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EXHIBIT 2.1
PLAN OF MERGER AND ACQUISITION AGREEMENT
DATED EFFECTIVE JULY16, 1999
BY AND AMONG
ILEX ONCOLOGY, INC.,
ILEX ACQUISITION, INC.,
CONVERGENCE PHARMACEUTICALS, INC.
AND
XXXXX XXXXXXXX
XXXXXXXX XXXXXXX
XXXXX XXXXXXXXXXXX
XXXXXX XXXX
XXXXX X. XXXX
TSUNEYA OHNO
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TABLE OF CONTENTS
1. GENERAL DEFINITIONS...................................................................1
1.1 "Affiliate"..................................................................1
1.2 "ApoMigren(TM)"..............................................................1
1.3 "Arresten(TM)"...............................................................1
1.4 "Article"....................................................................2
1.5 "Assets".....................................................................2
1.6 "Associate"..................................................................2
1.7 "Authorization"..............................................................2
1.8 "Balance Sheet Date".........................................................2
1.9 "Best Knowledge".............................................................2
1.10 "Business Combination".......................................................2
1.11 "Business Day"...............................................................2
1.12 "CanStatin(TM)"..............................................................2
1.13 "CERCLA".....................................................................2
1.14 "Certificate"................................................................2
1.15 "Change of Control"..........................................................2
1.16 "Chelerythrine"..............................................................2
1.17 "Code".......................................................................3
1.18 "Contracts"..................................................................3
1.19 "Control"....................................................................3
1.20 "Damages"....................................................................3
1.21 "Deposits"...................................................................3
1.22 "Earn-Out Right".............................................................3
1.23 "Earn-Out Shares"............................................................3
1.24 "Effective Time".............................................................3
1.25 "Encumbrance"................................................................3
1.26 "Environmental Laws".........................................................3
1.27 "Environmental Liabilities"..................................................4
1.28 "ERISA"......................................................................4
1.29 "Exchange Act"...............................................................4
1.30 "Financial Statements".......................................................4
1.31 "First Milestone"............................................................4
1.32 "Former Seller Shareholder"..................................................4
1.33 "Governmental Authority".....................................................4
1.34 "Governmental Requirement"...................................................4
1.35 "ILEX Stock".................................................................4
1.36 "Indemnitee".................................................................4
1.37 "Indemnitor".................................................................5
1.38 "Intellectual Property"......................................................5
1.39 "IRS"........................................................................5
1.40 "Licenses"...................................................................5
1.41 "Losses".....................................................................5
1.42 "Material Adverse Effect"....................................................6
1.43 "Matrix".....................................................................6
1.44 "Matrix Note"................................................................6
1.45 "Merger Consideration".......................................................6
1.46 "NM-3".......................................................................6
1.47 "Parties"....................................................................6
1.48 "PBGC".......................................................................6
1.49 "Permitted Encumbrances".....................................................6
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1.50 "Person".....................................................................6
1.51 "Pro Rata Share".............................................................6
1.52 "Purchaser Stock"............................................................6
1.53 "RCRA".......................................................................6
1.54 "Reference Balance Sheet"....................................................6
1.55 "Research Funding"...........................................................7
1.56 "Research Committee".........................................................7
1.57 "Restin(TM)".................................................................7
1.58 "Schedule"...................................................................7
1.59 "SEC"or "Commission".........................................................7
1.60 "SEC Documents"..............................................................7
1.61 "Second Milestone"...........................................................7
1.62 "Section"....................................................................7
1.63 "Securities Act".............................................................7
1.64 "Seller Stock"...............................................................7
1.65 "Subsidiary".................................................................7
1.66 "Surviving Corporation"......................................................7
1.67 "Taxes"......................................................................7
1.68 "Tax Returns"................................................................7
1.69 "Third-Party Claims".........................................................7
1.70 "TumStatin(TM)"..............................................................8
1.71 "Waste Materials"............................................................8
2. MERGER................................................................................8
2.1 The Merger...................................................................8
2.2 Surviving Corporation........................................................8
2.3 Liabilities..................................................................8
2.4 Certificate of Incorporation and Bylaws......................................8
2.5 Directors and Officers.......................................................8
2.6 Conversion or Cancellation of Stock Upon Merger..............................9
2.7 Earn-Out Right...............................................................9
2.8 Fractional Shares...........................................................10
2.9 Exchange Procedures.........................................................10
2.10 Interim Dividends...........................................................10
2.11 Additional Consideration....................................................10
2.12 Further Assurances..........................................................10
3. CLOSING; CLOSING DATE................................................................11
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDER.........................11
4.1 Incorporation...............................................................11
4.2 Share Capital...............................................................11
4.3 Financial Statements........................................................12
4.4 Events Since the Balance Sheet Date.........................................12
4.5 Competing Interests.........................................................13
4.6 Taxes.......................................................................14
4.7 Employee Matters............................................................15
4.8 Contracts and Agreements....................................................15
4.9 Effect of Agreement.........................................................18
4.10 Properties, Assets and Leasehold Estates....................................18
4.11 Intellectual Property.......................................................19
4.12 Compliance with Laws........................................................21
4.13 Suits, Actions and Claims...................................................24
4.14 Licenses and Permits; Compliance With Governmental Requirements.............24
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4.15 Authorization...............................................................24
4.16 Records.....................................................................25
4.17 Environmental Protection Laws...............................................26
4.18 Accounts Receivable.........................................................26
4.19 Brokers and Finders.........................................................26
4.20 Deposits....................................................................26
4.21 Work Orders.................................................................26
4.22 Customer List; Supplier List................................................26
4.23 No Royalties................................................................26
4.24 Bank Accounts...............................................................26
4.25 Insurance...................................................................27
4.26 Employee Benefit Matters....................................................27
4.27 Warranties and Product Liability............................................29
4.28 Securities Laws Matters.....................................................29
5. REPRESENTATIONS AND WARRANTIES OF THE ILEX PARTIES...................................31
5.1 Purchaser Incorporation.....................................................31
5.2 ILEX Incorporated...........................................................31
5.3 ILEX Products Incorporation.................................................31
5.4 Authorization...............................................................32
5.5 Brokers and Finders.........................................................32
5.6 Authorization for Merger Consideration......................................32
5.7 SEC Documents...............................................................32
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES, REPRESENTATIONS AND
WARRANTIES OF SELLER AND EACH SHAREHOLDER............................................33
7. CONDITIONS TO OBLIGATION TO CLOSE....................................................33
7.1 Conditions to Obligation of the ILEX Parties................................33
7.2 Conditions to Obligation of Seller and the Shareholders.....................35
8. SPECIAL CLOSING AND POST-CLOSING COVENANTS...........................................35
8.1 General.....................................................................36
8.2 Litigation Support..........................................................36
8.3 Transition..................................................................36
8.4 Intellectual Property Assignment............................................36
8.5 Use of Name of Seller.......................................................36
8.6 Research and Development Spending...........................................36
8.7 Seller Information..........................................................37
8.8 Board Representation........................................................37
9. INDEMNITY BY THE SHAREHOLDERS........................................................37
9.1 Indemnification by each Shareholder.........................................37
9.2 Environmental Indemnification...............................................37
9.3 Tax Indemnification.........................................................37
9.4 Products Liability and Warranty Indemnification.............................38
9.5 Indemnification by the ILEX Parties.........................................38
9.6 Limitation on Indemnification; Basket.......................................38
9.7 Procedure...................................................................39
9.8 Payment.....................................................................40
9.9 Failure to Pay Indemnification..............................................40
9.10 Cooperation.................................................................40
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION...........................................40
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11. NOTICES..............................................................................41
12. GENERAL PROVISIONS...................................................................44
12.1 Governing Law; Interpretation; Section Headings.............................44
12.2 Severability................................................................44
12.3 Entire Agreement............................................................45
12.4 Binding Effect..............................................................45
12.5 Assignment..................................................................45
12.6 Amendment; Waiver...........................................................45
12.7 Gender; Numbers.............................................................45
12.8 Counterparts................................................................45
12.9 Telecopy Execution and Delivery.............................................45
12.10 Expenses....................................................................46
12.11 Arbitration.................................................................46
12.12 Effect of Due Diligence.....................................................47
12.13 Press Releases and Public Announcements.....................................47
12.14 No Third Party Beneficiaries................................................47
12.15 Construction................................................................47
12.16 Incorporation of Exhibits, Annexes and Schedules............................47
12.17 Specific Performance........................................................47
12.18 Remedies Cumulative.........................................................48
Exhibit 1.24 - Form of Certificate of Merger
Exhibit 2.11 - Non-Competition Agreement
Exhibit 7.1(k) - Consulting Agreement
Exhibit 7.1(l) - Employment Agreement
Exhibit 8.4 - Intellectual Property Assignment
Exhibit 8.6 - Research Funding Guidelines
Schedule 4.1 - Foreign Qualifications
Schedule 4.2(b) - Capital Stock
Schedule 4.3(a) - Financial Statements
Schedule 4.4 - Balance Sheet
Schedule 4.5 - Competing Interests
Schedule 4.6 - Taxes
Schedule 4.7 - Employee Matters
Schedule 4.8 - Contracts and Agreements
Schedule 4.9 - Governmental License, Franchise or Permit
Schedule 4.10 - Properties, Assets and Leasehold Estates
Schedule 4.11 - Intellectual Property
Schedule 4.12 - NDA or ANDA Drugs Approved by FDA
Schedule 4.13 - Suits, Actions and Claims
Schedule 4.14 - Licenses and Permits; Compliance With Governmental Requirements
Schedule 4.17 - Environmental Protection Laws
Schedule 4.18 - Accounts Receivable
Schedule 4.20 - Deposits
Schedule 4.22 - Customer Lists
Schedule 4.23 - Royalties
Schedule 4.24 - Bank Accounts
Schedule 4.25 - Insurance
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Schedule 4.26 - Employee Benefit Plans and Compensation Agreements
Schedule 4.27 - Warranties and Product Liability
Schedule 4.28 - Shareholders' Residence
Schedule 5.8 - Events Since March 31, 1999 (ILEX)
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PLAN OF MERGER AND ACQUISITION AGREEMENT
THIS PLAN OF MERGER AND ACQUISITION AGREEMENT (this "Agreement") is
made and entered into this 16th day of July, 1999, by and among (i) Convergence
Pharmaceuticals, Inc., a Delaware corporation ("Seller"), (ii) Xxxxx Xxxxxxxx
("Xxxxxxxx"), Xxxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxx Xxxxxxxxxxxx ("Xxxxxxxxxxxx"),
Xxxxxx Xxxx ("Kufe"), Xxxxx X. Xxxx ("Rice") and Tsuneya Ohno ("Ohno")
(collectively, the "Shareholders" or, individually, a "Shareholder"), (iii) ILEX
Oncology, Inc., a Delaware corporation ("ILEX"), and (iv) ILEX Acquisition Inc.,
a Delaware corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, ILEX is in the business of developing clinical oncology
compounds; and
WHEREAS, in connection with the transactions contemplated by this
Agreement, ILEX previously caused Purchaser to be organized and to issue to ILEX
Products, Inc., a Delaware corporation and wholly-owned subsidiary of ILEX
("ILEX Products", and, together with ILEX and Purchaser, the "ILEX Parties"),
all of the issued and outstanding shares of capital stock of Purchaser; and
WHEREAS, Seller is a biopharmaceutical company focused on treatment of
oncogenic disease through the development of novel therapeutics (the
"Business"); and
WHEREAS, the Shareholders are the only shareholders of Seller, holding
all of the issued and outstanding shares of capital stock of Seller; and
WHEREAS, the respective boards of directors of ILEX, ILEX Products,
Purchaser and Seller have voted to approve the merger of Seller with and into
Purchaser (the "Merger") pursuant to the terms and subject to the conditions of
this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree that Seller shall be merged with and into
Purchaser and that the terms and conditions of the Merger, the method of
carrying the Merger into effect and certain other provisions relating thereto
shall be as hereinafter set forth:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 "Affiliate" of any Person shall mean any Person Controlling,
Controlled by or under common Control with such Person.
1.2 "ApoMigren" shall mean a 10Kd fragment of Restin(TM).
1.3 "Arresten" shall mean a c-terminal fragment (NCI domain) of
Collagen IV alpha 1 chain.
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1.4 "Article" shall mean an Article of this Agreement unless otherwise
stated.
1.5 "Assets" shall mean the assets, properties and rights of Seller of
every nature, kind and description, wherever located, tangible and intangible,
real, personal and mixed, whether or not reflected in the books and records of
Seller, necessary or desirable to permit the Business to be carried on in the
manner as is presently conducted.
1.6 "Associate" shall have the meaning assigned to it in Section 4.5.
1.7 "Authorization" shall mean any consent, approval or authorization
of, expiration or termination of any waiting period requirement by, or filing,
registration, qualification, declaration or designation with, any Governmental
Authority.
1.8 "Balance Sheet Date" shall have the meaning assigned to it in
Section 4.3.
1.9 "Best Knowledge" shall mean both what a Person knew as well as what
the Person should have known had the person exercised reasonable diligence. When
used with respect to a Person other than a natural person, the term "Best
Knowledge" shall include the directors and executive officers of the Person.
1.10 "Business Combination" shall mean (i) any merger or consolidation
of, or share exchange involving, the Seller with or into any Person, (ii) any
sale, lease, exchange, transfer or other disposition (whether in one transaction
or a series of related transactions) of more than ten percent of the Seller's
consolidated assets, (iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Seller, (iv) any issuance, sale, purchase or
redemption of equity securities, any reclassification of equity securities or
recapitalization of the Seller, and (v) any transaction having an effect similar
to those described above.
1.11 "Business Day" shall mean any day other than Saturday, Sunday or
other day on which federally chartered commercial banks in San Antonio, Texas
are authorized or required by law to close.
1.12 "CanStatin(TM)" shall mean c-terminal fragment (NCI domain) of
Collagen IV alpha 2 chain.
1.13 "CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
1.14 "Certificate" shall mean each stock certificate representing
shares of Seller Stock.
1.15 "Change of Control" shall mean (i) a merger or consolidation in
which Control of ILEX is transferred to a Person or Persons different from those
holding such securities prior to such merger or consolidation; or (ii) the sale,
transfer or other disposition of all or substantially all of ILEX's assets to an
entity other than a Person or Persons having Control of ILEX.
1.16 "Chelerythrine" shall mean a first-generation inhibitor of DNA-PK.
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1.17 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.18 "Contracts" shall have the meaning assigned to it in Section 4.8.
1.19 "Control" and all derivations thereof shall mean the ability to
either (a) vote (or direct the vote of) 50% or more of the voting interests in
any Person or (b) direct the affairs of another, whether through voting power,
contract or otherwise.
1.20 "Damages" shall mean any and all liabilities, losses, damages,
demands, assessments, punitive damages, loss of profits, refund obligations
(including, without limitation, interest and penalties thereon), claims of any
and every kind whatsoever, costs and expenses (including interest, awards,
judgments, penalties, settlements, fines, costs of remediation, diminutions in
value, costs and expenses incurred in connection with investigating, prosecuting
and defending any claims or causes of action (including, without limitation,
reasonable attorneys' fees and reasonable expenses and all reasonable fees and
reasonable expenses of consultants and other professionals)).
1.21 "Deposits" shall have the meaning assigned to it in Section 4.20.
1.22 "Earn-Out Right" shall have the meaning assigned to it in Section
2.7.
1.23 "Earn-Out Shares" shall mean 1,000,000 shares of ILEX Stock
otherwise deliverable at the Effective Time to the Former Seller Shareholders in
connection with the Merger
1.24 "Effective Time" shall mean the time at which a properly executed
certificate of merger in substantially the form attached to this Agreement as
Exhibit 1.24 (together with other documents required by law to effect the
Merger) shall have been filed with the Secretary of State of Delaware.
1.25 "Encumbrance" shall mean any security interest, mortgage, pledge,
trust, claim, lien, charge, option, defect, restriction, encumbrance or other
right or interest of any third Person of any nature whatsoever.
1.26 "Environmental Laws" shall mean any and all applicable laws,
statutes, ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to the environment heretofore or currently in
effect in any and all jurisdictions in which Seller is conducting or at any time
has conducted business, or where any of the Assets are located, or where any
hazardous substances generated by or disposed of by Seller are located.
"Environmental Laws" shall include, but not be limited to, the Clean Air Act, as
amended, CERCLA, the Federal Water Pollution Control Act, as amended, RCRA, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, and all other applicable laws, statutes, ordinances, rules,
regulations, orders and determinations of any Governmental Authority relating to
(a) the control of any potential pollutant or protection of the air, water or
land, (b) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation and (c) exposure to hazardous, toxic or
other substances alleged to be harmful. The terms "hazardous substance,"
"release" and "threatened release" shall have the meanings specified in CERCLA,
and the terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA.
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1.27 "Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remediation, removal,
response, abatement, clean-up, investigative or monitoring costs and any other
related costs and reasonable expenses), other causes of action recognized now or
at any later time, damages, settlements, reasonable expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
reasonable attorneys' fees and other reasonable legal fees (a) pursuant to any
agreement, order, notice or responsibility, directive embodied in Environmental
Laws or relating to environmental matters, injunction, judgment or similar
documents (including settlements) relating to environmental matters or (b)
pursuant to any claim by a Governmental Authority or other person for personal
injury, property damage, damage to natural resources, remediation or similar
costs or expenses incurred by such Governmental Authority or person pursuant to
common law or statute.
1.28 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.29 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.30 "Financial Statements" shall have the meaning assigned to it in
Section 4.3.
1.31 "First Milestone" shall have the meaning assigned to it in Section
2.7.
1.32 "Former Seller Shareholder" shall mean each Person who was,
immediately before the Effective Time, a holder of issued and outstanding shares
of Seller Stock.
1.33 "Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted or existing.
1.34 "Governmental Requirement" shall mean any and all applicable laws
(including, but not limited to, applicable common law principles), statutes,
ordinances, codes, rules, regulations, interpretations, guidelines, directions,
orders, judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements, promulgated, issued, passed or set forth by any Governmental
Authority in effect as of the Effective Time.
1.35 "ILEX Stock" shall mean the common stock, $.01 par value, of ILEX.
1.36 "Indemnitee" shall mean the ILEX Parties and the Surviving
Corporation and each of their respective Associates, Affiliates, officers,
directors, employees, agents, consultants, representatives, shareholders and
controlling Persons and their respective successors and assigns, on the one
hand, and each Shareholder and his respective heirs, beneficiaries, successors
and assigns, on the other hand, whether indemnified, or entitled, or claiming to
be entitled to be indemnified or receive property, pursuant to the provisions of
Article 9 hereof.
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1.37 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify or make payment pursuant to the provisions of Article 9
hereof.
1.38 "Intellectual Property" shall mean:
(a) All rights in and to the Licenses; and
(b) All rights in and to ApoMigren(TM), Arresten(TM),
Chelerythrine, NM-3, Restin(TM), TumStatin(TM) and CanStatin(TM); and
(c) all of Seller's patents and applications therefor, further
including, but not limited to, all divisions, reissues, substitutions,
reexaminations, continuations, continuations-in-part and extensions thereof (the
"Patents"); and
(d) all of Seller's inventions, whether or not patentable, further
including, but not limited to, all new developments and inventions, as well as
all improvements on prior inventions regardless of prior inventorship; and
(e) all of Seller's know-how and work product, regardless of form
and whether tangible or intangible, further including, but not limited to, flow
charts, test data, records and journals; blueprints, drawings and photographs;
research reports, including any models or other hardware; licensing, marketing
or development analysis; and
(f) all of Seller's copyright interests regardless of actual or
potential registrability, and including moral rights, rights of publication and
rights of attribution and integrity; and
(g) all of Seller's trademark or service xxxx interests, together
with all of the goodwill of the business associated therewith and represented
thereby (the "Trademarks"); and
(h) all of Seller's trade secrets; and
(i) all of Seller's other intellectual property and other
proprietary interests, whether or not identifiable as of the date of execution
hereof, relating to, or used in connection with, the Business or Assets now or
at any time in the future (to the extent consistent with the respective
contractual obligations of the Shareholders as of the date hereof to the
academic institutions with which each is affiliated).
1.39 "IRS" shall mean the Internal Revenue Service.
1.40 "Licenses" shall mean (i) that certain license dated as of July 2,
1999 between Seller and Xxxx Israel Deaconess Medical Center; (ii) that certain
license dated as of July 6, 1999 between Seller and Arch Development
Corporation; and (iii) that certain license dated as of July 13, 1999 between
Seller and Microbial Chemistry Research Foundation and Mercian Ltd. (the
"Microbial Licence").
1.41 "Losses" shall mean General Losses, Environmental Losses, Tax
Losses and Product Losses (each as defined in Article 9 hereof), as the case may
be.
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1.42 "Material Adverse Effect" shall mean a material adverse effect on
the Business, Assets, properties, operations, condition (financial or otherwise)
or results of operations of Seller, or ILEX and its Subsidiaries, taken as a
whole, as applicable.
1.43 "Matrix" shall mean Matrix Pharmaceuticals, Inc.
1.44 "Matrix Note" shall mean that certain convertible promissory note
dated February 10, 1999 in the principal amount of $1,000,000 made by the Seller
to Matrix Pharmaceuticals, Inc.
1.45 "Merger Consideration" shall have the meaning assigned to it in
Section 2.6.
1.46 "NM-3" shall mean the compounds referenced on Exhibit A to the
Microbial License.
1.47 "Parties" or "parties" shall mean collectively the ILEX Parties,
the Shareholders and Seller.
1.48 "PBGC" shall have the meaning assigned to it in Section 4.26.
1.49 "Permitted Encumbrances" shall mean (a) Encumbrances for current
taxes and assessments not yet past due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
reflected in the Financial Statements, (b) mechanics and materialmen
Encumbrances for construction in progress to the extent not perfected by filing,
recording, giving of notice or other appropriate action in the relevant
jurisdiction or which are being contested in good faith by appropriate
proceedings and to the extent required by GAAP, with respect to which adequate
reserves are reflected in the Financial Statements, (c) workmen, repairmen,
warehousemen, carriers, lessors and operators Encumbrances arising in the
ordinary course of business to the extent not perfected by filing, recording,
giving of notice or other appropriate action in the relevant jurisdiction or
which are being contested in good faith by appropriate proceedings and, to the
extent required by GAAP, with respect to which adequate reserves are reflected
in the Financial Statements, and (d) easements, including agreements and deeds
of easement, and other minor imperfections of title which would not have a
Material Adverse Effect.
1.50 "Person" shall mean any natural person, any Governmental Authority
and any entity, the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.51 "Pro Rata Share" shall mean the number of shares of Seller Stock
held by a Former Seller Shareholder immediately prior to the Closing divided by
the total number of shares of Seller Stock outstanding immediately prior to the
Closing.
1.52 "Purchaser Stock" shall mean the common stock, $.01 par value, of
Purchaser.
1.53 "RCRA" shall mean the Resource Conservation and Recovery Act of
1976, as amended.
1.54 "Reference Balance Sheet" shall have the meaning assigned to it in
Section 4.3.
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1.55 "Research Funding" shall have the meaning assigned to it in
Section 8.6.
1.56 "Research Committee" shall mean a committee comprised of one
designee to ILEX, who shall initially be Xxxxxxx Xxxx, and one designee of the
Shareholders, who shall initially be Xxxxx Xxxx.
1.57 "Restin(TM)" shall mean c-terminal fragment (NCI domain) of
Collagen XV alpha 1 chain.
1.58 "Schedule" shall mean a Schedule to this Agreement unless
otherwise stated. The Schedules to this Agreement may be attached to this
Agreement or may be set forth in a separate document denoted as the Schedules to
this Agreement, or both.
1.59 "SEC" or "Commission" shall mean the United States Securities and
Exchange Commission.
1.60 "SEC Documents" shall have the meaning assigned to it in Section
5.7.
1.61 "Second Milestone" shall have the meaning assigned to it in
Section 2.7.
1.62 "Section" shall mean a Section of this Agreement unless otherwise
stated.
1.63 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.64 "Seller Stock" shall mean the common stock, par value $.001, of
Seller.
1.65 "Subsidiary" shall mean, with respect to any Person (the
"parent"), (a) any corporation, association, joint venture, partnership or other
business entity of which securities or other ownership interests representing
more than 50% of the ordinary voting power or beneficial interest are, at the
time as of which any determination is being made, owned or controlled by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent and (b) any joint venture or partnership of
which the parent or any Subsidiary of the parent is a general partner or has
responsibility for its management.
1.66 "Surviving Corporation" shall mean the corporation existing at and
after the Effective Time as a result of the Merger.
1.67 "Taxes" shall mean any foreign, federal, state or local tax,
assessment, levy, impost, duty, withholding, estimated payment or other similar
governmental charge, together with any penalties, additions to tax, fines,
interest and similar charges thereon or related thereto.
1.68 "Tax Returns" shall mean all Tax returns and reports (including,
without limitation, income, franchise, sales and use, unemployment compensation,
excise, severance, property, gross receipts, profits, payroll and withholding
Tax returns and information returns).
1.69 "Third-Party Claims" shall have the meaning such term is given in
Section 9.7(b) hereof.
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1.70 "TumStatin(TM)" shall mean a c-terminal fragment (NCI domain) of
Collagen type IV alpha 3 chain.
1.71 "Waste Materials" shall mean any toxic or hazardous materials or
substances, or solid wastes, including asbestos, buried contaminants, chemicals,
flammable or explosive materials, radioactive materials, petroleum and petroleum
products, and any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Authority under any Environmental Law.
2. MERGER.
2.1 The Merger. Subject to the terms and conditions of this Agreement,
Seller shall be merged with and into Purchaser in accordance with all applicable
laws, with Seller being the Surviving Corporation. Purchaser and Seller shall
cause a certificate of merger to be filed with the Secretary of State of
Delaware and such other documents and instruments to be filed in any other
jurisdiction where such a certificate or articles of merger is required, within
two business days after the Closing Date (as hereinafter defined), unless
legally prohibited from doing so. The Merger shall be effective at the Effective
Time.
2.2 Surviving Corporation. From and after the Effective Time, the
Surviving Corporation shall have the name "Convergence Pharmaceuticals, Inc."
and shall possess all assets and property of every description, and every
interest in the assets and property, wherever located, and the rights,
privileges, immunities, powers, franchises and authority, of a public as well as
of a private nature, of each of Seller and Purchaser, and all debts and all
other things in action or belonging or due to each of Seller and Purchaser, all
of which shall be vested in the Surviving Corporation without further act or
deed, and title to any real estate or any interest in the real estate vested in
either Seller or Purchaser shall not revert or in any way be impaired.
2.3 Liabilities. The Surviving Corporation shall be liable for all the
debts, liabilities and duties of each of Seller and Purchaser; any action or
proceeding pending, by or against either Seller or Purchaser, may be prosecuted
to judgment, with right of appeal, as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place, and all the rights of
creditors of each of Seller and Purchaser shall be preserved unimpaired, and all
liens upon the property of each of Seller and Purchaser shall be preserved
unimpaired, on only the property affected by the liens immediately prior to the
Effective Time.
2.4 Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of Purchaser in effect immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
Surviving Corporation following the Merger until otherwise amended or repealed.
2.5 Directors and Officers. The directors and officers of Purchaser
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their successors are duly elected or appointed
and qualified in the manner provided in the bylaws of the Surviving Corporation,
or as otherwise provided by law.
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2.6 Conversion or Cancellation of Stock Upon Merger.
(a) In consideration for the Merger, the non-disclosure agreement
in Article 10 hereof and the Non-Competition Agreement contemplated by Section
2.11 hereof and attached hereto as Exhibit 2.11, as of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Seller Stock, or the holder of the shares of Purchaser Stock, (i)
Seller Stock outstanding immediately before the Effective Time shall be
converted into, subject to Section 2.8, (1) an aggregate of 1,000,000 shares of
ILEX Stock (the "Stock Consideration"), and (2) the right to earn the Earn-Out
Shares described in Section 2.7 (the Stock Consideration and the right to earn
the Earn-Out Shares collectively referred to as the "Merger Consideration") and
(ii) each share of Purchaser Stock outstanding immediately before the Effective
Time shall be converted into one share of common stock of the Surviving
Corporation. Promptly following the Closing, ILEX shall issue certificates
representing the Stock Consideration to the Former Seller Shareholders.
(b) In the event that Matrix elects to convert the Matrix Note at
prior to or at the time of the Closing Date, then the Stock Consideration will
be increased by 100,000 shares of ILEX Stock.
2.7 Earn-Out Right.
(a) As additional consideration and as part of the Merger
Consideration and subject to the terms and conditions contained herein, (1) upon
achievement of the First Milestone (as hereinafter defined), ILEX shall issue
pro rata to each of the Former Seller Shareholders, subject to Section 2.8, an
aggregate of 500,000 shares of the Earn-Out Shares; and (2) upon achievement of
the Second Milestone (as hereinafter defined), ILEX shall issue pro rata to each
of the Former Seller Shareholders, subject to Section 2.8, an aggregate of
500,000 shares of the Earn-Out Shares (the "Earn-Out Right"). The First
Milestone shall be defined as the initiation of treatment of the first patient
following initiation of an ILEX Phase I trial in the U.S. or Europe with any
item of Intellectual Property, which such First Milestone must occur no later
than December 31, 2001. The Second Milestone shall be defined as the initiation
of treatment of the first patient following initiation of an ILEX Phase II trial
in the U.S. or Europe with any item of Intellectual Property, which such Second
Milestone must occur no later than December 31, 2002.
(b) Each of the First Milestone and the Second Milestone shall be
deemed to have been met if, following a Change in Control of ILEX (i) Xxxxxxx
Xxxx is no longer Chief Executive Officer of ILEX; (ii) ILEX, through the action
or inaction of the Research Committee or the Scientific Advisory Board,
discontinues, impedes or delays the obligations of ILEX under Section 8.6 to
spend the Research Funding; (iii) the Shareholders serving on the Scientific
Advisory Board notify ILEX in writing of their disagreement with such action or
inaction of ILEX and request a meeting of the Scientific Advisory Board, which
such meeting shall occur as soon as is reasonably possible after such request,
to enable such Shareholders to present their reasons for spending the Research
Funding; (iv) at such meeting the Scientific Advisory Board determines not to
allocate the Research Funding within the time frame set forth in Section 8.6;
and (v) the Shareholders serving on the Scientific Advisory Board notify ILEX in
writing of their disagreement with such determination of the Scientific Advisory
Board.
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2.8 Fractional Shares. Notwithstanding the provisions of either Section
2.6 or Section 2.7, no certificates or scrip representing. fractional shares of
ILEX Stock shall be issued upon the surrender for exchange of certificates that
prior to the Effective Time represented shares of Seller Stock, no dividend or
distribution of ILEX shall relate to any fractional share interest and no
fractional share interest shall entitle the owner thereof to vote or to exercise
any rights of a stockholder of ILEX. In the event that any Former Seller
Shareholder shall be entitled to any fractional share interest, then any
fractional amount shall be rounded up to the nearest whole share.
2.9 Exchange Procedures.
(a) After the Effective Time, each outstanding Certificate shall,
until duly surrendered to Purchaser as contemplated by this Section 2.9, be
deemed to represent only the right to receive the Merger Consideration.
(b) After the Effective Time, there shall be no further transfer
on the records of Seller of Certificates, and each share of Seller Stock
presented or surrendered to Purchaser shall be canceled in exchange for the
Merger Consideration as contemplated by Section 2.6. Purchaser shall not be
obligated to deliver Merger Consideration to any holder of a Certificate until
such holder surrenders such Certificate as provided herein.
2.10 Interim Dividends. No dividends or other distributions declared
after the Effective Time on ILEX Stock issuable pursuant to the Merger and
payable to any Former Seller Shareholder after the Effective Time shall be paid
to the holder of any unsurrendered certificates formerly representing shares of
Seller Stock until the certificates shall be surrendered as provided herein,
provided, however, that (a) upon surrender there shall be paid to the
shareholder in whose name the certificates representing the shares of ILEX Stock
shall be issued the amount of unpaid dividends with respect to the holder's
shares of ILEX Stock and (b) at the appropriate payment date, or as soon as
practicable thereafter, there shall be paid to the shareholder the amount of
dividends declared with respect to whole shares of ILEX Stock with a record date
on or after the Effective Time but before surrender and a payment date
subsequent to surrender, subject in any case to any applicable escheat laws. No
interest shall be payable with respect to the payment of dividends or other
distributions on surrender of outstanding certificates.
2.11 Additional Consideration. As additional consideration for the
Merger to the ILEX Parties, each Shareholder will enter a Non-Competition
Agreement in the form attached hereto as Exhibit 2.11.
2.12 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all the Assets and all privileges, powers and franchises of
Seller and Purchaser, the Surviving Corporation and its proper officers and
directors, in the name and on behalf of Seller and Purchaser, shall execute and
deliver all such proper deeds, assignments and assurances in law and do all
things necessary and proper to vest, perfect or confirm title to such property
or rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of Seller or otherwise to take any
and all such action.
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3. CLOSING; CLOSING DATE.
As soon as practicable after satisfaction or waiver of all conditions
to the Merger, the consummation of the transactions referenced above shall take
place (the "Closing") at 10:00 a.m., San Antonio time, at the offices of
Fulbright & Xxxxxxxx L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx
, or at such other time, date and place as ILEX and Seller shall in writing
designate. The date of the Closing is referred to herein as the "Closing Date."
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS.
Seller and each Shareholder hereby represents and warrants to the ILEX Parties,
each to its or their Pro Rata Share, as follows:
4.1 Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly authorized, qualified and licensed under all applicable Governmental
Requirements to carry on its business in the places and in the manner as now
conducted and to own, operate and lease the Assets it now owns, operates or
holds under lease. There has not been any claim by any other jurisdiction to the
effect that Seller is required to qualify or otherwise be authorized to do
business as a foreign corporation therein in order to carry on any of its
businesses as now conducted or to own, lease or operate the Assets. Schedule 4.1
sets forth a complete list of all jurisdictions in which Seller is qualified as
a foreign corporation, and Seller is in good standing in each of such
jurisdictions. To the Best Knowledge of the Seller and each Shareholder, there
has not been any claim by any other jurisdiction to the effect that Seller is
required to qualify or otherwise be authorized to do business as a foreign
corporation therein in order to carry on any of its businesses as now conducted
or to own, lease or operate the Assets. Complete and correct copies of the
Certificate of Incorporation of Seller and all amendments thereto, certified in
each case by the Secretary of State of the State of Delaware, and of the Bylaws
of Seller and all amendments thereto, certified by the Secretary of Seller,
heretofore have been delivered to the ILEX Parties. The minute books of Seller
previously made available to the ILEX Parties are complete and accurately
reflect all action taken prior to the date of this Agreement by its board of
directors and shareholders, in their capacities as such. Neither Seller nor any
Shareholder has, to their respective Best Knowledge, taken any action, or failed
to take any action which action or failure will preclude or prevent Seller's
business from being conducted in substantially the same manner in which Seller
has heretofore conducted the same. Other than as set forth on Schedule 4.1,
Seller has no Subsidiaries. Seller is not engaged in any business or operations
other than the Business.
4.2 Share Capital
(a) The authorized capital stock of Seller consists of 10,000,000
shares of Seller Stock, of which 820,600 shares are outstanding as of the date
hereof. All of the outstanding Seller Stock is held of record and beneficially
by the persons set forth on Schedule 4.2(a), in such amounts as indicated on
such schedule. All outstanding Seller Stock is duly authorized and issued in
compliance with all federal and state securities laws. True and correct copies
of the stock records of Seller, showing all issuances and transfers of shares of
capital stock of Seller since inception, have been provided to ILEX.
(b) Except as set forth on Schedule 4.2(b), There are outstanding
on the date hereof no rights of first refusal, preemptive rights, conversion
rights, options, warrants or other rights
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to acquire, directly or indirectly, capital stock from Seller or, to the Best
Knowledge of each Shareholder, from any Shareholder.
(c) Except as set forth on Schedule 4.2(c), Seller is not a party
or subject to any agreement or understanding, and there is no agreement or
understanding between any Persons, that affects or relates to the voting or
giving of written consents with respect to any securities of Seller or the
voting by any director of Seller. Except as reflected on the Referenced Balance
Sheet, no Shareholder nor any Affiliate thereof is indebted to Seller. Seller is
not indebted to any Shareholder or any Affiliate thereof and Seller is not under
any contractual or other obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued.
4.3 Financial Statements. Seller has delivered to the ILEX Parties
copies of the following financial statements for Seller, all of which financial
statements are included in Schedule 4.3(a) (collectively, the "Financial
Statements"):
(a) Unaudited Balance Sheet of Seller and its Subsidiary (the
"Reference Balance Sheet") as of June 30, 1999 and March 31, 1999, respectively
(the "Balance Sheet Dates") and Unaudited Income Statement of Seller and its
Subsidiary for the three-month period ended on the Balance Sheet Dates; and
(b) Unaudited Balance Sheets, Income Statements and Statements of
Changes in Financial Position of Seller and its Subsidiary for each year since
inception and for the last three fiscal years, respectively.
All financial statements supplied to the ILEX Parties by Seller have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the financial position of Seller and its
Subsidiary as of the dates thereof and the results of operations and cash flows
for the periods then ended for each of the Seller and its Subsidiary (except in
the case of interim period financial information for normal year-end
adjustments).
4.4 Events Since the Balance Sheet Date. Except as set forth on
Schedule 4.4, since the Balance Sheet Date, there has not been:
(a) any change in the condition (financial or otherwise) or in the
properties, assets, liabilities, business or prospects of the Business, except
normal and usual changes in the ordinary course of business, none of which has
been adverse and all of which in the aggregate have not been adverse; (b) any
labor trouble, strike or any other occurrence, event or condition affecting the
employees of Seller that adversely affects the condition (financial or
otherwise) of the Assets or the Business; (c) any breach or default by Seller
or, to the Best Knowledge of Seller and each Shareholder, by any other party,
under any agreement or obligation included in the Assets or by which any of the
Assets are bound; (d) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the Assets or the Business; (e) to the Best
Knowledge of Seller and the Shareholder, any legislative or regulatory change
adversely affecting the Assets or the Business; (f) any change in the types,
nature, composition or quality of the services of the Business, any adverse
change in the contributions of any of the service lines of the Business to the
revenues or net income of such Business, or any adverse change in the sales,
revenue or net income of the Business; (g) any
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transaction related to or affecting the Assets or the Business other than
transactions in the ordinary course of business of Seller; (h) any other
occurrence, event or condition that has adversely affected (or, to the Best
Knowledge of the Seller and each Shareholder, can reasonably be expected to
adversely affect) the Assets or the Business; (i) any declaration, setting aside
or payment of any dividend (whether in cash, stock or property) with respect to
any of Seller's capital stock; (j) (i) any granting by Seller to any executive
officer of Seller of any increase in compensation, any granting by Seller to any
executive officer of any increase in severance or termination pay, or (ii) any
entry by Seller into any employment, severance or termination agreement with any
executive officer; (k) any change in accounting methods, principles or practices
by Seller materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in tax-basis or generally accepted
accounting principles, and except as required by the ILEX Parties; (l) to the
Best Knowledge of the Seller and each Shareholder, any condition, event or
occurrence through the date hereof which, individually or in the aggregate,
could reasonably be expected to prevent, hinder or delay in any material respect
the ability of Seller to consummate the transactions contemplated by this
Agreement; or (m) any agreement, in writing or otherwise, by Seller or any
corporate action by Seller with respect to the foregoing.
4.5 Competing Interests. Except as set forth on Schedule 4.5, neither
Seller nor any Shareholder, nor, to the Best Knowledge of such parties, any
director or officer of, or consultant to, Seller, and no Associate (as
hereinafter defined) of Seller or any Shareholder:
(a) owns, directly or indirectly, any equity interests in, or is a
director, officer or employee of, or consultant to, any entity which is a
competitor, supplier or customer of the Business, or, to the Best Knowledge of
Seller and any Shareholder, a competitor, supplier or customer of any of Seller
or an Associate of Seller (except for ownership, if any, of less than one
percent of the outstanding capital stock of any corporation the capital stock of
which is traded on a nationally recognized securities exchange or which has a
class of securities registered pursuant to the Exchange Act), or
(b) owns, directly or indirectly, in whole or in part, any
property, asset or right which is associated with the Assets or the Business or
which Seller is presently operating or using in connection with or the use of
which is necessary for or material to the operation of the Business.
For purposes of this Agreement, the term "Associate" shall mean:
(y) with respect to an individual:
(i) the spouse of the individual and all ancestors and lineal
descendants of the individual and the spouse,
(ii) any trust in which the individual or any person described
in (i) above has a pecuniary interest or any trustee of such a trust,
and
(iii) any business entity which is directly or indirectly
Controlled by any of the foregoing; and
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(z) with respect to a Seller, any Person Controlling, Controlled
by or under common Control with Seller, and any director, officer,
partner, trustee, administrator, beneficiary, executor, manager,
employee, consultant or agent of Seller and any Associate of any
Person described in this clause (z).
4.6 Taxes. Except as set forth in Schedule 4.6:
(a) to the Best Knowledge of the Seller and each Shareholder, all
Tax Returns of or relating to any Taxes that are required to be filed on or
before the Effective Time, subject to any allowable extension periods, for, by,
on behalf of or with respect to Seller, including, but not limited to, those
relating to the income, business, operations or property of Seller (whether on a
separate, consolidated, affiliated, combined, unitary or any other basis), have
been timely filed with the appropriate foreign, federal, state and local
authorities, and all Taxes shown to be due and payable on such Tax Returns or
related to such Tax Returns have been paid in full on or before the Effective
Time, except Taxes which have not yet accrued or otherwise become due, all of
which are reflected on the Reference Balance Sheet;
(b) all such Tax Returns and the information and data contained
therein have been properly and accurately compiled and completed in all material
respects, fairly present the information purported to be shown therein, and
reflect all liabilities for Taxes for the periods covered by such Tax Returns,
net of any applicable reserves;
(c) none of such Tax Returns are under audit or examination by any
foreign, federal, state or local authority and there are no agreements, waivers
or other arrangements providing for an extension of time with respect to the
assessment or collection of any Tax or deficiency of any nature against Seller
or with respect to any such Tax Return, or any suits or other actions,
proceedings, investigations or claims now pending or, to the Best Knowledge of
Seller and each Shareholder, threatened against Seller with respect to any Tax,
or any matters under discussion with any foreign, federal, state or local
authority relating to any Tax, or any claims for any additional Tax asserted by
any such authority;
(d) all Taxes assessed and due and owing from or against Seller on
or before the Effective Time (including, but not limited to, ad valorem taxes
relating to any property of Seller) have been timely paid in full on or before
the Effective Time;
(e) all withholding Tax, Tax deposit and estimated Tax payment
requirements imposed on Seller for any and all periods ending on or before the
Effective Time, or through and including the Effective Time for periods that
have not ended on or before the Effective Time, have been satisfied in full on
or before the Effective Time or reserves adequate for the payment of such
withholding, deposit and estimated Taxes have been or will be established in the
financial statements of Seller on or before the Effective Time, a copy of which
has been provided to ILEX; and
(f) the Financial Statements reflect and include adequate charges,
accruals, reserves and provisions for the payment in full of any and all Taxes
payable with respect to any and all periods ending on or before the respective
dates thereof.
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4.7 Employee Matters. Schedule 4.7 sets forth a true and complete list
of the names of, and current annual compensation paid by Seller to, each
employee of Seller utilized in connection with the operation of the Business.
Seller is not a party to or bound by any collective bargaining or other union
agreements. Seller has not had or been threatened with any union activities,
work stoppages or other labor trouble with respect to its employees. As of the
date hereof, there are no disputes with employees in general to which Seller is
a party. As of the date hereof, there are no strikes, slowdowns or picketing
against Seller (or, to the Best Knowledge of Seller and each Shareholder,
against any material supplier of goods or services to Seller) pending or, to the
Best Knowledge of Seller and each Shareholder, threatened. As of the date
hereof, Seller has not received notice from any union or employees setting forth
demands for representation, elections or for present or future changes in wages,
terms of employment or working conditions. Other than wage increases in the
ordinary course of business, since the Balance Sheet Date, Seller has not made
any commitment or agreement to increase the wages or modify the conditions or
terms of employment of any of the employees of Seller used in connection with
the Business.
4.8 Contracts and Agreements. (a) Except as set forth in Schedule
4.8(a), Seller is not a party to or bound by:
(i) any contract, agreement or commitment in respect of the
sale of products or services or the purchase of raw materials, supplies
or other products or utilities;
(ii) any offer, tender or the like outstanding and capable of
being converted into an obligation of Seller by the passage of time or
by an acceptance or other act of some other person or entity or both,
except for those incurred in the ordinary course of Seller's business,
none of which have had a Material Adverse Effect;
(iii) any sale, agency, distributorship agreement, franchise
agreement or legally enforceable commitment or obligation with respect
thereto;
(iv) any collective bargaining agreement, union agreement,
employment agreement, consulting agreement, management service
agreement, agreement providing for the services of an independent
contractor or any other similar type of contract or agreement;
(v) any profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health
insurance or other employee benefit plan, agreement, arrangement or
commitment of a similar nature or any agreement with any present or
former officer, director or shareholder of Seller, except as indicated
in Schedule 4.26;
(vi) any loan or credit agreement, indenture, guarantee (other
than endorsements made for collection), mortgage, pledge, conditional
sale or other title retention agreement, any equipment financing
obligation, lease and lease-purchase agreement, except as indicated in
Schedule 4.8(b);
(vii) any lease related to the Assets or the Business, and any
other contract, agreement or legally enforceable commitment relating to
or affecting the Assets or the Business;
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(viii) any performance bond, bid bond, surety bond and the
like, any contract and bid covered by such bond, and any letter of
credit and guaranty;
(ix) any consent decree and other judgment, decree or order,
settlement agreement and agreement relating to competitive activities,
requiring or prohibiting any future action;
(x) any contract, commitment or agreement of any nature with a
Shareholder, or any Associate (as defined in Section 4.5) of a
Shareholder or Affiliate of a Shareholder;
(xi) any contracts, commitments and agreements entered into
outside the ordinary course of the operation of the Business;
(xii) any agreement, indenture or other instrument which
contains restrictions with respect to the payment of dividends or any
other distribution in respect of its capital stock or the purchase,
redemption or other acquisition of capital stock;
(xiii) other than expenditures regularly made in the ordinary
course of business of Seller for items that are not property, plant or
equipment, any agreement, contract or commitment relating to any
expenditure or a series of related expenditures in excess of $10,000;
(xiv) any outstanding loan or advance by Seller to, or
investment by Seller in, any Person, or any agreement, contract,
commitment or understanding relating to the making of any such loan,
advance or investment (excluding trade receivables);
(xv) any contract, agreement, indenture, note or other
instrument relating to (A) the borrowing of money by Seller or the
granting of any Encumbrance or (B) any guarantee or other contingent
liability (identifying the primary contract or agreement to which such
guarantee or contingent liability relates or the agreement pursuant to
which such guarantee was delivered) in respect of any indebtedness,
commitment, liability or obligation of any Person (other than the
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business);
(xvi) any agreement, contract or commitment limiting the
freedom of Seller or any Affiliate of Seller to engage in any line of
business, to own, operate, sell, transfer, pledge or otherwise dispose
of or encumber any Asset or to compete with any Person or to engage in
any business or activity in any geographic area;
(xvii) any agreement, lease, contract or commitment or series
of related agreements, leases, contracts or commitments not entered
into in the ordinary course of business that is not cancelable under
the terms of such agreement, lease, contract or commitment without
penalty to Seller within 30 days;
(xviii) any agreement, contract or commitment requiring (A)
the payment for goods or services whether or not such goods or services
are actually provided or (B) the furnishing of goods or services at a
price less than Seller's cost of producing such goods or providing such
services;
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(xix) any agreement or contract obligating Seller or that
would obligate or require any subsequent owner of the business
currently conducted by Seller or any of the Assets to provide for
indemnification or contribution with respect to any matter (other than
customary indemnification provisions in leases of property leased by
Seller);
(xx) any license, royalty or similar agreement;
(xxi) any intellectual property assignment; or
(xxii) any agreement, contract or commitment that Seller
expects to have a Material Adverse Effect on Seller and/or Purchaser
subsequent to Closing.
Schedule 4.8(a) sets forth with respect to each mortgage, security agreement,
letter of credit or guaranty, a cross-reference to the principal agreement,
instrument or document referred to in Schedule 4.8(a) pursuant to which such
mortgage, security agreement, letter of credit or guaranty was executed or to
which such mortgage, security agreement, letter of credit or guaranty relates.
(b) Schedule 4.8(b) sets forth (i) the aggregate outstanding
principal amount as of March 31, 1999, with respect to each loan, credit or
other agreement, instrument or document listed in Schedule 4.8(b) hereto
relating to the borrowing of money by Seller and (ii) the amount of available
borrowings as of March 31, 1999, with respect to each such loan, credit or other
agreement, instrument or document.
(c) All of such contracts, agreements, leases, licenses, plans,
arrangements, commitments and documents listed in Schedule 4.8(a) (collectively,
the "Contracts") are valid, binding and in full force and effect in accordance
with their terms and conditions, other than as set forth in Schedule 4.12(a),
and there is no existing default thereunder or breach thereof by Seller, or, to
the Best Knowledge of Seller and each Shareholder, by any other party to a
Contract, or any conditions which, with the passage of time or the giving of
notice or both, might reasonably constitute such a default by Seller, or, to the
Best Knowledge of Seller and each Shareholder, by any other party to a Contract,
and none of the Contracts will be breached by or give any other party a right of
termination as a result of the transactions contemplated by this Agreement.
There are no pending or, to the Best Knowledge of Seller and each Shareholder,
threatened disputes with respect to the Contracts. Seller is not obligated to
pay any liquidated damages under any of the Contracts and to the Best Knowledge
of Seller and each Shareholder, there are no facts or circumstances that could
reasonably be expected to result in an obligation of Seller to pay any such
liquidated damages. To the Best Knowledge of Seller and each Shareholder, there
is no reason why any of the Contracts (i) will result in a loss to the Surviving
Corporation on completion by performance or (ii) cannot readily be fulfilled or
performed by the Surviving Corporation on time without undue or unusual
expenditure of money or effort. Copies of all of the documents (or in the case
of oral commitments, descriptions of the material terms thereof) relevant to the
Contracts have been delivered by Seller to the ILEX Parties, and such copies
and/or descriptions are true, complete and accurate and include all amendments,
supplements or modifications thereto. All of the Contracts will be fully vested
in Purchaser as of the Effective Time of the Merger, without the approval or
consent of any Person, or, if such approval or consent is required, it will be
obtained by Seller and delivered to the ILEX Parties at or prior to the Closing.
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4.9 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (a)
violate any provision of the Certificate of Incorporation or other charter
documents or bylaws of Seller; (b) result in any violation of any Governmental
Requirement applicable to any Shareholder, Seller, the Assets or the Business;
(c) conflict with, or result in any breach of, or default or loss of any right
under (or an event or circumstance that, with notice or the lapse of time, or
both, would result in a default), or the creation of an Encumbrance pursuant to,
or cause or permit the acceleration prior to maturity or "put" right with
respect to, any obligation under, any contract, indenture, mortgage, deed of
trust, lease, loan agreement or other agreement or instrument to which Seller or
any Shareholder is a party or to which any of the Assets or Business are
subject; (d) relieve any Person of any obligation (whether contractual or
otherwise) or enable any Person to accelerate or terminate any such obligation
or any right or benefit enjoyed by Seller or to exercise any right under any
agreement in respect of the Assets or the Business; and (e) require notice to or
the consent, authorization, approval, clearance, waiver or order of any Person
(except as may be contemplated by the last sentence of Section 4.8). To the Best
Knowledge of Seller and each Shareholder, the business relationships of clients,
customers and suppliers of the Business will not be adversely affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 4.9 hereto, the execution,
delivery and performance of this Agreement by Seller will not result in the loss
of any governmental license, franchise or permit possessed by Seller.
4.10 Properties, Assets and Leasehold Estates.
(a) Set forth on Schedule 4.10(a) is a description of each item of
personal property, excluding inventory, owned by Seller that had a book value as
of the Balance Sheet Date greater than $10,000. For purposes of this Section
4.10, "personal property" excludes Intellectual Property. Seller has good title
to all of its personal property that is material to Seller's business, results
of operations, financial condition or Assets (including, without limitation,
those items of personal property set forth on Schedule 4.10(a)), free and clear
of all Encumbrances, except for Permitted Encumbrances and those Encumbrances
set forth on Schedule 4.10(a).
(b) Set forth on Schedule 4.10(b) is a description of each item of
personal property leased by Seller for which the annual rent payable under the
applicable lease or contract exceeds $10,000. Seller has good title to all the
leasehold estates pursuant to which the personal property set forth on Schedule
4.10(b) is leased, free and clear of all Encumbrances, except for Permitted
Encumbrances and those Encumbrances set forth on Schedule 4.10(b). Seller has
not breached any provision of and is not in default (and no event or
circumstance exists that with notice, or the lapse of time or both, would
constitute a default by Seller) under the terms of any lease or other agreement
pursuant to which the personal property set forth on Schedule 4.10(b) is leased.
To the Best Knowledge of Seller and each Shareholder, all of such leases or
other agreements are in full force and effect. There are no pending or, to the
Best Knowledge of Seller and each Shareholder, threatened disputes with respect
to any lease or other agreement pursuant to which the personal property set
forth on Schedule 4.10(b) is leased and, to the Best Knowledge of Seller and
each Shareholder, the lessor thereunder has not breached any provision of and is
not in default (and no event or circumstance exists that with notice, or the
lapse or time or both, would constitute a default by the lessor) under the terms
of any such lease or other agreement.
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(c) Seller owns no real property.
(d) Set forth on Schedule 4.10(d) is a list of all leases of
Seller with respect to real property leased by Seller for which the annual rent
payable under the applicable lease or contract exceeds $10,000. Seller has good
and marketable title to all the leasehold estates pursuant to which the real
property set forth on Schedule 4.10(d) is leased, free and clear of all
Encumbrances, except for Permitted Encumbrances. Seller has not breached any
provision of and is not in default (and no event or circumstance exists that
with notice, or the lapse of time or both, would constitute a default by Seller)
under the terms of any lease or other agreement pursuant to which the real
property set forth on Schedule 4.10(d) is leased. To the Best Knowledge of
Seller and each Shareholder, all of such leases or other agreements are in full
force and effect. There are no pending or, to the Best Knowledge of Seller and
each Shareholder, threatened disputes with respect to any lease or other
agreement pursuant to which the real property set forth on Schedule 4.10(d) is
leased and, to the Best Knowledge of Seller and each Shareholder, the lessor
thereunder has not breached any provision of and is not in default (and no event
or circumstance exists that with notice, or the lapse of time or both, would
constitute a default by the lessor) under the terms of any such lease or other
agreement.
(e) To the Best Knowledge of Seller and each Shareholder, there is
no (i) applicable law, statute, ordinance, rule, regulation, order or
determination of any Governmental Authority or any restrictive covenant or deed
restriction affecting the real property described in Section 4.10(d) hereof,
including without limitation any zoning ordinances, building codes, flood
disaster laws, wetlands regulations, health laws or environmental laws, (ii)
judicial or administrative action, (iii) action by adjacent landowners, (iv)
administrative action, (v) natural or artificial conditions on or about the real
property identified in Section 4.10(d) or (vi) significant adverse fact or
condition relating to such real property or its use that would, in each case,
prevent, limit, impede or render more costly the ownership, operation or
maintenance of such real property compared to the cost as of the date hereof.
4.11 Intellectual Property.
(a) Schedule 4.11 lists all Patents, registered and applied for
Trademarks and material unregistered trademarks, service marks and trade names
owned by (or registered in the name of) Seller. Schedule 4.11 includes as to
each Patent or Trademark listed thereon: a Patent registration or application
number, as applicable for each listed Trademark and non-U.S. Patent, and a
docket or patent number for each listed U.S. Patent; the country or countries in
which each Patent or Trademark is issued, registered or applied for, as
applicable; the application date or registration date for each listed Trademark
and the docket number or issue date for each listed Patent, as applicable; and
the owner of such Patent or Trademark. To the best knowledge of Seller and each
Shareholder, all Patents and Trademarks listed on Schedule 4.11 exist and have
been maintained in good standing, including without limitation, the timely
payment of any maintenance fees and annuities thereon. Seller has taken all
commercially reasonable actions and made all commercially reasonable
applications and filings pursuant to applicable laws to secure, perfect and
protect its rights in the Intellectual Property, necessary, required or
desirable for the conduct of the Business and, to the Best Knowledge of each
Shareholder, neither Seller, any Shareholder nor any of their respective agents
has practiced inequitable conduct under the Patent laws or other applicable laws
with respect to any of the foregoing. Seller and each Shareholder has taken all
commercially reasonable steps (including without limitation entering into
appropriate confidentiality, non-disclosure and non-competition
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agreements with all officers, directors, shareholders and employees of Seller
with access to or knowledge of the Intellectual Property of Seller (and the
products and technology of Seller) to safeguard and maintain the secrecy and
confidentiality of, and to assign to Seller, all of such employee's, as
applicable, rights in all such Intellectual Property invented or developed by
such employee within the scope of such employee's employment. All full-time
employees of Seller have signed a confidentiality and invention assignment
agreement for the benefit of Seller to assign such employee's rights in
Intellectual Property to Seller.
(b) To the Best Knowledge of Seller and each Shareholder, Seller
owns or is duly licensed or otherwise has the right to use all the Intellectual
Property used or required for use in connection with the Business; and, to the
Best Knowledge of Seller and each Shareholder, all such Intellectual Property is
valid and enforceable against third parties. Except as set forth in Schedule
4.11, to the Best Knowledge of Seller and each Shareholder, Seller owns on an
exclusive basis, free and clear of any Encumbrances, and has the unrestricted
right to use, license, sell or dispose of, and the right to bring infringement
actions with respect to all the Intellectual Property. Except as set forth in
Schedule 4.11, to the Best Knowledge of Seller and each Shareholder, Seller does
not pay, and has no obligation (whether absolute or contingent) to pay,
royalties, honoraria, fees or other payments to any Person by reason of the
ownership, use, license, sale or disposition of any Intellectual Property right
held by Seller. Except as set forth in Schedule 4.11, to the Best Knowledge of
Seller and each Shareholder, Seller has not received notice (written or oral) of
any claim of any Person asserting rights in, or a conflict with, the
Intellectual Property used or required for use in connection with the Business
(including without limitation the Patents and Trademarks listed in Schedule
4.11). Without limiting the foregoing, to the Best Knowledge of Seller and each
Shareholder, no other Person has claimed the right to use any Trademark which is
identical or confusingly similar to any Trademark used by Seller. To the Best
Knowledge of Seller and each Shareholder, Seller has not provided notice
(written or oral) to any Person of infringement of any Intellectual Property
right held by Seller and, to the Best Knowledge of Seller and each Shareholder,
there is no reasonable basis for such a claim. There is no agreement,
arrangement or understanding (written or oral) between Seller and another Person
which would prevent or restrict Purchaser after the Merger from using, selling,
licensing or disposing of any Intellectual Property of Seller on substantially
the same terms and conditions applicable to Seller immediately prior to the
Merger.
(c) Schedule 4.11 lists all material agreements, arrangements or
understandings (whether written or oral, and if oral, Schedule 4.11 contains a
brief description of the principal terms thereof) pursuant to which has either
purchased, sold, licensed, secured or disposed of rights in Intellectual
Property from or to another Person or agreed to do any of the foregoing (other
than licenses to commercially available off-the-shelf computer software acquired
or entered into by Seller in the ordinary course of business) ("Intellectual
Property Agreements"). To the Best Knowledge of Seller and each Shareholder,
each of the parties thereto have performed, in all material respects, all
obligations under each Intellectual Property Agreement which are required to be
performed by such party, and there is no default (or event which with notice or
lapse of time would constitute a default) thereunder. To the Best Knowledge of
Seller and each Shareholder, each Intellectual Property Agreement is enforceable
against each of the parties thereto pursuant to its terms.
(d) To the Best Knowledge of Seller and each Shareholder, the
operation of the Business (including without limitation the manufacture, sale,
use, trade dress, packaging, license, or other exploitation of products and
technology currently marketed or in development) does not and
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will not infringe, trespass or otherwise violate the Intellectual Property
rights of any Person. Without limiting the foregoing, to the Best Knowledge of
Seller and each Shareholder, Seller has not received a notice (written or oral)
of infringement of any Intellectual Property right held by another Person and
there is no reasonable basis for such a claim. Seller is not obligated to
indemnify any Person for any liability, cost or expense arising from such
Person's use, sale, licensing or disposition of any Intellectual Property or
such Person's manufacture, use, sale, license or other exploitation of any
product or technology.
(e) Seller has developed all Intellectual Property through its own
efforts for its own account and has good and clear title thereto, and, except as
set forth in agreements itemized on Schedule 4.11(c), there is no contract
obligation, license, lien, encumbrance, alleged infringement, dispute, potential
dispute, claim or other cloud of title concerning such Intellectual Property
whatsoever. The Intellectual Property neither infringes nor is being infringed
by any third party proprietary interest, including (without limitation) any
third party patent, copyright, trademark, or trade secret interest. The
Intellectual Property is fully eligible for protection under applicable law and
has not been forfeited, abandoned, lapsed or donated in any way into the public
domain. All of Seller's trade secrets have been maintained in confidence and,
except as set forth in agreements itemized on Schedule 4.11(c), are not known to
any third party. All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the Intellectual Property either (i) have been a party to a
work-for-hire relationship with Seller that has accorded Seller full, effective
and exclusive original ownership of all tangible and intangible property arising
with respect to the Intellectual Property or (ii) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed to
Seller full, effective and exclusive ownership of all tangible and intangible
property thereby arising with respect to the Intellectual Property. Except for
agreements itemized on Schedule 4.11(c), no agreements or arrangements are in
effect with respect to the development, non-disclosure, marketing, distribution,
licensing or promotion of the Intellectual Property by any independent
contractor, salesperson, distributor, sublicensor or other remarketer or sales
organization.
4.12 Compliance with Laws.
(a) No investigation, review, inquiry or proceeding by any
Governmental Entity with respect to Seller is pending or, to the Best Knowledge
of Seller and each Shareholder, is pending or, to the Best Knowledge of Seller
and Shareholder threatened, other than those related to FDA product approvals
requested by Seller, and there are no facts which could reasonably be expected
to form a legitimate basis for any of the foregoing.
(b) Seller is not subject to any agreement, contract or decree
with any Governmental Entities arising out of any current or previously existing
violations of any laws, ordinances or regulations.
(c) To the Best Knowledge of Seller and each Shareholder, all
finished products purchased from third party manufacturers by Seller meet the
specifications therefor in all material respects and there is no material
violation of any applicable law by any third party manufacturer.
(d) To the Best Knowledge of Seller and each Shareholder, as to
each drug for which a new drug application ("NDA") or abbreviated new drug
application ("ANDA") has been
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approved by the U.S. Food and Drug Administration ("FDA"), which drugs are
described on Schedule 4.12 and such NDAs and ANDAs are exclusively owned by the
applicant and all Persons performing operations covered by the application are
not in violation of, in any material respect, and are in material compliance
with, 21 U.S.C. (S)(S) 355,21 C.F.R. Parts 314 et. seq., respectively, and all
terms and conditions of the application.
(e) Seller does not manufacture, sell or distribute, and has not
developed and is not currently developing any "biologic product," "medical
devices" or "antibiotics."
(f) To the Best Knowledge of Seller and each Shareholder, Seller
is not in violation of and is in compliance with, all applicable registration
and listing requirements set forth in 21 U.S.C. (S) 360 and 21 C.F.R. Part 207.
To the Best Knowledge of Seller and each Shareholder, to the extent required,
Seller has obtained licenses from the U.S. Drug Enforcement Agency ("DEA") and
are not in violation of and are in compliance with, all such licenses and all
applicable regulations promulgated by the DEA.
(g) To the Best Knowledge of Seller and each Shareholder all
manufacturing operations conducted by or for the benefit of Seller are not in
violation of and have been and are being conducted in compliance with, the good
manufacturing practice regulations set forth in 21 C.F.R. Parts 210 and 211.
(h) To the Best Knowledge of Seller and each Shareholder, neither
Seller, any Shareholder nor their respective officers, employees, or agents have
made an untrue statement of material fact or fraudulent statement to the FDA or
the DEA, failed to disclose a material fact required to be disclosed to the FDA
or the DEA, or committed an act, made a statement, or failed to make a statement
that could reasonably be expected to provide a basis for the FDA to invoke its
policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities," set forth in 56 Fed. Reg 46191 (September 10, 1991) and any
amendments thereto.
(i) No reports of inspection observations, establishment
inspection reports or warning letters have been received from or issued by the
FDA or the DEA within the last three years that allege lack of compliance with
the FDA or the DEA regulatory requirements by Seller or, to the Best Knowledge
of Seller and each Shareholder. Persons covered by product applications or
otherwise performing services for the benefit of Seller.
(j) Neither Seller nor any Shareholder has received any written
notice or has Best Knowledge that the FDA or the DEA has commenced or threatened
to initiate, any action to withdraw its approval or request the recall of any
product of Seller or commenced or threatened to initiate, any action to enjoin
production at any facility owned or used by Seller or any facility at which any
of Seller's products are manufactured, processed, packaged, labeled, stored,
distributed, tested or otherwise handled (the "Manufacturing Locations").
(k) To the Best Knowledge of Seller and each Shareholder, as to
each product currently manufactured and/or distributed by Seller such product is
not adulterated or misbranded within the meaning of the FDCA, 21 U.S.C.
(S)(S)321 et. seq.
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(l) To the Best Knowledge of Seller and each Shareholder as to
each drug referred to in Section 4.12(d), Seller and its officers, employees,
agents and affiliates have included or caused to be included in the application
for such drug, where required, the certification described in 21 U.S.C. (S)
335a(k)(l) and the list described in 21 U.S.C. (S) 335a(k)(2), and such
certification and such list was in each case true and accurate, in all material
respects, when made and remained true and accurate in all material respects
thereafter.
(m) Neither Seller nor any Shareholder, nor, to the Best Knowledge
of Seller and each Shareholder, their respective officers, employees, agents or
affiliates, has been convicted of any crime or engaged in any conduct for which
debarment is mandated by 21 U.S.C. (S) 335a(a) or authorized by 21 U.S.C. (S)
335a(b).
(n) As to each application or abbreviated application submitted
to, but not approved by, the FDA, and not withdrawn by Seller or applicants
acting on its behalf as of the date of this Agreement, Seller has complied, and
is in compliance with, the requirements of 21 U.S.C. (S)(S) 355 and 21 C.F.R.
Parts 312 and 314 et. seq. and has provided all additional information and taken
all additional action reasonably requested by the FDA in connection with the
application.
(o) There are no facts or circumstances that would reasonably be
expected to delay outside the ordinary course of business, or prevent approval
of any pending NDAs or ANDAs, or any amendments and/or supplements thereto.
(p) There are no lawsuits, actions, arbitrations or legal or
administrative or regulatory proceedings, charges, complaints, or investigations
by the FDA or any other Governmental Entity pending against Seller. There are no
proceedings pending with respect to a violation by Seller of the Food, Drug and
Cosmetic Act, FDA regulations adopted thereunder, or any other legislation or
regulation promulgated by any other Governmental Entity which might result in
the revocation, cancellation, suspension, limitation or adverse modification of
any Permit.
(q) Neither Seller nor any Shareholder has been served with any
complaint or received any other notices of lawsuits, arbitrations, legal or
administrative or regulatory proceedings, charges, complaints or investigations
by any federal, state or foreign regulatory agency threatened or pending against
or relating to Seller or any permit of Seller.
(r) Seller is not in violation of and is in compliance with all
applicable laws and regulations regarding the conduct of pre-clinical and
clinical investigations including but not limited to good laboratory practices,
investigational new drug requirements, and requirements regarding informed
consent and Institutional Review Boards designed to ensure the protection of the
rights and welfare of human subjects, including but not limited to the
requirements provided in 21 C.F.R. Parts 50, 56, 58 and 312.
(s) Schedule 4.12 identifies all the countries in which Seller's
products have been or are being registered and/or approved for manufacturing,
marketing or sale and the products approved in each respective country. Seller
is authorized to sell products in each of the countries in which such products
are currently being sold and all Permits necessary for such sale are held by
Seller. Schedule 4.12 describes the owners of the approvals or registrations for
the manufacture, marketing or sale of Seller's products.
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4.13 Suits, Actions and Claims. Except as set forth in Schedule 4.13,
(a) there are no suits, actions, claims, inquiries or investigations by any
Person, or any legal, administrative or arbitration proceedings in which Seller
is engaged or which are pending or, to the Best Knowledge of Seller and each
Shareholder, threatened against or affecting Seller or any of its properties,
assets or business, or to which Seller is or might become a party, or which
question the validity or legality of the transactions contemplated hereby, (b)
to the Best Knowledge of the Seller and each Shareholder, no reasonable basis or
reasonable grounds for any such suit, action, claim, inquiry, investigation or
proceeding exists and (c) there is no outstanding order, writ, injunction or
decree of any Governmental Authority against or affecting Seller or any of its
properties, assets or business. Without limiting the foregoing, to the Best
Knowledge of Seller and each Shareholder, there is no state of facts or the
occurrence of any event forming the basis of any present or potential claim
against Seller.
4.14 Licenses and Permits; Compliance With Governmental Requirements.
Except as set forth in Schedule 4.14, Seller has all federal, state, local and
foreign governmental licenses and permits necessary to the conduct of the
operations of Seller's business as currently conducted, such licenses and
permits are in full force and effect, no violations currently exist in respect
of any thereof and no proceeding is pending or, to the Best Knowledge of Seller
and each Shareholder, threatened to revoke or limit any thereof. Schedule 4.14
contains a true, complete and accurate list of (a) all such governmental
licenses and permits, (b) all consents, orders, decrees and other compliance
agreements under which Seller is operating or bound, copies of all of which have
been furnished to the ILEX Parties, and (c) all material governmental licenses
and permits applied for but not yet received by Seller. Seller has not received
and neither Seller nor any Shareholder is aware of any reports of inspections
under the United States Occupational Safety and Health Act, or under any other
applicable federal, state or local health and safety laws and regulations
relating to Seller, the Assets or the operation of Seller's business. There are
no safety, health, anti-competitive or discrimination claims that have been made
or are pending or, to the Best Knowledge of Seller and each Shareholder, that
are threatened relating to the business or employment practices of Seller.
Seller has complied with all Governmental Requirements applicable to its
business and all Governmental Requirements with respect to the distribution and
sale of products and services by it.
4.15 Authorization.
(a) Seller has full legal right, power and authority to enter into
and deliver this Agreement, to consummate the transactions set forth herein and
to perform all the terms and conditions hereof to be performed by it. The
execution and delivery of this Agreement by Seller and the performance by it of
the transactions contemplated herein have been duly and validly authorized by
all requisite corporate actions of Seller, and this Agreement has been duly and
validly executed and delivered by Seller and is the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with the terms of
the Agreement, except as limited by applicable bankruptcy, moratorium,
insolvency or other similar laws affecting generally the rights of creditors or
by principles of equity.
(b) Each Shareholder has full legal right, power and authority to
enter into and deliver this Agreement and the Affiliate Letter (as defined
herein), to consummate the transactions set forth herein and to perform all the
terms and conditions hereof to be performed by it. This Agreement has been duly
and validly executed and delivered by each Shareholder and is the legal,
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valid and binding obligation of each Shareholder, enforceable against each
Shareholder in accordance with the terms of the Agreement, except as limited by
applicable bankruptcy, moratorium, insolvency or similar laws affecting
generally the rights of creditors or by principles of equity.
4.16 Records. The books, records and minutes kept by Seller with
respect to the Assets and the Business, including, but not limited to, all
customer files, service agreements, correspondence and historic revenue of
Seller, have been kept properly and contain records of all matters required to
be included therein by any Governmental Requirement or by generally accepted
accounting principles, and such books, records and minutes are true, accurate
and complete.
4.17 Environmental Protection Laws.
(a) Except as set forth in Schedule 4.17, to the Best Knowledge of
the Seller and each Shareholder, Seller has at all times operated in compliance
with all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations of Environmental Laws and related
orders of any court or other Governmental Authority.
(b) Except as set forth in Schedule 4.17, there are no existing,
pending or, to the Best Knowledge of Seller and each Shareholder, threatened
actions, suits, claims, investigations, inquiries or proceedings by or before
any court or any other Governmental Authority directed against Seller or its
Assets or the Business which pertain or relate to (i) any remedial obligations
under any applicable Environmental Law, (ii) violations of any Environmental
Law, (iii) personal injury or property damage claims relating to the release of
chemicals or Waste Materials or (iv) response, removal or remedial costs under
CERCLA or any similar state law.
(c) Except as set forth in Schedule 4.17, all notices, permits,
licenses or similar authorizations required to be obtained or filed by Seller
under all applicable Environmental Laws in connection with its current and
previous operation or use of the Assets, any other assets or properties
currently or previously leased or owned by Seller or the current and previous
conduct of its business have been duly obtained or filed and are in full force
and effect.
(d) Neither Seller nor any Shareholder has received notice that
any permit, license or similar authorization is to be revoked or suspended by
any Governmental Authority.
(e) Seller does not own or operate any underground storage tanks.
(f) No portion of the Assets or any other assets or properties
currently or previously leased or owned by Seller is part of a Superfund site
under CERCLA or any similar ranking or listing under any similar state law.
(g) All Waste Materials generated by Seller have been transported,
stored, treated and disposed of by carriers, storage, treatment and disposal
facilities authorized and maintaining valid permits under all applicable
Environmental Laws.
(h) No Person has disposed or released any Waste Materials on or
under the Assets or any other asset or property currently or previously leased
or owned by Seller and Seller has
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not disposed or released Waste Materials on or under the Assets or any other
asset or property currently or previously leased or owned by Seller, except in
compliance with all Environmental Laws.
(i) No facts or circumstances exist which could reasonably be
expected to result in any liability to any Person with respect to the current or
past business and operations of Seller, the Assets or any other assets or
properties currently or previously leased or owned by Seller in connection with
(i) any release, transportation or disposal of any Waste Materials, hazardous
substance or solid waste or (ii) action taken or omitted that was not in full
compliance with or was in violation of, any applicable Environmental Law.
4.18 Accounts Receivable. Other than as set forth on Schedule 4.18,
neither Seller nor its Subsidiary has any accounts receivable.
4.19 Brokers and Finders. No broker or finder has acted for Seller or
any Shareholder in connection with this Agreement or the transactions
contemplated by this Agreement and no broker or finder is entitled to any
brokerage or finder's fee or to any commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of Seller
or each Shareholder.
4.20 Deposits. Except as set forth on Schedule 4.20, Seller does not
now hold any deposits or prepayments by third parties with respect to any of the
Assets or the Business ("Deposits").
4.21 Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Assets from or required by any policy of
insurance, fire department, sanitation department, health authority or other
Governmental Authority nor is there any matter under discussion with any such
parties or authorities relating to work orders or contracts.
4.22 Customer List; Supplier List.
(a) Schedule 4.22(a) sets forth a true, correct and complete list
of all customers of the Business to which Seller has sold or provided products
or services since inception. This list provides an accurate statement of the
gross revenues received from each such customer by the Business since inception.
(b) Schedule 4.22(b) sets forth a true, correct and complete list
of all suppliers of the Business from which Seller has purchased or otherwise
received more than $10,000 worth of products or services since inception. This
list provides an accurate statement of the gross payments to each such supplier
by the Business since inception.
4.23 No Royalties. Except as set forth on Schedule 4.23, no royalty or
similar item or amount is being paid or is owing by Seller, nor is any such item
accruing, with respect to the operation, ownership or use of the Business or the
Assets.
4.24 Bank Accounts. Schedule 4.24 sets forth a true and complete list
of all bank or financial accounts and safe deposit boxes of Seller and of the
credit and debit balances of such bank and financial accounts as of the most
recent practicable date. Except as set forth in Schedule 4.24, since the date of
the balances set forth on such list, there have been no payments out of or
drafts
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against any of the accounts included therein other than routine payments and
drafts in the ordinary course of business, and the balances in such accounts as
of the date hereof are not materially different from those reflected in such
list. Schedule 4.24 also lists all persons having signatory authority over or
access to such bank and financial accounts and safe deposit boxes.
4.25 Insurance. Schedule 4.25 sets forth all existing insurance
policies held by Seller relating to the Business, Assets, employees or agents of
Seller. Each such policy is in full force and effect and is with insurance
carriers believed by Seller to be responsible. There is no dispute with respect
to such policies, and all claims arising from events or circumstances occurring
prior to the date hereof have been paid in full or adequate reserves therefor
are recorded in the Reference Balance Sheet. All retroactive premium adjustments
for any period ended on or before March 31, 1999, under any worker's
compensation policy or any other insurance policies of Seller have been recorded
in accordance with generally accepted accounting principles and are reflected in
the Reference Balance Sheet. Except for the policies identified as such on
Schedule 4.25, none of the policies set forth on Schedule 4.25 will terminate as
a result of the transactions contemplated by this Agreement.
4.26 Employee Benefit Matters. As used in this Section 4.26, "Seller"
shall include Seller and any member of a controlled group or affiliated service
group as defined in Sections 414(b), (c), (m) and (o) of the Code of which
Seller is a member.
(a) List of all Benefit Plans and Compensation Agreements.
Schedule 4.26(a) includes a complete and accurate list of all employee welfare
benefit and employee pension benefit plans as defined in Sections 3(1), 3(2) and
3(3) of ERISA and all other employee benefit agreements or arrangements,
including, but not limited to, deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans, golden
parachute agreements, severance pay plans, dependent care plans, cafeteria
plans, employee assistance programs, scholarship programs, employment contracts
and other similar plans, agreements and arrangements since inception, or have
been approved before this date but are not yet effective, for the benefit of
directors, officers, employees, or former employees (or their beneficiaries) of
Seller. Seller is not aware of any commitment to create any new plan, agreement
or arrangement or modify any now existing. Seller has delivered to the ILEX
Parties, as to each plan, agreement or arrangement listed in Schedule 4.26(a),
as applicable, a complete and accurate copy of (i) each plan, agreement or
arrangement listed, (ii) the trust, group annuity contract or other document
which provides the funding for the plan, agreement or arrangement, (iii) the
three most recent annual Form 5500, 990 and 1041 reports, (iv) the most recent
actuarial report or valuation statement, (v) the most current summary plan
description, booklet, or other descriptive written materials, and each summary
of material modifications prepared after the last summary plan description, (vi)
the most recent IRS determination letter and all rulings or determinations
requested from the IRS subsequent to the date of that exemption letter and (vii)
all other correspondence from the IRS or the Department of Labor received which
relates to one or more of the plans, agreements or arrangements. There are no
pending or, to the Best Knowledge of Seller and each Shareholder, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the plans disclosed on Schedule 4.26(a) or their related trusts.
(b) Representations Pertaining to all Employee Benefit Plans. Each
employee welfare benefit plan and every employee pension benefit plan as defined
in Sections 3(1), 3(2) and 3(3) of ERISA which has been or is sponsored by,
participated in by or contributed to by Seller: (i)
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is in compliance with the Code and ERISA, including, but not limited to, all
reporting and disclosure requirements of Part 1 of Subtitle B of Title I of
ERISA; (ii) has had the appropriate Form 5500 filed timely for each year of its
existence; (iii) has not engaged in any transaction described in Sections 406 or
407 of ERISA or Section 4975 of the Code unless exempt under Section 408 of
ERISA or Section 4975 of the Code, as applicable; (iv) has at all times complied
with the bonding requirements of Section 412 of ERISA; (v) has no issue pending
(other than the payment of benefits in the normal course) nor any issue resolved
adversely to Seller which may subject Seller to the payment of a penalty,
interest, tax or other amount and (vi) can be unilaterally terminated or amended
on no more than 90 days notice [other than collectively bargained union plans],
and (vii) all contributions or other amounts payable by Seller as of the Closing
Date with respect to each employee welfare benefit plan and each employee
pension benefit plan, other than an employee pension benefit plan which is
subject to Section 412 of the Code, have either been paid or accrued in the
Reference Balance Sheet, a copy of which has been furnished to the ILEX Parties.
No notice has been received by Seller of an increase or proposed increase in the
cost of any employee welfare benefit or employee pension benefit plan or other
employee benefit agreement or arrangement listed in Schedule 4.26(a).
(c) Additional Representations Pertaining to Certain Employee
Welfare Benefit Plans. All voluntary employee benefit associations have been
submitted to and approved as exempt from federal income tax under Section
501(c)(9) of the Code by the IRS or the applicable submission period will not
have ended prior to the Closing. No plan, arrangement or agreement with any one
or more employees will cause Seller to have liability for severance pay as a
result of the Merger. Except as listed in Schedule 4.26(a), Seller does not
provide employee benefits, including without limitation, death, post-retirement
medical or health coverage (whether or not insured) or contribute to or maintain
any employee benefit plan which provides for benefit coverage following
termination of employment, nor has it made any representations, agreements,
covenants or commitments to provide that coverage, except (i) as is required by
Section 4980B(f) of the Code or other applicable statute, (ii) death benefits or
retirement benefits under any employee pension benefit plan as defined in
Section 3(2) of ERISA, (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), or (iv) deferred compensation
benefits which have been accrued as liabilities on the books of Seller and
disclosed on its Financial Statements. All group health plans maintained by
Seller have been operated in compliance with Section 4980B(f) of the Code.
(d) Additional Representations Pertaining to Certain Employee
Pension Benefit Plans. All employee pension benefit plans as defined in Section
3(2) of ERISA which are intended to qualify under Section 401(a) of the Code
have been submitted to and approved as qualifying under Section 401(a) of the
Code by the IRS or the applicable remedial amendment period will not have ended
prior to the Closing. No facts have occurred which if known by the IRS could
cause disqualification of those plans. All employee pension benefit plans to
which Section 412 of the Code is applicable have fully complied with the funding
requirements of that Section and there is no accumulated funding deficiency as
defined in Section 302(a)(2) of ERISA (whether or not waived) in any one or more
of those plans. Seller has paid all premiums (any interest, charges and
penalties for late payment, if any applicable) due the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to each employee pension benefit plan for
which premiums are required. No facts are known by Seller which will materially
increase those premiums within three years of the Closing Date. Except as set
forth on Schedule 4.26(d), no employee pension benefit plan maintained by Seller
has been terminated under circumstances which would result in liability to the
PBGC. There has been no "reportable event" (as defined in Section 4043(b) of
ERISA and the regulations under that
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Section) with respect to any employee pension benefit plan subject to Title IV
of ERISA. Seller has not ceased operations at a facility so as to become subject
to the provisions of Section 4062(e) of ERISA, withdrawn as a substantial
employer so as to become subject to the provisions of Section 4063 of ERISA or
ceased making contributions on or before the date of the Closing to any employee
pension benefit plan subject to Section 4064(a) of ERISA to which Seller made
contributions at any time during the six years prior to the date of Closing.
Seller has not made a complete or partial withdrawal from a multiemployer plan
(as defined in Section 3(37) of ERISA) so as to incur withdrawal liability as
defined in Section 4201 of ERISA. The aggregate withdrawal liability of Seller,
computed as if a complete withdrawal by Seller had occurred under each
multiemployer pension plan as of the date hereof, would not exceed $10,000.
(e) Except as disclosed in Schedule 4.26(e), the transactions
contemplated by this Agreement will not accelerate the time of payment or
vesting, or increase the amount, of compensation due any director, officer or
employee or former director, officer or employee (including any beneficiary)
from Seller.
4.27 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and (ii) warranties
disclosed on Schedule 4.27, Seller has not given or made any warranties either
express or implied in connection with the sale or rental of goods or services,
including, without limitation, warranties covering the customer's consequential
damages. To the Best Knowledge of Seller and each Shareholder, and except as set
forth in Schedule 4.27, there is no state of facts or occurrence of any event
forming the basis of any present claim against Seller with respect to warranties
relating to products produced, manufactured, marketed, sold, transported or
distributed by Seller or services rendered or allegedly offered by or on behalf
of Seller that could reasonably be expected to materially exceed the reserves
therefor.
(b) To the Best Knowledge of Seller and each Shareholder, there is
no state of facts or any event forming the basis of any present claim against
Seller not fully covered by insurance for personal injury or property damage
alleged to be caused by products produced, manufactured, marketed, sold,
transported or distributed by Seller or services rendered or allegedly offered
by or on behalf of Seller, except for deductibles and self-insurance retentions.
4.28 Securities Laws Matters.
(a) Each Shareholder recognizes and understands that the Merger
Consideration to be issued to the Former Seller Shareholders pursuant to the
Merger (the "securities") will not be registered under the Securities Act, or
under the securities laws of any state (the "securities laws"). The securities
are not being so registered in reliance upon exemptions from the Securities Act
and the securities laws which are predicated, in part, on the representations,
warranties and agreements of each Shareholder contained herein.
(b) Each Shareholder represents and warrants that (i) such
Shareholder has business knowledge and experience, such experience being based
on actual participation therein, (ii) such Shareholder is capable of evaluating
the merits and risks of an investment in the Merger Consideration and the
suitability thereof as an investment therefor, (iii) the Merger Consideration to
be acquired by
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such Shareholder in connection with the Merger will be acquired solely for
investment and not with a view toward resale or redistribution in violation of
the securities laws, (iv) each Shareholder's residence and domicile is set forth
on Schedule 4.28, (v) in connection with the transactions contemplated hereby,
no assurances have been made concerning the future results of the ILEX Parties
or either of them or as to the value of the Merger Consideration and (vi) except
as set forth on Schedule 4.28, each Former Seller Shareholder is an "accredited
investor" within the meaning of Regulation D promulgated by the SEC pursuant to
the Securities Act. Each Shareholder understands that, except for the
Registration Rights Agreement among ILEX and the Shareholders of even date
herewith, none of the ILEX Parties is under any obligation to file a
registration statement or to take any other action under the securities laws
with respect to any such securities.
(c) Each Shareholder has consulted with such Shareholder's
securities counsel in regard to the securities laws and is fully aware (i) of
the circumstances under which such Shareholder is required to hold the
securities, (ii) of the limitations on the transfer or disposition of the
securities, (iii) that the securities must be held indefinitely unless the
transfer thereof is registered under the securities laws or an exemption from
registration is available and (iv) that no exemption from registration is likely
to become available for at least one year from the date of acquisition of the
securities. Each Shareholder has been advised by such Shareholder's securities
counsel as to the provisions of Rules 144 and 145 as promulgated by the
Commission under the Securities Act and has been advised of the applicable
limitations thereof. Each Shareholder acknowledges that the ILEX Parties are
relying upon the truth and accuracy of the representations and warranties in
this Section 4.28 by such Shareholder in consummating the transactions
contemplated by this Agreement without registering the securities under the
securities laws.
(d) Each Shareholder has been furnished with (i) the definitive
proxy statement filed with the Commission in connection with the annual meeting
of stockholders of ILEX to be held on May 26, 1999, (ii) ILEX's Annual Report on
Form 10-K for the year ended December 31, 1998, and (iii) ILEX's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999, each as filed with the
Commission under the Exchange Act. Each Shareholder has been furnished with the
complete financial statements of ILEX for the fiscal years ended December 31,
1996, 1997 and 1998, respectively. Each Shareholder has been furnished with a
summary description of the terms of the ILEX Stock and the ILEX Parties have
made available to each Shareholder the opportunity to ask questions and receive
answers concerning the terms and conditions of the transactions contemplated by
this Agreement and to obtain any additional information which they possess or
could reasonably acquire for the purpose of verifying the accuracy of
information furnished to each Shareholder as set forth herein or for the purpose
of considering the transactions contemplated hereby. ILEX has offered to make
available to each Shareholder upon request at any time all exhibits filed by
ILEX with the Commission as part of any of the reports filed therewith.
(e) Each Shareholder agrees that the certificates representing
such Shareholder's Merger Consideration to be acquired pursuant to the Merger
will be imprinted with the following legend, the terms of which are specifically
agreed to:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144
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UNDER THE ACT. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SUCH STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COUNSEL
FOR THIS CORPORATION, IS AVAILABLE.
Each Shareholder understands and agrees that appropriate stop transfer notations
will be placed in the records of ILEX and with its transfer agent in respect of
the securities which are to be issued to such Shareholder in the Merger. ILEX
shall be obligated to reissue promptly unlegended certificates and remove any
stop-transfer instructions at the request of a Shareholder if such Shareholder
shall have obtained an opinion of counsel at such Shareholder's expense (which
counsel may be counsel to ILEX) reasonably acceptable to ILEX to the effect that
the subject securities or a portion of the subject securities may lawfully be
transferred without registration, qualification or legend.
5. REPRESENTATIONS AND WARRANTIES OF THE ILEX PARTIES. The ILEX Parties
jointly and severally represent and warrant to the Shareholders as follows:
5.1 Purchaser Incorporation. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The authorized capital stock of Purchaser consists of 1,000 shares of common
stock, $.01 par value ("Purchaser Stock"), of which 1,000 shares are outstanding
as of the date hereof. All of the outstanding Purchaser Stock is held of record
and beneficially by ILEX Products. All outstanding Purchaser Stock is duly
authorized and issued in compliance with all federal, state and foreign
securities laws. True and correct copies of the stock records of Purchaser,
showing all issuances and transfers of shares of capital stock of Purchaser
since inception, have been provided to Seller. There are outstanding on the date
hereof no rights of first refusal, preemptive rights, conversion rights,
options, warrants or other rights to acquire, directly or indirectly, capital
stock from Purchaser.
5.2 ILEX Incorporated. ILEX is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
authorized capital stock of ILEX consists of 60,000,000 shares of ILEX Stock of
which 12,979,678 shares are outstanding as of the date hereof, and 10,000,000
shares of preferred stock, $.01 par value, none of which shares are issued as of
the date hereof. Except (i) as set forth in the SEC Documents or (ii) for
options granted pursuant to the stock option plans of ILEX, there are
outstanding on the date hereof no rights of first refusal, preemptive rights,
conversion rights, options, warrants or other rights to acquire, directly or
indirectly, capital stock from ILEX. Since March 31, 1999, ILEX has granted
options to purchase 75,151 shares of ILEX Stock.
5.3 ILEX Products Incorporation. ILEX Products is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The authorized capital stock of ILEX Products consists of 1,000 shares
of common stock, $.01 par value ("Products Stock"), of which 1,000 shares are
outstanding as of the date hereof. All of the outstanding Products Stock is held
of record and beneficially by ILEX. There are outstanding on the date hereof no
rights
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of first refusal, preemptive rights, conversion rights, options, warrants or
other rights to acquire, directly or indirectly, capital stock from ILEX
Products.
5.4 Authorization. The ILEX Parties have full legal right, power and
authority, corporate and otherwise, to enter into this Agreement and to
consummate the transactions set forth herein and to perform all the terms and
conditions hereof to be performed by them. The execution and delivery of this
Agreement and the performance by the ILEX Parties of the transactions
contemplated herein have been duly authorized by all requisite corporate action
of the ILEX Parties and is the legal, valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms, except as
limited by applicable bankruptcy, moratorium, insolvency or similar laws
affecting generally the rights of creditors or by principles of equity, and will
not result in the default or breach of any material agreement or instrument to
which any of the ILEX Parties is a party.
5.5 Brokers and Finders. No broker or finder has acted for the ILEX
Parties in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of the ILEX Parties.
5.6 Authorization for Merger Consideration. ILEX has taken all
necessary action to permit it to issue the number of shares of Merger
Consideration required to be issued pursuant to the terms of this Agreement. The
shares of Merger Consideration issued pursuant to the terms of this Agreement
will, when issued, be validly issued, fully paid and nonassessable and not
subject to preemptive rights. The Merger Consideration issuable pursuant to this
Agreement will, when issued, be listed on The Nasdaq National Market.
5.7 SEC Documents. ILEX has provided to Seller and each Shareholder its
Annual Report on Form 10-K for the year ended December 31, 1998, its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999, and its proxy
statement with respect to the Annual Meeting of Stockholders to be held on May
26, 1999 (such documents collectively referred to herein as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of ILEX included in the SEC Documents comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of ILEX
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except in
the case of interim period financial information for normal year-end
adjustments).
5.8 Events Since March 31, 1999. Except as set forth on Schedule 5.8 or
as otherwise publicly disclosed, since March 31, 1999, there has not been any
change in the condition (financial or otherwise) or in the properties, assets,
liabilities, business or prospects of the ILEX Parties, except
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normal and usual changes in the ordinary course of business, none of which has
been adverse and all of which in the aggregate have not been adverse.
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLER AND EACH SHAREHOLDER.
(a) All statements of fact contained in this Agreement or in any
written statement (including financial statements), certificate, schedule or
other document delivered by or on behalf of Seller or any Shareholder pursuant
to this Agreement or in connection with the transactions contemplated hereby
shall be deemed representations and warranties of Seller and each Shareholder
hereunder. All indemnifications, representations and warranties made by Seller
and/or any Shareholder hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Effective Time for a period
of [one (1)] year (or such longer period as is provided for herein) regardless
of any investigation at any time made by or on behalf of the ILEX Parties. The
covenants and agreements made by Seller and/or any Shareholder hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
continue until all obligations with respect thereto shall have been performed or
satisfied or shall have been terminated in accordance with their terms.
(b) All statements of fact contained in the Agreement or in any
written statement (including financial Statements), certificate, schedule or
other document delivered by or on behalf of the ILEX Parties pursuant to this
Agreement or in connection with the transactions contemplated hereby shall be
deemed representations and warranties of the ILEX Parties hereunder. All
indemnifications, representations and warranties made by the ILEX Parties
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the Effective Time. The covenants and agreements made by
the ILEX Parties hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall continue until all obligations with
respect thereto shall have been performed or satisfied or shall have been
terminated in accordance with their terms.
7. CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of the ILEX Parties. The obligation of the
ILEX Parties to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) all representations and warranties of any Shareholder and
Seller contained in this Agreement (including the Schedules hereto), and all
written information delivered to the ILEX Parties by any Shareholder and Seller
on or prior to the Closing Date pursuant to this Agreement, (i) that are
qualified as to materiality shall be true in all respects on and as of the
Closing Date and (ii) that are not qualified as to materiality shall be true in
all material respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties were made, and such written
information was delivered, on and as of the Closing Date;
(b) Seller and the Shareholders shall have procured all of the
third party consents required in connection with the consummation of the
transactions contemplated hereby;
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(c) no action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the right of ILEX to
control Seller, (iv) affect adversely the right of Seller to own its assets and
to operate its businesses, (v) require or could reasonably be expected to
require any divestiture by Seller of a portion of its business that ILEX in its
reasonable judgment believes will have a material adverse effect on the Seller
or (vi) imposes any condition upon the Seller that in ILEX's reasonable judgment
(x) would be materially burdensome to the Seller or (y) would materially
increase the costs incurred or that will be incurred by ILEX as a result of
consummating the merger and the other transactions contemplated hereby (and no
such injunction, judgment, order, decree, ruling or charge shall be in effect);
(d) Seller and the Shareholders shall have delivered to ILEX a
certificate to the effect that each of the conditions specified above in Section
7.1(a) through (c) is satisfied in all respects;
(e) Seller shall have entered into license agreements in form and
substance reasonably acceptable to the ILEX Parties with each of ARCH
Development and Xxxx Israel Deaconess Medical Center;
(f) ILEX shall have received from counsel to Seller an opinion in
form and substance reasonably acceptable to ILEX, addressed to ILEX, and dated
as of the Closing Date;
(g) all actions, proceedings, instruments and documents required
or incidental to carrying out this Agreement and all other related legal matters
shall have been approved by counsel to ILEX;
(h) the board of directors of the ILEX parties shall have approved
this Agreement and the consummation by the ILEX Parties of the transactions
contemplated hereby;
(i) all actions to be taken by Seller and the Shareholders in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to ILEX;
(j) as of the Closing Date, no shareholder of Seller shall have
demanded or otherwise purported to exercise dissenter's rights, if any, pursuant
to Delaware law with respect to all or any portion of the Seller Stock;
(k) each of Xxxxx Xxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxx Xxxx and
Xxxxx Xxxxxxxxxxxx shall have entered into consulting agreements in the form
attached hereto as Exhibit 7.1(k) (the "Consulting Agreement"); and
(l) Xxxxx X. Xxxx shall have entered into an employment agreement
in the form attached hereto as Exhibit 7.1(l);
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ILEX may waive any condition specified in this Section 7.1 if it
executes a writing so stating at or prior to the Closing.
7.2 Conditions to Obligation of Seller and the Shareholders. The
obligation of Seller and the Shareholders to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(a) all representations and warranties of the ILEX Parties
contained in this Agreement, and all written information delivered to Seller by
the ILEX Parties on or prior to the Closing Date pursuant to this Agreement, (i)
that are qualified as to materiality shall be true in all respects on and as of
the Closing Date and (ii) that are not qualified as to materiality shall be true
in all material respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties were made, and such written
information was delivered, on and as of the Closing Date;
(b) no action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect);
(c) ILEX shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in Section 7.2(a) and (b) is
satisfied in all respects;
(d) Seller shall have received from the general counsel of ILEX an
opinion in form and substance reasonably satisfactory to the Seller, addressed
to Seller, and dated as of the Closing Date;
(e) all actions to be taken by ILEX in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Seller;
(f) The Board of Directors of Seller shall have approved this
Agreement and the consummation by Seller of the transactions contemplated
hereby; and
(g) Seller and the Shareholders shall have procured all of the
third party consents required in connection with the consummation of the
transactions contemplated hereby.
Seller may waive any condition specified in this Section 7.2 if it
executes a writing so stating at or prior to the Closing.
8. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
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8.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article 9).
Seller and each Shareholder acknowledge and agree that from and after the
Closing ILEX will be entitled to possession of all documents, books, records
(including Tax records), agreements and financial data of any sort relating to
the Seller.
8.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article 9).
8.3 Transition. Seller and each Shareholder will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier or other business associate of the Seller from
maintaining the same business relationships with the Surviving Corporation after
the Closing as it maintained with the Seller prior to the Closing. Seller and
each Shareholder will refer all customer inquiries relating to the businesses of
the Seller to ILEX from and after the Closing.
8.4 Intellectual Property Assignment. Although acknowledged by all
parties as also fully enabled by the Merger memorialized by this Agreement,
Seller shall also execute a separate assignment to Purchaser of all of Seller's
right, title and interest in and to Intellectual Property. This separate
assignment shall be set forth as Exhibit 8.4 to this Agreement, and recordation
thereof shall be at the sole discretion of Purchaser.
8.5 Use of Name of Seller. Immediately upon the occurrence of the
Closing, Seller and Shareholders shall cease using the name "Convergence
Pharmaceuticals, Inc.," "Convergence," and all derivations thereof. Seller and
each Shareholder covenants and agrees that after the Closing they will not,
directly or indirectly, use the name "Convergence Pharmaceuticals, Inc.,"
"Convergence," or any derivation thereof in connection with any business
enterprise.
8.6 Research and Development Spending. Subject to the unanimous
agreement (not to be unreasonably withheld) of the Research Committee, or, in
the absence of such unanimous agreement, subject to the agreement of the
Scientific Advisory Board of ILEX, ILEX shall use reasonable and prudent efforts
to spend no less than $7.5 million on oncological research activities related to
the Intellectual Property (the "Research Funding") within 18 months following
the Closing Date in accordance with the Research Funding guidelines set forth on
Exhibit 8.6 hereto.
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8.7 Seller Information. The Shareholders and Seller shall provide to
ILEX all financial information of the Seller in the format required in
connection with the filing of financial information of the Seller with ILEX's
Current Report on Form 8-K under the Exchange Act required in connection with
ILEX's acquisition of the Business.
8.8 Board Representation. Upon execution of this Agreement, ILEX agrees
to and shall name a nominee of Seller to serve as a director of ILEX (the
"Nominee") until the next annual meeting or such other meeting in which
directors of ILEX are elected, which Nominee shall initially be Xxxxx X. Xxxx.
The Nominee shall not be entitled to compensation in the form of ILEX Stock
Options in consideration for such board representation, but shall receive other
consideration customarily given to ILEX board members. For so long as the
Shareholders collectively own 1,000,000 shares of ILEX Stock (inclusive of the
Earn-Out Shares), at each annual meeting or other meeting in which directors of
ILEX are elected, ILEX agrees to and shall cause one of the Shareholders to be
nominated for election as director of ILEX, the identity of which Shareholder
Nominee shall be at the discretion of ILEX.
9. INDEMNITY BY THE SHAREHOLDERS.
9.1 Indemnification by each Shareholder. Each Shareholder, severally in
proportion to its or his Pro Rata Share and not jointly, agrees to indemnify,
defend and hold harmless the ILEX Parties and the Surviving Corporation and each
of their respective Associates, Affiliates, officers, directors, employees,
agents, consultants, representatives, shareholders and controlling Persons and
their respective successors and assigns from and against and in respect of any
and all Damages which may now or in the future be paid, incurred or suffered by
or asserted against such party (collectively, "General Losses"), to the extent
arising out of or resulting from or relating to any inaccuracy in or breach of
any representation, warranty, covenant, commitment or agreement made or
undertaken by Seller or any Shareholder in this Agreement. Any claim for
indemnification under this Section 9.1 must be made within two years of the
Effective Time.
9.2 Environmental Indemnification. Each Shareholder, severally in
proportion to its or his Pro Rata Share and not jointly, agrees to indemnify,
defend and hold harmless the ILEX Parties and the Surviving Corporation and each
of their respective Associates, Affiliates, officers, directors, employees,
agents, consultants, representatives, shareholders and controlling Persons and
their respective successors and assigns from and against and in respect of any
and all Environmental Liabilities which may now or in the future be paid,
incurred or suffered by or asserted against such party, to the extent arising
out of or resulting from or relating to or in connection with (a) the acts or
omissions of any Person prior to the Effective Time relating to Seller, any
business currently or previously conducted by Seller, the Assets, the operations
currently or previously conducted by Seller or any other assets or properties
currently or previously leased or owned by Seller, or (b) any inaccuracy or
breach by Seller or any Shareholder of a representation or warranty contained in
Section 4.17 hereof (collectively, "Environmental Losses"). Any claim for
indemnification under this Section 9.2 must be made within two years of the
Effective Time.
9.3 Tax Indemnification. Each Shareholder, jointly and severally
(except for Tsuneya Ohno, whose obligation under this Section 9.3 shall be
several and in proportion to his Pro Rata Share), agrees to indemnify, defend
and hold harmless the ILEX Parties and the Surviving Corporation and each of
their respective Associates, Affiliates, officers, directors, employees, agents,
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consultants, representatives, shareholders and controlling Persons and their
respective successors and assigns from and against and in respect of any and all
Damages which may now or in the future be paid, incurred or suffered by or
asserted against such party to the extent arising out of or resulting from or
relating to any Taxes or Tax Returns of Seller for any period, or portion
thereof, up to and including the Effective Time (collectively, "Tax Losses").
Any claim for indemnification under this Section 9.3 must be made within four
years of the Effective Time (the "Tax Indemnity Survival Period").
9.4 Products Liability and Warranty Indemnification. Each Shareholder,
severally in proportion to its or his Pro Rata Share and not jointly, agrees to
indemnify, defend and hold harmless the ILEX Parties and the Surviving
Corporation and each of their respective Associates, Affiliates, officers,
directors, employees, agents, consultants, representatives, shareholders and
controlling Persons and their respective successors and assigns from and against
and in respect of any and all Damages which may now or in the future be paid,
incurred or suffered by or asserted against such party to the extent arising out
of or resulting from or relating to any products manufactured, sold or
distributed or services provided by or on behalf of Seller on or prior to the
Effective Time or with respect to any claims made pursuant to warranties to
third Persons in connection with products manufactured, sold or distributed or
services provided by or on behalf of Seller on or prior to the Effective Time
(collectively, "Product Losses"). Any claim for indemnification under this
Section 9.4 must be made within two years of the Effective Time.
9.5 Indemnification by the ILEX Parties. The ILEX Parties, jointly and
severally, agree to indemnify, defend and hold harmless the Shareholders and
their respective heirs, successors and assigns from and against and in respect
of any and all Damages which may now or in the future be paid, incurred or
suffered by or asserted against any such party, arising out of or resulting from
or relating to any inaccuracy in or breach of any representation, warranty,
covenant, commitment or agreement made or undertaken by the ILEX Parties in this
Agreement. Any claim for indemnification under this Section 9.5 must be made
within two years of the Effective Time.
9.6 Limitation on Indemnification; Basket.
(a) An Indemnitee shall not be entitled to assert any claim for
indemnification under this Article 9 unless and until such time as all claims
for Damages of the Indemnitee exceed $100,000 in the aggregate (the "Basket").
Once all Damages of an Indemnitee exceed the Basket, the Indemnitee shall,
subject to the terms of this Article 9, be entitled to full indemnification for
all Damages, including the Basket. However, this Section 9.6(a) will not apply
with respect to (i) any claim based on any claim for indemnification under
Section 9.3 hereof, or (ii) any claim for indemnification based on a breach of a
representation, warranty or covenant contained in Section 4.19.
(b) The sole and exclusive remedy of the parties hereto for any
claim resulting from a breach by any of the parties hereto of their respective
representations, warranties, covenants or agreements made hereby or the failure
by any party to perform their respective obligations under this Agreement,
except as otherwise provided in the Non-Competition Agreement described on
Exhibit 2.11 and Article 10 below, shall be a claim under this Article 9. The
parties hereby waive any provision of law to the extent that it would limit or
restrict the agreements set forth in this Article 9.
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(c) The parties hereto agree to treat any indemnity payment made
pursuant to Sections 9.1 through 9.6 as an adjustment to the Merger
Consideration for tax purposes.
(d) The parties hereto agree that the aggregate claims resulting
from a breach or multiple breaches by any of the parties hereto of their
respective representations, warranties, covenants or agreements made hereby or
the failure by any party to perform their respective obligations under this
Agreement, except as otherwise provided in the Non-Competition Agreement
described on Exhibit 2.11 and Article 10 below, shall not exceed $10,000,000.
(e) The parties hereto agree that, except as provided in Section
9.3, the indemnity obligations of the Shareholders made under this Article 9
shall be allocated among the Shareholders based on each Shareholder's Pro Rata
Share as of the Closing Date.
9.7 Procedure. All claims for indemnification or payment under this
Article 9 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of any
matter which an Indemnitee has determined has given or could give rise to a
right of indemnification under this Agreement stating the amount of the Loss, if
known, and method of computation thereof, all with reasonable particularity, and
stating with particularity the nature of such matter. Failure to provide such
notice shall not affect the right of the Indemnitee to indemnification except to
the extent such failure shall have resulted in liability to the Indemnitor that
could have been actually avoided had such notice been provided within such
required time period.
(b) The obligations and liabilities of an Indemnitor under this
Article 9 with respect to Losses arising from claims of any third party that are
subject to the indemnification provided for in this Article 9 ("Third-Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnitee shall receive notice of any Third-Party Claim,
the Indemnitee shall give the Indemnitor prompt notice of such Third-Party Claim
and the Indemnitor may, at its option, assume and control the defense of such
Third-Party Claim at the Indemnitor's expense and through counsel of the
Indemnitor's choice reasonably acceptable to Indemnitee. Subject to the
condition that notice be delivered prior to the expiration of one year after the
Effective Time, failure to provide such notice shall not affect the right of the
Indemnitee to indemnification except to the extent such failure shall have
resulted in liability to the Indemnitor that could have been actually avoided
had such notice been provided within such required time period. In the event the
Indemnitor assumes the defense against any such Third-Party Claim as provided
above, the Indemnitee shall have the right to participate at its own expense in
the defense of such asserted liability, shall cooperate with the Indemnitor in
such defense and will attempt to make available on a reasonable basis to the
Indemnitor all witnesses, pertinent records, materials and information in its
possession or under its control relating thereto as is reasonably required by
the Indemnitor. In the event the Indemnitor does not elect to conduct the
defense against any such Third-Party Claim, the Indemnitor shall cooperate with
the Indemnitee (and be entitled to participate) in such defense and attempt to
make available to it on a reasonable basis all such witnesses, records,
materials and information in its possession or under its control relating
thereto as is reasonably required by the Indemnitee. The Indemnitor understands
that if such Third-Party Claim results in an obligation to indemnify hereunder,
Damages shall include all reasonable costs and expenses of such defense. No
Third-Party Claim may be settled by Indemnitor without the written consent of
the Indemnitee;
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provided, however, if the Indemnitor offers to settle a Third-Party Claim for a
dollar amount (the "Offer Amount"), and the Indemnitee does not consent to such
settlement, then the Indemnitor's indemnification liability for such Third-Party
Claim shall not exceed the Offer Amount. So long as the Indemnitor is vigorously
contesting any such Third-Party Claim in good faith, the Indemnitee shall not
pay or settle such claim without the Indemnitor's consent, which consent shall
not be unreasonably withheld. Written notice of any proposed settlement of any
such claim and the material terms thereof shall be delivered by Indemnitor to
Indemnitee at least ten Business Days prior to any settlement of any such claim.
(c) If a claim for indemnity is provided pursuant to this Article
9 by an Indemnitee and the Indemnitor does not pay such claim or object to such
claim within 15 Business Days after notice is received by the Indemnitor, such
claim shall be deemed agreed to by the Indemnitor. If the Indemnitor shall
object to such claim, a written notice of such objection setting forth in
reasonable detail the basis for such objection shall be provided to the
Indemnitee and such dispute shall be resolved in accordance with Section 12.11
hereof. In addition, if the claim shall have been determined to have been a
valid claim, Damages shall include interest at the prime rate as quoted from
time to time by The Frost National Bank (San Antonio), N.A. (the "Prime Rate")
from the date the claim is first made until fully paid on all out-of-pocket
expenses incurred by the Indemnitee with respect to such claim.
9.8 Payment. Payment of any amounts due pursuant to this Article 9
shall be made within ten Business Days after resolution of the claim.
9.9 Failure to Pay Indemnification. If Indemnitor fails or refuses to
pay any amount due under this Article 9, the Indemnitee shall proceed in
accordance with the arbitration provisions of Section 12.11 hereof; provided,
however, that in the case of indemnification for a Third-Party Claim, such
matter need not be resolved by arbitration until the underlying Third-Party
Claim is finally resolved.
9.10 Cooperation. The Indemnitor and the Indemnitee shall cooperate
with each other with regard to any indemnification obligation under this Article
9 and each shall attempt to make available to the other on a reasonable basis
all personnel records, materials and information in its possession or under its
control as is reasonably requested by the other.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Each Shareholder
recognizes and acknowledges that he has and will have access to certain
confidential information of Seller that is included in the Assets (including,
but not limited to, lists of customers, software designs, system specifications,
trade secrets, Software source code, and costs and financial information) that
after the consummation of the transactions contemplated hereby will be valuable,
special and unique property of Purchaser. Each Shareholder as to itself agrees
that he will, and will cause his Associates, Affiliates and representatives, to
keep confidential and not disclose to any other Person or use for his own
benefit or for the benefit of any other Person, and he will use his best efforts
to prevent disclosure by any other Person of, any such confidential information
to any Person for any purpose or reason whatsoever, except to authorized
representatives of Purchaser; provided, however, such limitation shall not apply
to any information which (i) is then generally known to the public; (ii) become
or becomes generally known to the public through no fault of a Shareholder, his
Associates, Affiliates and representatives, and (iii) is disclosed in accordance
with an order of a court of
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competent jurisdiction or applicable law. Seller or a Shareholder may have
entered into certain confidentiality agreements with third parties regarding the
possible sale of Seller or its Business. Seller and/or such Shareholder has
previously requested that all such third parties return to Seller all
confidential information provided to such parties by or on behalf of Seller or
such Shareholder or that such information be destroyed. At the Closing, Seller
shall assign all of its rights in and to any such confidentiality agreements to
Purchaser. Each Shareholder acknowledges that in the event of a breach or
threatened breach by a Shareholder of any of the provisions contained in this
Article 10, the ILEX Parties will suffer irreparable damage or injury not fully
compensable by money damages, or the exact amount of which may be impossible to
ascertain, and therefore, the ILEX Parties will not have an adequate remedy at
law. Accordingly, the ILEX Parties shall be entitled to such injunctive relief
or other equitable relief, without the necessity of posting bond therefor, from
any court of competent jurisdiction as may be necessary or appropriate to
prevent or curtail any such actual or threatened breach. The foregoing shall be
in addition to and without prejudice to any other rights that the ILEX Parties
may have under this Agreement, at law or in equity, including, without
limitation, the right to xxx for and recover money damages.
11. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
(a) If to Purchaser or ILEX, at:
ILEX Oncology, Inc.
11550 I.H. 00 Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Love
Facsimile No.: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(b) If to Seller, at:
Convergence Pharmaceuticals, Inc.
00 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
(c) If to Sukhatme, at:
Vikas Xxxxxxxx
Xxxx Israel Deaconess Medical Center
Harvard Medical School
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
(d) If to Xxxxxxxx Xxxxxxx, at:
Xxxxxxxx Xxxxxxx
Xxxx Israel Deaconess Medical Center
Harvard Medical School
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
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(e) If to Xxxxx Xxxxxxxxxxxx, at:
Xxxxx Xxxxxxxxxxxx
Department of Radiation Oncology
University of Chicago
0000 X. Xxxxxxxx, XX0000
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
(f) If to Xxxxxx Xxxx, at:
Xxxxxx Xxxx
Xxxx Xxxxxx Medical Center
Harvard Medical Center
00 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
(g) If to Xxxxx X. Xxxx, at:
Xxxxx X. Xxxx
000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
(h) If to Tsuneya Ohno, at:
Tokyo Jikei Xxxxxxxxxx
0-00-0 Xxxxx-Xxxxxxxxx
Xxxxxx-Xx Xxxxx 000
Facsimile No.: 03 3434 1629
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
Facsimile No.: (000) 000-0000
provided that any party may change its address for notice by giving to the other
party written notice of such change. Any notice given under this Article 11
shall be effective (x) when delivered, if delivered personally, (y) 24 hours
after sending, if sent by telex or telegram or by facsimile or other similar
instantaneous electronic transmission device, and (z) 5 business days after
mailing, if mailed.
12. GENERAL PROVISIONS.
12.1 Governing Law; Interpretation; Section Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Texas without regard to conflict-of-laws rules as applied in Texas.
The section headings contained herein are for purposes of convenience only and
shall not be deemed to constitute a part of this Agreement or to affect the
meaning or interpretation of this Agreement in any way.
12.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of this
Agreement shall not be affected by any such modification or severance, except
that if any severance materially alters the intentions of the parties hereto as
expressed herein (a modification being permitted only if there is no material
alteration), then the parties hereto shall use commercially reasonable efforts
to agree to appropriate equitable amendments to this Agreement in light of such
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severance, and if no such agreement can be reached within a reasonable time, any
party hereto may initiate arbitration pursuant to the provisions of Section
12.11 to determine and effect such appropriate equitable amendments.
12.3 Entire Agreement. This Agreement, the Schedules and the documents
and agreements referenced herein set forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation, promise,
inducement or statement of intention has been made by any party hereto which is
not embodied or referenced in this Agreement, the Schedules or the documents or
agreements referenced herein, and no party hereto shall be bound by or liable
for any alleged representation, promise, inducement or statement of intention
not so set forth.
12.4 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
12.5 Assignment. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the prior written consent of the other parties hereto.
12.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
12.7 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
12.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
12.9 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all purposes. At the
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request of any party hereto, all parties hereto agree to execute an original of
this Agreement as well as any facsimile, telecopy or other reproduction hereof.
12.10 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the parties will pay all costs and expenses of its or his
performance of and compliance with this Agreement.
12.11 Arbitration. The parties acknowledge that money damages are not
an adequate remedy for violations of this Agreement and that, prior to the
Effective Time, any party may, in its sole discretion, apply to a court of
competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper to enforce this Agreement or to
prevent any violation hereof and, to the extent permitted by applicable law,
each party waives any objection to the imposition of such relief. Except for the
provisions of Article 10 of this Agreement dealing with restrictive covenants
and non-disclosure of confidential information, with respect to which the ILEX
Parties expressly reserve the right to petition a court directly for injunctive
and other relief, any controversy of any nature whatsoever, including but not
limited to tort claims or contract disputes, between the parties to this
Agreement or their respective heirs, executors, administrators, legal
representatives, successors and assigns, as applicable, arising out of or
related to this Agreement after the Effective Time, including the
implementation, applicability and interpretation thereof, shall, upon the
written request of one party served upon the other, be submitted to and settled
by arbitration in accordance with the provisions of the Federal Arbitration Act,
9 U.S.C. ss.ss.1-15, as amended. The terms of the commercial arbitration rules
of the American Arbitration Association shall apply except to the extent they
conflict with the provisions of this paragraph. If the amount in controversy in
the arbitration exceeds Two Hundred Fifty Thousand Dollars ($250,000), exclusive
of interest, attorneys' fees and costs, the arbitration shall be conducted by a
panel of three independent arbitrators. Otherwise, the arbitration shall be
conducted by a single independent arbitrator. The parties shall endeavor to
select independent arbitrators by mutual agreement. If such agreement cannot be
reached within 30 calendar days after a dispute has arisen which is to be
decided by arbitration, the selection of the arbitrator(s) shall be made in
accordance with Rule 13 of the Rules as presently in effect. If three
arbitrators are selected, the arbitrators shall elect a chairperson to preside
at all meetings and hearings. If a dispute is to be resolved by a sole
arbitrator in accordance with the terms hereof, or if the dispute is to be
resolved by a panel of three arbitrators as provided hereinabove, then each such
arbitrator shall be a member of a state bar engaged in the practice of law in
the United States or a retired member of a state or the federal judiciary in the
United States. The award of the arbitrator(s) shall require a majority of the
arbitrators in the case of a panel of arbitrators, shall be based on the
evidence admitted and the substantive law of the State of Texas and shall
contain an award for each issue and counterclaim. The award shall be made 30
days following the close of the final hearing and the filing of any post hearing
briefs authorized by the arbitrator(s). The award of the arbitrator(s) shall be
final and binding on the parties hereto. Each party shall be entitled to inspect
and obtain a copy of non-privileged relevant documents in the possession or
control of the other party. All such discovery shall be in accordance with
procedures approved by the arbitrator(s). Unless otherwise provided in the
award, each party shall bear its own costs of discovery. Each party shall be
entitled to take one deposition. Each party shall be entitled to submit one set
of interrogatories which require no more than 30 answers. All discovery shall be
expedited, consistent with the nature and complexity of the claim or dispute and
consistent with fairness and justice. The arbitrator(s) shall have the power to
compel any party to comply with discovery requests of the other parties and to
issue binding orders relating to any discovery dispute which shall be
enforceable in the same manner as awards. The
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arbitrator(s) also shall have the power to impose sanctions for abuse or
frustration of the arbitration process, including without limitation, the
refusal to comply with orders of the arbitrator(s) relating to discovery and
compliance with subpoenas. The arbitrator(s) shall require the non-prevailing
party to pay the prevailing party's attorneys' fees and costs incurred in
connection with the arbitration. It is further agreed that any of the parties
hereto may petition the United States District Court for the District of
Colorado, Denver Division, for a judgment to be entered upon any award entered
through such arbitration proceedings. All arbitration proceedings shall be
conducted in Denver, Colorado.
12.12 Effect of Due Diligence. No investigation by or on behalf of the
ILEX Parties into the business, operations, prospects, assets or condition
(financial or otherwise) of the Seller shall diminish in any way the effect of
any representations or warranties made by Seller and each Shareholder in this
Agreement or shall relieve Seller or any Shareholder of any of its or his
obligations under this Agreement.
12.13 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of ILEX
and Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
12.14 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
12.15 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. 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. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
12.16 Incorporation of Exhibits, Annexes and Schedules. The Exhibits,
Annexes and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
12.17 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof
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having jurisdiction over the Parties and the matter, in addition to any other
remedy to which they may be entitled, at law or in equity.
12.18 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
IN WITNESS WHEREOF, the parties have executed this Plan of Merger and
Acquisition Agreement as of the date first above written.
PURCHASER:
ILEX ACQUISITION, INC.
By:
------------------------------------
Xxxxx X. Xxxx
President
ILEX:
ILEX ONCOLOGY, INC.
By:
------------------------------------
Xxxxxxx X. Love,
President
SELLER:
CONVERGENCE PHARMACEUTICALS, INC.
By:
------------------------------------
Xxxxx X. Xxxx,
President
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SHAREHOLDERS:
---------------------------------------
Xxxxx Xxxxxxxx, Individually
---------------------------------------
Xxxxxxxx Xxxxxxx, Individually
---------------------------------------
Xxxxx Xxxxxxxxxxxx, Individually
---------------------------------------
Xxxxxx Xxxx, Individually
---------------------------------------
Xxxxx X. Xxxx, Individually
---------------------------------------
Tsuneya Ohno, Individually
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EXHIBIT 2.11
NON-COMPETITION AGREEMENT.
This Non-Competition Agreement (the "Non-Competition Agreement") is
made and entered into as of the _____ day of July, 1999 by and between ILEX
Oncology, Inc., a Delaware corporation ("ILEX") and _____________________
("Shareholder"), pursuant to Section 2.11 of the Plan of Merger and Acquisition
Agreement dated as of the date hereof among ILEX, ILEX Acquisition, Inc.,
Convergence Pharmaceuticals, Inc., Xxxxx Xxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxx
Xxxxxxxxxxxx, Xxxxxx Xxxx, Xxxxx X. Xxxx and Tsuneya Ohno (the "Merger
Agreement"). All capitalized words used herein but not defined herein shall have
the meanings ascribed to them in the Merger Agreement.
1. Non-Competition. In consideration of the benefits of the Merger
Agreement to Shareholder and as a material inducement to the ILEX Parties to
enter into the Merger Agreement and pay to the Shareholders the Merger
Consideration, Shareholder hereby covenants and agrees that, commencing on the
Closing Date and for three (3) years thereafter, Shareholder shall, and
Shareholder shall cause his Associates, Affiliates and representatives not to,
directly or indirectly, as proprietor, partner, stockholder, director,
executive, officer, employee, consultant, joint venturer, investor or in any
other capacity, engage in, or own, manage, operate or control, or participate in
the ownership, management, operation or control, of any entity which engages
anywhere in the United States in the business of developing radiation and
chemotherapy sensitizers for the treatment of cancer (the "Field"); provided,
however, the foregoing shall not prohibit each Shareholder, his Associates,
Affiliates and representatives from (i) purchasing and holding as an investment
not more than 1% of any class of publicly traded securities of any entity which
conducts a business in competition with the business of the ILEX Parties, so
long as such Shareholder, his Associates, Affiliates and representatives do not
participate in any way in the management, operation or control of such entity;
or (ii) accepting research grants for, consulting with and/or serving on
scientific advisory boards for other persons or entities (A) which are "for
profit" entities (the For-Profit Relationships"), provided that Shareholder has
obtained the prior written consent of the Chief Executive Officer of ILEX; (B)
which are governmental, academic or otherwise non-profit in nature or (C) which
consulting relationships or scientific advisory board participations pre-date
this Agreement and are listed on Schedule 1.0 attached hereto (the "Pre-Existing
Relationships"). Shareholder warrants and represents to ILEX that Shareholder
has no Pre-Existing Relationships except those listed on Schedule 1.0 attached
hereto.
2. Judicial Reformation. Shareholder acknowledges that, given the
nature of the ILEX Parties' business, the covenants contained in Section 1
establish reasonable limitations as to time, geographic area and scope of
activity to be restrained and do not impose a greater restraint than is
reasonably necessary to protect and preserve the goodwill of the ILEX Parties'
business and to protect their legitimate business interests. If, however,
Section 1 is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of it being too extensive in any other
respect or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographic area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court.
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3. Customer Lists; Non-Solicitation. Shareholder further covenants and
agrees that he shall not, and each Shareholder will cause his Associates,
Affiliates and representatives not to, directly or indirectly, (a) use or make
known to any person or entity the names or addresses of any clients or customers
of Seller or the ILEX Parties or any other information pertaining to them,
provided, however, such limitation shall not apply to any information which (i)
is then generally known to the public, (ii) become or becomes generally known to
the public through no fault of a Shareholder, his Associates, Affiliates and
representatives, and (iii) is disclosed in accordance with an order of a court
of competent jurisdiction or applicable law, (b) take away or attempt to take
away any clients or customers of Seller or the ILEX Parties, nor (c) solicit for
employment, recruit, hire or attempt to recruit or hire any employees of Seller
or the ILEX Parties.
4. Covenants Independent. The covenants of Shareholder contained in
Sections 1, 2 and 3 of this Agreement will be construed as independent of any
other provision in this Agreement or the Merger Agreement, and the existence of
any claim or cause of action by Shareholder against the ILEX Parties will not
constitute a defense to the enforcement by the ILEX Parties of said provisions.
Each Shareholder understands that the provisions contained in Sections 1, 2 and
3 are essential elements of the transactions contemplated by the Merger
Agreement and, but for the agreement of each Shareholder to be bound by the
provisions of Sections 1, 2 and 3, the ILEX Parties would not have agreed to
enter into the Merger Agreement and the transactions contemplated therein.
Shareholder has been advised to consult with, and represents that he has
consulted with, counsel in order to be informed in all respects concerning the
reasonableness and propriety of Sections 1, 2 and 3, and Shareholder
acknowledges that the provisions of Sections 1, 2 and 3 are reasonable in all
respects.
5. Remedies. Shareholder acknowledges that in the event of a breach or
a threatened breach by a Shareholder of any of the provisions contained in
Sections 1, 2 or 3 of this Agreement, the ILEX Parties will suffer irreparable
damage or injury not fully compensable by money damages, or the exact amount of
which may be impossible to ascertain, and therefore, the ILEX Parties will not
have an adequate remedy at law. Accordingly, the ILEX Parties shall be entitled
to such injunctive relief or other equitable relief, without the necessity of
posting bond therefor, from any court of competent jurisdiction as may be
necessary or appropriate to prevent or curtail any such actual or threatened
breach. The foregoing shall be in addition to and without prejudice to any other
rights that the ILEX Parties may have under this Agreement or the Merger
Agreement.
6. Miscellaneous.
6.1. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and, unless otherwise provided herein, shall be
deemed to have been duly given upon hand delivery or upon deposit in the United
States Mail, postage prepaid, certified or registered mail, return receipt
requested, as follows:
If to ILEX:
ILEX Oncology, Inc.
11550 I.H. 00 Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Love
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58
If to Shareholder:
------------------------------
------------------------------
------------------------------
With a copy to:
Xxxxxxx Coie LLP
000 Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxx, Jr.
or at such other address as shall have been furnished to the other in writing in
accordance herewith, except that such notice of such change shall be effective
only upon receipt.
6.2 Amendments and Waiver. This Agreement may be amended or modified
by, and only by, a written instrument executed by all the parties hereto. The
terms of this Agreement may be waived by, and only by, a written instrument
executed by the party against whom such waiver is sought to be enforced.
6.3 Section and Other Headings. The section and other headings
contained in this Agreement are for convenience of reference only and shall not
in any way affect the meaning or interpretation of this Agreement.
6.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
6.5 Severability. If any part or provision of this Agreement is or
shall be deemed violative of any applicable laws, rules or regulations, such
legal invalidity shall not void this Agreement or affect the remaining terms and
provisions of this Agreement, and this Agreement shall be construed and
interpreted to comport with all such laws, rules or regulations to the maximum
extent possible.
6.6 Applicable Law. This Agreement has been accepted and made
performable in Bexar County, Texas. This Agreement and the rights and
obligations of the parties hereto shall be construed under and governed by the
laws of the State of Texas, without giving effect to principles of conflict of
laws. The exclusive venue for resolution of any dispute between the parties
related to the subject matter of this Agreement shall be in Bexar County, Texas.
[signatures on following page]
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EXECUTED as of the day and year first above written.
ILEX ONCOLOGY, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SHAREHOLDER:
------------------------------------------
[name]
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