if there has been a breach of or failure to perform
any representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, which breach or failure to perform (i) would cause
the conditions set forth in Section 7.2(a) or 7.2(b) not to be satisfied, and
(ii) shall not have been cured within 30 days following receipt by the Company
of written notice of such breach or failure to perform from the Parent; or
(h) by the Company, if there has been a breach of or failure to
perform any representation, warranty, covenant or agreement on the part of the
Parent or the Transitory Subsidiary set forth in this Agreement, which breach or
failure to perform (i) would cause the conditions set forth in Section 7.3(a) or
7.3(b) not to be satisfied, and (ii) shall not have been cured within 30 days
following receipt by the Parent of written notice of such breach or failure to
perform from the Company; or
(i) by the Company, if the Company Board, pursuant to and in
compliance with Section 6.1, shall have approved or recommended to the
stockholders of the Company a Superior Proposal; or
(j) by the Company, if the Parent Board (or any committee thereof) (i)
shall have failed to recommend approval of the Parent Voting Proposal in the
Joint Proxy Statement/Prospectus or shall have withdrawn or knowingly modified
in a material adverse manner its recommendation of the Parent Voting Proposal or
(ii) shall have breached its obligations under Section 6.5.
8.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall immediately become void and there
shall be no liability or obligation on the part of the Parent, the Company, the
Transitory Subsidiary or their respective officers, directors, stockholders or
Affiliates; provided that (i) any such termination shall not relieve any party
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from liability for any intentional breach of this Agreement (which includes,
without limitation, the making of any representation or warranty by a party in
this Agreement that the party knew was not true and accurate when made) and (ii)
the provisions of Sections 3.22, 4.13, 5.2 and 8.3 and Article IX of this
Agreement and the Confidentiality Agreement shall remain in full force and
effect and survive any termination of this Agreement.
8.3 Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees and expenses, whether or
not the Merger is consummated; provided however, that the Company and the Parent
shall share equally all fees and expenses, other than accountants' and
attorneys' fees, incurred with respect to the printing, filing and mailing of
the Joint Proxy Statement/Prospectus (including any related preliminary
materials) and the Registration Statement and any amendments or supplements
thereto.
(b) The Company shall pay the Parent a termination fee of $1,324,600
(which shall include all expenses and fees) if:
(i) this Agreement is terminated pursuant to (A) Section 8.1(b)
(without the Company Stockholders Meeting having occurred) or (B) Section 8.1(d)
if in the case of each of clauses (A) and (B) at any time after the date of this
Agreement and before such termination an Acquisition Proposal shall have been
publicly announced or communicated to the Company and within twelve months of
such termination the Company enters into any definitive agreement with respect
to an Acquisition Proposal or an Acquisition Proposal relating to the Company is
consummated; or
(ii) this Agreement is terminated pursuant to Section 8.1(f)
(except for a termination pursuant to clause (i) of Section 8.1(f) regarding
Dissenting Shares); or
(iii) this Agreement is terminated pursuant to Section 8.1(g) (x)
resulting from a failure to satisfy the condition set forth in Section 7.2(a)
based upon a breach of a representation or warranty by the Company, which
representation or warranty was known by the Company to be false when made, or
(y) resulting from a failure to satisfy the condition set forth in Section
7.2(b) based upon a material and knowing breach by the Company of its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date, if at any time after the date of this Agreement and before
such termination an Acquisition Proposal shall have been publicly announced and
remains outstanding and within six months of such termination the Company enters
into any definitive agreement with respect to the Acquisition Proposal or the
Acquisition Proposal relating to the Company is consummated; or
(iv) this Agreement is terminated pursuant to Section 8.1(i).
(c) The Company shall pay the Parent a termination fee of $716,000
(which shall consist of all expenses and fees) if:
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(i) this Agreement is terminated pursuant to Section 8.1(d) so
long as the Company has not breached this Agreement with respect to its
obligations contained in Sections 6.1 or 6.5; or
(ii) this Agreement is terminated pursuant to Section 8.1(f)(i)
with respect to Dissenting Shares.
Any fee due under Sections 8.3(b) and (c) shall be paid by wire transfer of
the same-day funds:
(i) in the case of Section 8.3(b)(i) and Section 8.3(b)(iii), on
the earlier to occur of the date on which the Company (A) enters into the
definitive agreement or (B) consummates the Acquisition Proposal referred to
therein; and
(ii) in the case of Section 8.3(b)(ii), Section 8.3(b)(iv),
Section 8.3(c)(i) and Section 8.3(c)(ii)within one business day after the
termination of the Agreement.
(d) The Parent shall pay the Company up to $1,324,600 (which shall
include all expenses and fees) if:
(i) this Agreement is terminated pursuant to Section 8.1(h) (x)
resulting from a failure to satisfy the condition set forth in Section 7.3(a)
based upon a breach of a representation or warranty by the Parent that was known
by the Parent to be false when made, or (y) resulting from a failure to satisfy
the condition set forth in Section 7.3(b) based upon a material and knowing
breach by the Parent of its obligations under this Agreement required to be
performed by it on or prior to the Closing Date; or
(ii) this Agreement is terminated pursuant to Section 8.1(j).
(e) The Parent shall pay the Company up to $716,000 (which shall
include all expenses and fees) if this Agreement is terminated pursuant to
Section 8.1(e).
Any fee due under Sections 8.3(d) and (e) shall be paid by the Parent by
wire transfer of same-day funds within one business day after the date of
termination of this Agreement.
(f) The parties acknowledge that the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the parties would not enter into
this Agreement. For the avoidance of doubt, if a party pays a termination fee
pursuant to any of Sections 8.3(b) through (e) hereof, it shall not be obligated
to pay an additional termination fee or any additional portion thereof pursuant
to this Section 8.3; provided, however, payment of the fees and expenses
described in this Section 8.3 shall not be in lieu of damages incurred in the
event of a breach of this Agreement described in clause (i) of Section 8.2.
8.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of any party, but, after any such approval, no amendment
shall be made which by law requires further approval by such stockholders
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without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.5 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. Such extension or waiver
shall not be deemed to apply to any time for performance, inaccuracy in any
representation or warranty, or noncompliance with any agreement or condition, as
the case may be, other than that which is specified in the extension or waiver.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
9.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article II, Sections 6.11, 6.12 and
Article IX.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly delivered (i) four business days after being
sent by first-class, postage prepaid, or (ii) one business day after being sent
for next business day delivery, fees prepaid, via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
(a) if to the Parent or the Transitory Subsidiary, to
Clinical Data, Inc.
0 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
XxXxxxxxx Will & Xxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
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(b) if to the Company, to
Genaissance Pharmaceuticals, Inc.
Xxxx Xxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: President and Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Any party to this Agreement may give any notice or other communication
hereunder using any other means (including personal delivery, messenger service,
telecopy, ordinary mail or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party to this
Agreement may change the address to which notices and other communications
hereunder are to be delivered by giving the other parties to this Agreement
notice in the manner herein set forth.
9.3 Entire Agreement. This Agreement (including the Schedules and Exhibits
hereto and the documents and instruments referred to herein that are to be
delivered at the Closing) constitutes the entire agreement among the parties to
this Agreement and supersedes any prior understandings, agreements or
representations by or among the parties hereto, or any of them, written or oral,
with respect to the subject matter hereof; provided that the Confidentiality
Agreement shall remain in effect in accordance with its terms.
9.4 No Third Party Beneficiaries. Except as provided in Section 6.12, this
Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any person other than the parties hereto and their respective
successors and permitted assigns, to create any agreement of employment with any
person or to otherwise create any third-party beneficiary hereto.
9.5 Assignment. No party may assign any of its rights or delegate any of
its performance obligations under this Agreement, in whole or in part, by
operation of law or otherwise without the prior written consent of the other
parties, and any such assignment without such prior written consent shall be
null and void. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and permitted assigns. Any purported assignment
of rights or delegation of performance obligations in violation of this Section
9.5 is void.
9.6 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
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competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such court does
not exercise the power granted to it in the prior sentence, the parties hereto
agree to replace such invalid or unenforceable term or provision with a valid
and enforceable term or provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable term.
9.7 Counterparts and Signature. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile transmission.
9.8 Interpretation. When reference is made in this Agreement to an Article
or a Section, such reference shall be to an Article or Section of this
Agreement, unless otherwise indicated. The table of contents, table of defined
terms and headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa. Any reference to
any federal, state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No summary of this Agreement prepared by any party shall
affect the meaning or interpretation of this Agreement.
9.9 Governing Law. All matters arising out of or relating to this Agreement
and the transactions contemplated hereby (including without limitation its
interpretation, construction, performance and enforcement) shall be governed by
and construed in accordance with the internal laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of laws of any jurisdictions other than those of the State of
Delaware.
9.10 Remedies. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
-58-
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.11 Submission to Jurisdiction. Each of the parties to this Agreement (a)
consents to submit itself to the personal jurisdiction of the Chancery Court of
the State of Delaware or any federal court sitting in the State of Delaware in
any action or proceeding arising out of or relating to this Agreement or any of
the transactions contemplated by this Agreement, (b) agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court, (c) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (d)
agrees not to bring any action or proceeding arising out of or relating to this
Agreement or any of the transaction contemplated by this Agreement in any other
court. Each of the parties hereto waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of any other party with respect
thereto. Any party hereto may make service on another party by sending or
delivering a copy of the process to the party to be served at the address and in
the manner provided for the giving of notices in Section 9.2. Nothing in this
Section 9.11, however, shall affect the right of any party to serve legal
process in any other manner permitted by law.
9.12 Waiver of Jury Trial. EACH OF THE PARENT, THE TRANSITORY SUBSIDIARY
AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARENT, THE TRANSITORY SUBSIDIARY OR
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT.
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IN WITNESS WHEREOF, the Parent, the Transitory Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CLINICAL DATA, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Title: President and Chief Executive Officer
SAFARI ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Title: President and Chief Executive Officer
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ Xxx X. Xxxxxx
----------------------------------------
Title: Senior Vice President & CFO
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The undersigned, being the duly elected Secretary of the Transitory
Subsidiary, hereby certifies that this Agreement has been adopted by the holders
of shares representing a majority of the votes represented by the outstanding
shares of capital stock of the Transitory Subsidiary entitled to vote on this
Agreement.
----------------------------------
Secretary
The undersigned, being the duly elected Secretary of the Company, hereby
certifies that this Agreement has been adopted by the holders of shares
representing a majority of the votes represented by the outstanding shares of
capital stock of the Company entitled to vote on this Agreement.
---------------------------------
Secretary
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SCHEDULE A
----------
PARTIES TO PARENT VOTING AGREEMENTS
This schedule has been omitted in reliance on Item 601 of Regulation S-K.
-62-
SCHEDULE B
----------
PARTIES TO COMPANY VOTING AGREEMENTS
This schedule has been omitted in reliance on Item 601 of Regulation S-K.
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EXHIBIT A
---------
FORM OF PARENT VOTING AGREEMENTS
Executed copies of all Parent Voting Agreements have been filed as exhibits to
Clinical Data, Inc.'s filings with the Securities and Exchange Commission.
-64-
EXHIBIT B
---------
FORM OF COMPANY VOTING AGREEMENTS
Executed copies of all Company Voting Agreements have been filed as exhibits to
Clinical Data, Inc.'s filings with the Securities and Exchange Commission.
-65-
EXHIBIT C
---------
TERMS OF PARENT SERIES A PREFERRED STOCK
-66-
TERMS OF SERIES A PREFERRED STOCK
OF
CLINICAL DATA, INC.
(a) Designation, Par Value and Number. A total of {Note: The number of
shares of Series A Preferred Stock to be issued to the Investor shall equal (1)
$11,139,000 less any dividends paid on the Genaissance Series A Preferred Stock
after June 20, 2005, divided by (2) the Original Issue Price} shares of the
authorized but undesignated Preferred Stock of the Corporation are hereby
designated as "Series A Preferred Stock" and constituted as a series of
preferred stock, having a par value of $.01 per share (the "SERIES A PREFERRED
Stock"). In accordance with the terms hereof, each share of Series A Preferred
Stock shall have the same relative rights as and be identical in all respects
with each other share of Series A Preferred Stock.
(b) Dividends. To the extent permitted under the Delaware General
Corporation Law, the Corporation shall pay dividends to the holders of the
Series A Preferred Stock as provided in this Section 2.
(i) General. Dividends on each issued and outstanding share of
Series A Preferred Stock shall accrue at a rate of 2% per annum (subject to
Section 4(c) and Section 6(b)), on the Accreted Value of such share of Series A
Preferred Stock as of the immediately preceding Dividend Payment Date (or, for
the initial Dividend Period, as of the Original Issuance Date) from and
including the Original Issuance Date of such share of Series A Preferred Stock
until the first to occur of (i) the date on which the Liquidation Value or the
Make Whole Redemption Price of such share of Series A Preferred Stock is paid to
the holder thereof in accordance with Section 4, or (ii) the date on which such
share of Series A Preferred Stock is converted into shares of Common in
accordance with Section 5 (in which case, any accrued dividends shall then be
forfeited). Such dividends shall accrue whether or not they have been declared
and whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends, and such dividends shall be
cumulative such that all accrued and unpaid dividends shall be fully paid or
declared before any dividends may be made with respect to any Junior Securities.
Dividends shall accrue on a daily basis (computed on the basis of a 365-day
year).
(ii) Payment of Dividends. The Corporation shall pay, out of
funds legally available therefor, any accrued dividends in respect of each share
of Series A Preferred Stock semi-annually in arrears on January 5 and July 5 of
each year (each such date being a "DIVIDEND PAYMENT DATE" and each such
semi-annual period ending on such Dividend Payment Date being a "DIVIDEND
PERIOD"). Each such dividend shall be payable to the holders of record of shares
of Series A Preferred Stock on December 15 and June 15, respectively, as they
appear on the stock records of the Corporation at the close of business on such
record date. An amount equal to any such accrued dividends not paid with respect
to any Dividend Period shall be added to the Accreted Value of the Series A
Preferred Stock; provided, that, any such amounts shall remain as accrued and
unpaid dividends for all purposes hereunder notwithstanding such amounts being
added to the Accreted Value. Such increased Accreted Value after each Dividend
Period shall be used for purposes of calculating dividends for succeeding
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Dividend Periods (except to the extent any such accrued dividends included in
the Accreted Value are subsequently declared and paid).
(iii) Distribution of Partial Dividend Payments. If at any time
the Corporation pays less than the total amount of dividends then accrued with
respect to the Series A Preferred Stock, such payment shall be distributed pro
rata among the holders of the outstanding shares of Series A Preferred Stock
based upon the aggregate dividends accrued and payable on such outstanding
shares of Series A Preferred Stock held by each such holder.
(iv) Treatment of Accrued and Unpaid Dividends Upon Conversion.
Upon any conversion of shares of Series A Preferred Stock into Common in
accordance with Section 5, any accrued and unpaid dividends on the Series A
Preferred Stock shall be forfeited.
(v) Participation in Common Dividends. In the event that the
Corporation declares or pays a dividend or makes any cash distribution (or
distribution in kind of assets) on the Common, then the holders of the
outstanding shares of Series A Preferred Stock (based on the number of shares of
Common into which such shares of Series A Preferred Stock are convertible as of
the record date for such dividend or distribution) and the holders of the Common
shall share pro rata in such dividend or distribution.
(vi) Partial Dividend Period. Dividends payable on the shares of
Series A Preferred Stock for any period less than a full Dividend Period shall
be computed on the basis of a 365-day year and the actual number of days elapsed
in the period for which such dividend is payable.
(c) Voting Rights.
(i) General. The holders of the Series A Preferred Stock shall be
entitled to notice of all stockholders meetings in accordance with the Bylaws of
the Corporation, and except as otherwise required by applicable law or in this
Section 3, the holders of the Series A Preferred Stock shall be entitled to vote
on all matters submitted to the stockholders of the Corporation for a vote,
voting as a single class with the Common, with the holders of Series A Preferred
Stock entitled to one vote for each share of Common issuable upon conversion of
the Series A Preferred Stock held as of the record date for such vote or, if no
record date is specified, as of the date of such vote or date of any written
consent, as the case may be; provided, however, that notwithstanding anything to
the contrary herein, upon conversion, each share of Common issued shall be
entitled to one vote per share.
(ii) Special Series A Preferred Stock Restrictions. In addition
to the voting rights contained in Section 3(a) or as otherwise required by
applicable law, so long as the original holder of the Series A Preferred Stock
or its affiliated entities own in the aggregate at least 125,000 shares of
Series A Preferred Stock (as adjusted for any stock split, stock dividend,
recapitalization or otherwise), the Corporation shall not, without the vote or
written consent of holders of 66-2/3's of the shares of Series A Preferred Stock
then outstanding (the "SUPERMAJORITY PREFERRED HOLDERS") alter or change the
rights, preferences or privileges of the Series A Preferred Stock, including any
increase in the number of authorized shares of Series A Preferred Stock, whether
as a result of any amendment, repeal, modification or supplement to any
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provision of the Certificate of Incorporation of the Corporation, as amended,
this Certificate of Designation or the Bylaws of the Corporation, or by merger,
consolidation or otherwise.
(d) Liquidity Events.
(i) Significant Event. Upon any Significant Event:
Each holder of Series A Preferred Stock shall be entitled to
receive for each share of Series A Preferred Stock held by
such holder immediately prior to such Significant Event,
prior and in preference to any distribution or payment made
upon or with respect to any Junior Securities, irrespective
of whether such distribution or payment is made by the
Corporation or any other Person, an amount (the "LIQUIDATION
VALUE") equal to either (A)(1) the Original Issue Price of
such share of Series A Preferred Stock on the date of
distribution or payment plus (2) all dividends (whether or
not declared) accrued but unpaid on such share of Series A
Preferred Stock, or (B) if elected by the vote or written
consent of the Supermajority Preferred Holders, the amount
to which the holder of such share of Series A Preferred
Stock would be entitled assuming all of the shares of Series
A Preferred Stock had been converted into shares of Common
in accordance with Section 5(a)(i) immediately prior to such
Significant Event (the "AS CONVERTED VALUE"). If upon any
Significant Event the assets and/or proceeds to be
distributed to the holders of the Series A Preferred Stock
are insufficient to permit payment to such holders of the
aggregate amount which they are entitled to receive under
Section 4(a)(i)(A), then the entire amount of assets and/or
proceeds available to the Corporation's stockholders upon
such Significant Event shall be distributed pro rata among
such holders of the Series A Preferred Stock based upon the
aggregate amounts due to each such holder with respect to
such shares of Series A Preferred Stock if such assets
and/or proceeds were sufficient to permit payment in full.
With respect to any Significant Event involving the
Corporation's merger, consolidation or similar transaction,
except as otherwise consented to by the Supermajority
Preferred Holders, the Corporation shall not effect such
Significant Event unless the agreement or plan of merger or
consolidation or other applicable agreement provides that
the consideration payable to the stockholders of the
Corporation shall be allocated among the holders of capital
stock of the Corporation in accordance with the priorities
set forth in this Section 4(a).
After the payment and/or distribution to the holders of the
Series A Preferred Stock of the amounts set forth in Section
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4(a)(i), the holders of the Series A Preferred Stock shall
not be entitled to any further payment or distribution.
The Liquidation Value shall in all events be paid in cash
and/or securities, depending on the form of consideration
payable to the Corporation's stockholders as set forth in
the applicable documents and agreements effecting any
Significant Event; provided, however, that if the applicable
Liquidation Value for the Series A Preferred Stock is
payable in connection with a merger, consolidation or sale
of capital stock in which the consideration is not cash,
then the consideration (including any shares of capital
stock to be delivered by the acquiring corporation) payable
to the holders of Common and Series A Preferred Stock in
connection with such transaction shall be allocated or
reallocated, as applicable, among the holders of Common and
the Series A Preferred Stock (of all outstanding series) in
an appropriate and equitable manner to give economic effect
to the priority of distributions between the holders of
Common and Preferred Stock in accordance with this Section
and the Corporation's Certificate of Incorporation, as
amended. The foregoing allocation to the holders of Series A
Preferred Stock shall apply notwithstanding that, pursuant
to the terms of the Significant Event, consideration is only
allocated to the holders of Common, it being the intention
of this Section 4 that, if a Significant Event is to be
treated as a liquidation, holders of Common shall not be
entitled to any payment until the holders of outstanding
Preferred Stock (of all series) have received their
applicable liquidation preference amounts or elected the
benefits of the As Converted Value under Section 4(a)(i)(B).
If there is more than one form of consideration payable in
connection with the Significant Event, such consideration
shall be allocated proportionately to the holders of
Preferred Stock (of all series) and Common based on the
amount to which each such holder of each class or series is
entitled.
(ii) Form of Consideration. Whenever the distribution provided
for in this Section 4 shall be payable in property other than cash, the value of
such distribution shall be the Fair Market Value of such property.
(iii) Mandatory Redemption Upon Certain Significant Events. If a
Significant Event occurs prior to the fifth anniversary of the Closing Date,
then, unless the Supermajority Preferred Holders elect otherwise to receive the
As Converted Value, the Corporation shall redeem each then outstanding share of
Series A Preferred Stock at a per share purchase price equal to the sum of (i)
the Accreted Value of such shares of Series A Preferred Stock on the date of
redemption, plus (ii) all dividends (whether or not declared) accrued since the
end of the previous Dividend Period on such share of Series A Preferred Stock,
plus (iii) the sum of the remaining dividends that would have accrued and/or
been payable on one share of Series A Preferred Stock pursuant to Section 2 from
the date of redemption pursuant to this Section 4(c) through the fifth
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anniversary of the Closing Date had such share of Series A Preferred Stock not
been so redeemed (the sum of clauses (i), (ii) and (iii) being referred to
herein as the "MAKE-WHOLE REDEMPTION PRICE"). If the Corporation (or its
successor with respect to any Significant Event) does not have sufficient funds
legally available to redeem on any redemption date all shares of Series A
Preferred Stock, the Corporation (or its successor) shall redeem a pro rata
portion of each holder's shares of such stock out of funds legally available
therefor, based on the respective amounts which would otherwise be payable in
respect of the shares to be redeemed if the legally available funds were
sufficient to redeem all such shares, and shall redeem the remaining shares to
have been redeemed as soon as practicable after the Corporation (or its
successor) has funds legally available therefor; provided, that, with respect to
any shares of Series A Preferred Stock that were to have been redeemed and are
not, the Make-Whole Redemption Price shall be re-calculated such that with
respect to the remaining dividends determined in accordance with clause (iii) of
this Section 4(c), the dividend rate shall be increased to 10% per annum for
purposes of Section 2(a) for any shares of Series A Preferred Stock that are not
so redeemed.
(e) Conversion.
(i) Conversion Procedures.
Subject to Section 5(c), at any time and from time to time,
a holder of Series A Preferred Stock shall have the right to
convert any share(s) of Series A Preferred Stock into the
number of shares of Common computed by dividing (X) the
Original Issue Price by (Y) the Conversion Price then in
effect for such share of Series A Preferred Stock (such
quotient being the "Ordinary Conversion Amount"); provided,
however, that after the third anniversary of the Closing
Date, any share(s) of Series A Preferred Stock shall be
convertible into a number of shares of Common computed by
dividing (A) the Original Issue Price by (B) the average
Market Price for the 10 consecutive Trading Days before the
delivery to the office of the Corporation or any transfer
agent of the written notice of election to convert if such
amount is greater than the Ordinary Conversion Amount.
Each conversion of Series A Preferred Stock pursuant to
Section 5(a) shall be effected by delivery, to the office of
the Corporation or to any transfer agent for such shares, of
(A) duly endorsed certificates for the shares being
converted and (B) written notice to the Corporation that the
holder elects to convert such shares. Conversion pursuant to
Section 5(a) shall be deemed to occur immediately prior to
the close of business on the date the certificates and
notice are delivered. At the time any such conversion has
been effected, the rights of the holders of shares of Series
A Preferred Stock so converted shall cease with respect to
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such converted shares of Series A Preferred Stock, and such
holders entitled to receive Common upon conversion of such
Series A Preferred Stock shall be treated for all purposes
as the record holders of such shares of Common on the date
conversion is deemed to have been effected.
As soon as practicable after (x) a conversion has been
effected and (y) the certificate(s) representing the
converted shares of Series A Preferred Stock have been
surrendered to the principal office of the Corporation or to
any transfer agent for such shares, the Corporation shall
deliver to the converting holder:
a certificate or certificates representing the number
-----------------------------------------------------
of shares of Common issuable by reason of such
----------------------------------------------
conversion in such name or names and such denomination
------------------------------------------------------
or denominations as the converting holder has
---------------------------------------------
specified;
----------
a certificate representing any shares of Series A
-------------------------------------------------
Preferred Stock which were represented by the
---------------------------------------------
certificate or certificates delivered to the
--------------------------------------------
Corporation or to any transfer agent in connection with
-------------------------------------------------------
such conversion but which were not converted; and
-------------------------------------------------
any amount payable under Section 5(a)(vi) with respect
------------------------------------------------------
to such conversion.
-------------------
The Corporation shall not close its books on a Business Day
against the transfer of Series A Preferred Stock or of
Common issued or issuable upon conversion of Series A
Preferred Stock in any manner that interferes with the
timely conversion of Series A Preferred Stock. At any time
that a conversion of shares of Series A Preferred Stock
pursuant to this Section 5(a) has occurred, the shares of
Series A Preferred Stock so converted shall not thereafter
be reissued, sold or transferred or deemed to be issued and
outstanding for any purpose and the number of shares of
Series A Preferred Stock authorized to be issued by the
Corporation shall be reduced by the number of shares of
Series A Preferred Stock so converted.
The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of
Common, solely for the purpose of issuance upon the
conversion of shares of the Series A Preferred Stock, such
number of shares of Common as are issuable upon the
conversion of all outstanding Series A Preferred Stock. All
shares of Common which are so issuable shall, when issued in
accordance with the terms hereof, be duly and validly
issued, fully paid and nonassessable. The Corporation shall
not take any action that would cause the number of
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authorized but unissued shares of Common to be less than the
number of such shares required to be reserved hereunder for
issuance upon conversion of the Series A Preferred Stock.
If any fractional interest in a share of Common would,
except for the provisions of this subparagraph, be delivered
upon any conversion of any shares of Series A Preferred
Stock, the Corporation, in lieu of delivering the fractional
share therefor, may pay an amount to the holder thereof
equal to the Market Price of such fractional interest as of
the date of conversion. The determination as to the amount
of any cash payment in lieu of the issuance of fractional
shares shall be based upon the total number of shares of
Series A Preferred Stock being converted at any one time by
the holder thereof, not upon each share of Series A
Preferred Stock being converted at any one time by the
holder thereof.
If any holder surrenders shares of Series A Preferred Stock
for conversion after the close of business on the record
date for the payment of a dividend and prior to the opening
of business on the Dividend Payment Date for such dividend,
then, notwithstanding such conversion, the dividend payable
on such Dividend Payment Date will be paid to the registered
holder of such shares on such record date.
If a holder converts shares of Series A Preferred Stock, the
Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of Common upon the
conversion. The holder, however, shall pay to the
Corporation the amount of any tax which is due (or shall
establish to the satisfaction of the Corporation the payment
thereof or that no such payment is due) if the shares are to
be issued in a name other than the name of such holder.
(ii) Effect on Conversion Price of Certain Events. For purposes
of determining the applicable Conversion Price under Section 5, the following
shall be applicable:
Subdivisions or Combinations of Common. If the Corporation
at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common into a greater number of
shares, the Conversion Price in effect immediately prior to
such subdivision shall be reduced proportionately, and if
the Corporation at any time combines (by reverse stock split
or otherwise) one or more classes of its outstanding shares
of Common into a smaller number of shares, the Conversion
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Price in effect immediately prior to such combination shall
be increased proportionately.
Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization,
reorganization, reclassification, consolidation, merger or
similar transaction, in each case which is effected in such
a manner that the holders of Common are entitled to receive
(either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for
Common, and which does not otherwise qualify as a
Fundamental Change, is referred to herein as an "ORGANIC
CHANGE." Prior to the consummation of any Organic Change,
the Corporation shall make appropriate provisions to insure
that each of the holders of Series A Preferred Stock shall
thereafter have the right to acquire and receive, in lieu of
the shares of Common immediately theretofore acquirable and
receivable upon the conversion of such holder's Series A
Preferred Stock, such shares of stock, securities or assets
as such holder would have received in connection with such
Organic Change if such holder had converted its Series A
Preferred Stock immediately prior to such Organic Change. In
each such case, the Corporation shall also make appropriate
provisions to insure that the provisions of this Section
5(b) shall thereafter be applicable to the securities
issuable upon conversion of the Series A Preferred Stock and
shall provide the holders of Series A Preferred Stock with
notice thereof.
Notices. As soon as practicable after any adjustment of the
Conversion Price, the Corporation shall give written notice
thereof to all holders of Series A Preferred Stock, setting
forth in reasonable detail and certifying the calculation of
such adjustment.
(iii) Mandatory Conversion. If, on or after the later of the
Closing Date or the date the shares of Common issuable upon conversion of the
Series A Preferred Stock become registered under the Securities Act of 1933, as
amended, and become eligible for trading to the public, the Market Price of the
Common exceeds ${NOTE: THIS AMOUNT SHALL EQUAL THE ORIGINAL ISSUE PRICE PER
SHARE PLUS $5.00} per share (as adjusted for any stock split, stock dividend,
recapitalization or otherwise on the Common) for 10 consecutive Trading Days,
the Corporation may elect, beginning on the first Business Day following such 10
Trading Day period, and at any time thereafter while any shares of Series A
Preferred Stock remain outstanding, to require the holders of all (but not less
than all) outstanding shares of Series A Preferred Stock to convert such shares
into Common pursuant to the terms of this Section 5 (a "MANDATORY CONVERSION").
In case of such election, the Corporation shall give written notice to each
holder of outstanding shares of Series A Preferred Stock. Any such conversion
shall be deemed to have been effected, without further action by any party,
immediately prior to the close of business on the fifth Business Day after the
Corporation delivers notice of its election of a Mandatory Conversion to the
holders of Series A Preferred Stock Shares. At the time any such conversion has
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been effected, the rights of the holders of shares of Series A Preferred Stock
so converted shall cease with respect to such converted shares of Series A
Preferred Stock, and such holders entitled to receive Common upon conversion of
such Series A Preferred Stock shall be treated for all purposes as the record
holders of such shares of Common on the date conversion is deemed to have been
effected. The provisions of Section 5(a) shall apply to a Mandatory Conversion
under this Section 5(c).
(f) General.
(i) The Corporation shall keep at its principal office (or at the
office of its counsel) a register for the registration of Series A Preferred
Stock. Upon the surrender of any certificate representing Series A Preferred
Stock at such place, the Corporation shall, at the request of the record holder
of such certificate, execute and deliver a new certificate or certificates in
exchange therefor representing in the aggregate the number of shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
(ii) Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred Stock, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
(iii) Except as otherwise expressly provided hereunder, all
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, by
reputable overnight courier service, charges prepaid, or by personal delivery,
and shall be deemed to have been given (i) three (3) Business Days after being
sent by registered or certified mail, (ii) one (1) Business Day after being
deposited with such an overnight courier service, and (iii) upon delivery, if by
personal delivery, if mailed or delivered (A) to the Corporation, at its
principal executive offices, or (B) to any stockholder, at such holder's address
as it appears in the stock records of the Corporation (unless otherwise
indicated by any such holder).
(g) Definitions. The following terms shall have the following meanings
for purposes of this Certificate of Designation:
"ACCRETED VALUE" means, with respect to one share of Series A Preferred Stock,
${125% OF THE AVERAGE MARKET Price}, plus the amount of any dividends added to
such Accreted Value in accordance with Section 2, minus the amount of any
dividends included in Accreted Value that are subsequently declared and paid
(subject to equitable adjustments by the Board acting in good faith to reflect
stock splits of shares of Series A Preferred Stock, stock dividends in respect
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of shares of Series A Preferred Stock, stock combinations of shares of Series A
Preferred Stock, recapitalizations and like occurrences).
"AVERAGE MARKET PRICE" shall mean the average of the Market Price of the Common
for the ten (10) consecutive Trading Days commencing on the Business Day
following the day of the press release of the announcement of the execution and
delivery of the Merger Agreement.
"BOARD" means the Board of Directors of the Corporation.
"BUSINESS DAY" means any day except a Saturday or Sunday, or other day on which
banks in Boston, Massachusetts, are authorized or obligated by law or executive
order to close..
"CLOSING DATE" is the date of consummation of the transactions contemplated by
the Agreement and Plan of Merger by and among the Corporation, Safari
Acquisition Corp., and Genaissance Pharmaceuticals, Inc.
"COMMON" means the Corporation's Common Stock, $0.01 par value per share.
"CONVERSION PRICE" means, with respect to each share of Series A Preferred
Stock, initially 125% OF THE AVERAGE MARKET PRICE for such share, subject to
adjustment from time to time in accordance with Section 5(b).
"DIVIDEND PAYMENT DATE" is defined in Section 2(b).
"DIVIDEND PERIOD" is defined in Section 2(b).
"FAIR MARKET VALUE" means fair market value as determined in good faith by the
Board. Any securities shall be valued as follows: (i) securities not subject to
investment letter or other similar restrictions on free marketability:
if traded on a securities exchange or The Nasdaq Stock
------------------------------------------------------
Market, the value shall be based on a formula approved
------------------------------------------------------
in good faith by the Board and derived from the closing
-------------------------------------------------------
prices of the securities on such exchange or The Nasdaq
-------------------------------------------------------
Stock Market over a specified time period;
------------------------------------------
if actively traded over-the-counter, the value shall be
-------------------------------------------------------
based on a formula approved in good faith by the Board
------------------------------------------------------
and derived from the closing prices of the securities
-----------------------------------------------------
on such exchange or The Nasdaq Stock Market over a
--------------------------------------------------
specified time period; and
--------------------------
if there is no active public market, the value shall be
-------------------------------------------------------
the fair market value thereof, as determined in good
----------------------------------------------------
faith by the Board;
-------------------
and (ii) the method of valuation of securities subject to investment letter or
other restrictions on free marketability (other than restrictions arising solely
by virtue of a stockholder's status as an affiliate or former affiliate) shall
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be to make an appropriate discount from the market value determined as above in
clause (i) to reflect the approximate fair market value thereof, as determined
in good faith by the Board.
"FUNDAMENTAL CHANGE" means (i) any sale or transfer of all or substantially all
of the assets of the Corporation in any transaction or series of transactions,
or (ii) any merger or consolidation to which the Corporation is a party, except
for a merger in which (a) the Corporation is the surviving corporation, (b) the
terms, rights and preferences of the Series A Preferred Stock are not adversely
affected, (c) the Common is not converted into or exchanged for cash, securities
or other property, and (d) after giving effect to such merger, the holders of
the Corporation's outstanding capital stock immediately prior to the merger
shall continue to own the Corporation's outstanding capital stock possessing a
majority of the voting power of the Corporation and the voting power (under
ordinary circumstances) to elect a majority of the Board.
"INVESTOR" means RAM Trading, Ltd., a Cayman Islands exempted company, and its
affiliated entities.
"JUNIOR SECURITIES" means any of the Corporation's equity securities (whether or
not currently authorized or outstanding) which by its terms is junior to the
Series A Preferred Stock (including, without limitation, the Common).
"LIQUIDATION VALUE" is defined in Section 4(a)(i).
"MAKE-WHOLE REDEMPTION PRICE" is defined in Section 4(c).
"MANDATORY CONVERSION" is defined in Section 5(c).
"MARKET PRICE" shall mean, with respect to one share of Common and for any
Business Day: (i) if the Common is then listed on a national securities exchange
or is authorized for quotation on NASDAQ and is designated as a National Market
System or NASDAQ Small Cap Market security, the last sale price of one share of
Common, regular way, on such day on the principal stock exchange or market
system on which the Common is then listed or authorized for quotation as set
forth in the "Close" column of the "Historical Quotation" table on Yahoo!
Finance for the Corporation's stock price (or, if Yahoo! Finance is no longer
available, as set forth in the Wall Street Journal), or, if no such sale takes
place on such Business Day, the last sale price for one share of Common on the
prior Business Day as reported in such column, or (ii) if the Common is not then
listed or authorized for quotation on any national securities exchange or
designated as a National Market System or Small Cap Market security on NASDAQ
but is traded over-the-counter, the closing price for one share of Common as
reported on NASDAQ or the Electronic Bulletin Board or in the National Daily
Quotation Sheets, as applicable.
"ORGANIC CHANGE" is defined in Section 5(b)(ii).
"ORIGINAL ISSUANCE DATE" means, with respect to any share of Series A Preferred
Stock, the date on which the Corporation initially issues such share of Series A
Preferred Stock, regardless of the number of times a transfer of such share is
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made on the stock records maintained by or for the Corporation and regardless of
the number of certificates which may be issued to evidence such share.
"ORIGINAL ISSUE PRICE" means 125% OF THE AVERAGE MARKET PRICE (subject to
equitable adjustments by the Board acting in good faith to reflect stock splits
of shares of Series A Preferred Stock, stock dividends in respect of shares of
Series A Preferred Stock, stock combinations of shares of Series A Preferred
Stock, recapitalizations and like occurrences).
"PERSON" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"SIGNIFICANT EVENT" means (i) a liquidation, dissolution or winding up of the
Corporation, voluntary or otherwise, or (ii) a Fundamental Change.
"SUPERMAJORITY PREFERRED HOLDERS" is defined in Section 3(b).
"TRADING DAY" shall mean a day on which the Common is for authorized for trading
or for quotation on NASDAQ.
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EXHIBIT D
---------
CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
This schedule has been omitted in reliance on Item 601 of Regulation S-K.
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EXHIBIT E
---------
BY-LAWS OF THE TRANSITORY SUBSIDIARY
This schedule has been omitted in reliance on Item 601 of Regulation S-K.
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