EXHIBIT 10.27
EXECUTION COPY
CONFIDENTIAL
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
STOCK PURCHASE AGREEMENT
by and among
THE STOCKHOLDERS IDENTIFIED ON SIGNATURE PAGES HERETO,
NOVARTIS PHARMA AG
and
IDENIX PHARMACEUTICALS, INC.
TABLE OF CONTENTS
1. Purchase and Sale of Stock............................................................ 2
1.1 Sale and Purchase............................................................... 2
1.2 Subsequent Contingent Payments.................................................. 4
2. Closing Date, Delivery................................................................ 10
2.1 Closing Date.................................................................... 10
2.2 Delivery at Closing............................................................. 11
2.3 Further Actions................................................................. 12
3. Representations and Warranties of Each Seller......................................... 13
3.1 Stock Ownership................................................................. 13
3.2 Authority; Execution and Delivery............................................... 13
3.3 No Conflict..................................................................... 13
3.4 No Other Agreements to Sell Purchased Shares.................................... 14
3.5 Consents........................................................................ 14
3.6 Offering........................................................................ 15
3.7 Qualified Private Offering...................................................... 15
3.8 Accredited Sellers.............................................................. 15
3.9 Disclosure Statement............................................................ 16
3.10 Stockholder Approval............................................................ 16
3.11 Reliance........................................................................ 17
4. Representations and Warranties of the Company......................................... 17
4.1 Organization, Good Standing and Qualification................................... 17
4.2 Capitalization and Voting Rights................................................ 17
4.3 Subsidiaries.................................................................... 19
4.4 Authorization, Execution and Delivery........................................... 20
4.5 No Conflict..................................................................... 21
4.6 Valid Issuance of Stock......................................................... 21
4.7 Consents........................................................................ 21
4.8 Absence of Changes.............................................................. 22
4.9 Litigation...................................................................... 23
4.10 Employees and Consultants....................................................... 23
4.11 Intellectual Property........................................................... 25
4.12 Compliance with Other Instruments............................................... 25
4.13 Related Party Agreements; Other Action.......................................... 25
4.14 Material Contracts and Obligations.............................................. 25
4.15 Owned Real Property............................................................. 28
4.16 Title to Property and Assets.................................................... 28
4.17 Sufficiency of Property and Assets.............................................. 28
4.18 Financial Statements............................................................ 28
4.19 Employee Benefit Plans.......................................................... 29
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4.20 Taxes........................................................................... 30
4.21 Insurance....................................................................... 31
4.22 Labor Agreements and Actions.................................................... 31
4.23 Governmental Regulations........................................................ 31
4.24 Offering; Securities Laws....................................................... 31
4.25 Environmental Matters........................................................... 32
4.26 Commercial Relationships........................................................ 33
4.27 Licenses and Other Rights; Compliance with Laws................................. 33
4.28 Regulatory Agency Matters....................................................... 34
4.29 Opinion of Financial Advisor.................................................... 35
4.30 Broker or Finders............................................................... 36
4.31 Corporate Records............................................................... 36
4.32 Qualified Private Offering...................................................... 36
4.33 Takeover Statutes............................................................... 36
4.34 Stockholder Approval............................................................ 36
4.35 Restated Certificates and Amended and Restated By-laws.......................... 36
4.36 Reliance........................................................................ 36
5. Representations and Warranties of Buyer............................................... 36
5.1 Organization, Compliance and Qualification...................................... 37
5.2 Authorization, Consents and Compliance with Other Instruments................... 37
5.3 SEC Reports..................................................................... 38
5.4 Issuance of Shares.............................................................. 38
5.5 Buyer Matters................................................................... 39
5.6 Purchase Entirely for Own Account............................................... 40
5.7 Broker or Finders............................................................... 40
5.8 Disclosure Statement............................................................ 40
5.9 Offer and Sale of Parent ADSs................................................... 40
5.10 Litigation...................................................................... 40
5.11 Novartis BioVentures Ltd........................................................ 40
5.12 Initial Sellers Disclosure Statement............................................ 40
5.13 Reliance........................................................................ 41
6. Conditions to Closing of Buyer........................................................ 41
6.1 Seller's Representations and Warranties......................................... 41
6.2 The Company's Representations and Warranties.................................... 41
6.3 Covenants....................................................................... 41
6.4 Compliance Certificates......................................................... 41
6.5 Certification of Resolutions and Officers....................................... 41
6.6 Organizational Documents........................................................ 42
6.7 Restated Certificates........................................................... 42
6.8 Amended and Restated By-laws.................................................... 42
6.9 Qualified Private Offering...................................................... 42
6.10 Conversion of Preferred Stock................................................... 42
6.11 No Material Adverse Effect...................................................... 42
6.12 Good Standing Certificates...................................................... 43
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6.13 Other Agreements and Documents.................................................. 43
6.14 Employment Agreements........................................................... 43
6.15 UAB License Agreement........................................................... 43
6.16 Purchased Shares................................................................ 43
6.17 Certain Agreements.............................................................. 43
6.18 Consents; Stockholder Approval.................................................. 43
6.19 Compulsory Transfer............................................................. 44
6.20 Series C Purchase Agreement..................................................... 44
6.21 Rights of First Refusal/Co-Sale................................................. 44
6.22 Series C Dividend............................................................... 44
6.23 FIRPTA Certificate.............................................................. 44
6.24 Second Amended and Restated Stockholders' Agreement Termination................. 44
6.25 Warrant Amendment............................................................... 44
6.26 Resignations of Directors....................................................... 44
6.27 2004 Budget..................................................................... 44
6.28 Takeover Statutes............................................................... 44
7. Conditions to Closing of the Company.................................................. 45
7.1 Buyer's Representations and Warranties.......................................... 45
7.2 Covenants....................................................................... 45
7.3 Compliance Certificates......................................................... 45
7.4 Other Agreements and Documents.................................................. 45
7.5 Conversion of Preferred Stock................................................... 45
7.6 Company Stockholder Approval.................................................... 45
8. Conditions to Closing of Sellers...................................................... 45
8.1 Payment of Individual Closing Consideration..................................... 46
8.2 Buyer's Representations and Warranties Correct.................................. 46
8.3 Covenants....................................................................... 46
8.4 Other Agreements and Documents.................................................. 46
8.5 Conversion of Preferred Stock................................................... 46
8.6 Series C Dividend............................................................... 46
8.7 Joinder Agreements.............................................................. 46
9. Mutual Conditions of Closing.......................................................... 46
9.1 Qualifications.................................................................. 47
9.2 Absence of Litigation........................................................... 47
9.3 Joinder Period Expiration....................................................... 47
10. Covenants............................................................................. 47
10.1 Regulatory Filings.............................................................. 47
10.2 No Solicitation................................................................. 48
10.3 Notice of Breaches; Updates..................................................... 49
10.4 Exclusivity of Purchased Shares................................................. 49
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10.5 Conduct of Business............................................................. 49
10.6 Delivery of Common Stock Certificates........................................... 52
10.7 Stockholder Approval............................................................ 52
10.8 Takeover Statutes............................................................... 52
10.9 Confidentiality Agreements...................................................... 53
10.10 Preparation of Disclosure Statement............................................. 53
10.11 Inspection of Properties........................................................ 53
10.12 Qualified Private Offering...................................................... 53
10.13 Restated Certificates and Amended and Restated By-laws.......................... 54
10.14 Series C Warrants............................................................... 54
10.15 Disclosure Statement............................................................ 54
11. Termination........................................................................... 54
12. Miscellaneous......................................................................... 55
12.1 Indemnification................................................................. 55
12.2 Successors and Assigns.......................................................... 61
12.3 Entire Agreement................................................................ 62
12.4 Governing Law and Consent to Jurisdiction....................................... 62
12.5 Counterparts.................................................................... 62
12.6 Titles and Subtitles............................................................ 62
12.7 Nouns and Pronouns.............................................................. 62
12.8 Notices......................................................................... 63
12.9 Finder's Fee.................................................................... 64
12.10 Expenses and Fees............................................................... 64
12.11 Amendments and Waivers.......................................................... 64
12.12 Delays or Omissions............................................................. 65
12.13 Severability.................................................................... 65
12.14 Confidentiality and Publicity................................................... 65
12.15 Definitions..................................................................... 66
ANNEXES
Annex A Table of Initial Sellers and Initial Shares
Annex B Management Sellers
Annex C Accredited Sellers
EXHIBITS
Exhibit A Form of Custody Agreement
Exhibit B Form of Joinder Agreement
Exhibit C Form of Development, License and Commercialization Agreement
Exhibit D Form of Supply Agreement
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Exhibit E Form of Stockholders' Agreement
Exhibit F Form of Restated Certificate of Incorporation (Alternative 1)
Exhibit G Form of Restated Certificate of Incorporation (Alternative 2)
Exhibit H Form of Amended and Restated By-laws
Exhibit I Amendments to Certain License and Related Agreements
Exhibit J Form of Management Rights Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of March 21,
2003, by and among the stockholders identified on the signature pages hereto
(each, an "Initial Seller" and, collectively, the "Initial Sellers"), Novartis
Pharma AG ("Buyer"), a corporation organized under the laws of Switzerland, with
its principal place of business at Xxxxxxxxxxxx 00, XX-0000, Xxxxx, Xxxxxxxxxxx,
Idenix Pharmaceuticals, Inc. (the "Company"), a Delaware corporation with its
principal place of business at 000 XxxxxxxxxXxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
00000, and the Additional Sellers (as defined in Section 1.1(b)). The Initial
Sellers and the Additional Sellers are collectively referred to herein as the
"Sellers" and the Sellers, Buyer and the Company are collectively referred to
herein as the "Parties."
WHEREAS, all shares of Company Stock (as defined in Section 12.15(a))
owned by each Initial Seller as of the date hereof are set forth opposite such
Initial Seller's name on Annex A attached hereto (the "Initial Shares") and all
options to purchase shares of Common Stock (as defined in Section 12.15(a))
owned by each Initial Seller also are set forth opposite such Initial Seller's
name on Annex A;
WHEREAS, the Initial Sellers desire to sell that portion of their
aggregate Initial Shares comprising, together with any shares to be sold by
Additional Sellers, fifty-one percent (51.0%) of the Fully-Diluted Common Stock
Deemed Outstanding (as defined in Section 12.15(a)) as of the Closing Date (as
defined in Section 2.1);
WHEREAS, during the Joinder Period (as defined in Section 1.1(b)), each
of the holders of Company Stock and the holders of options vested on or prior to
the Closing Date to purchase shares of Common Stock (other than the Initial
Sellers) will be offered the opportunity to participate in the transactions
contemplated by this Agreement and it is expected that certain of such holders
will become Additional Sellers, whereupon the number of shares to be sold by the
Initial Sellers hereunder shall be reduced on a pro rata basis such that Buyer
shall purchase at the Closing (as defined in Section 2.1), an aggregate number
of shares of Company Stock equal to fifty-one percent (51.0%) of the
Fully-Diluted Common Stock Deemed Outstanding as of the Closing Date (which
shares shall not be subject to a right of repurchase in favor of the Company);
WHEREAS, Buyer wishes to purchase from Sellers and Sellers wish to sell
to Buyer the Purchased Shares (as defined in Section 12.15(a)) upon the terms
and subject to the conditions of this Agreement;
WHEREAS, the Company is in the process of developing certain (i)
hepatitis B virus drug candidates, including telebuvidine and valtorcitabine
(the "Hepatitis B Drug Candidates") and (ii) hepatitis C virus drug candidates
(the "Hepatitis C Drug Candidates");
WHEREAS, the Company wishes to license to Buyer, and collaborate with
Buyer in the development of, such Hepatitis B Drug Candidates, and grant Buyer
certain rights with respect to Hepatitis C Drug Candidates and certain other
compounds
subsequently discovered or developed by the Company under the terms and on the
conditions set forth in the Development, License and Commercialization Agreement
(as defined in Section 4.4), which Buyer and the Company shall enter into on the
Closing Date;
WHEREAS, in connection with the transactions contemplated by this
Agreement, Buyer wishes that certain key employees of the Company enter into
employment agreements on and as of the Closing Date; and
WHEREAS, in connection with the transactions contemplated by this
Agreement, Buyer and the Company have executed, on the date hereof, the Credit
Agreement (as defined in Section 4.4) pursuant to which Buyer will lend to the
Company, and the Company will borrow from Buyer, twenty-five million dollars
($25,000,000) subject to the terms and conditions contained therein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND PURCHASE.
(a) On the terms and subject to the conditions of this Agreement, at
the Closing, the Sellers shall sell, convey, transfer and deliver to Buyer, and
Buyer shall purchase from such Sellers, the Purchased Shares for an aggregate
purchase price of two hundred fifty-five million dollars ($255,000,000) in cash
plus, if applicable, the Contingent Payments (as defined in Section 12.15(a))
subject to the terms and conditions set forth in Section 1.2 of this Agreement
(the "Aggregate Purchase Price"). As to each Seller, the shares of Company Stock
being sold by such Seller (which shares shall not be subject to a right of
repurchase in favor of the Company) are sometimes referred to herein as
"Seller's Shares." Each Seller agrees to sell, convey, transfer and deliver to
Buyer, and Buyer agrees to purchase from each Seller, at the Closing, that
number of Seller's Shares pursuant to this Section 1.1, which number of shares
shall be set forth opposite such Seller's name on Adjusted Annex A (as defined
in Section 1.1(c)).
(b) During the period beginning on the first business day after the
date on which the Parties first make available to the holders of Company Stock
and the holders of options to purchase shares of Common Stock (in each case,
other than the Initial Sellers) the opportunity to offer for sale to Buyer, and
Buyer's offer to purchase, shares of Company Stock held by such holders on the
Closing Date that are not subject to a right of repurchase in favor of the
Company on the terms and subject to the conditions of this Agreement and the
procedures set forth in the Disclosure Statement (as defined in Section 1.1(e))
until the Closing Date (but in no event less than 20 business days) (the
"Joinder Period"), each holder of shares of Company Stock and each holder of
options to purchase shares of Common Stock (in each case, other than the Initial
Sellers) that validly executes and delivers to Mellon Investor Services LLC, as
custodian (the
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"Custodian"), an irrevocable Power of Attorney and Custody Agreement in the form
of Exhibit A attached hereto made with the Custodian (the "Custody Agreement"),
the Stockholders' Agreement (as defined in Section 4.4) and an appropriate
Consent (as defined in Section 3.5) with respect to the approval of the Restated
Certificates and Amended and Restated By-laws (each of the foregoing two terms
as defined in Section 4.4), together with a Joinder Agreement, to be dated on or
prior to the Closing Date and delivered to Buyer and the Company, in the form of
Exhibit B attached hereto (the "Joinder Agreement" and, together with the other
agreements and Consents to be executed and delivered by such holders, the
"Additional Seller Documents"), which Joinder Agreement shall specify, among
other things, the number of shares of Company Stock and/or the number of shares
of Common Stock issuable upon the exercise of options to purchase shares of
Common Stock owned by such holder and that such holder shall be a party to this
Agreement, shall become an "Additional Seller" for all purposes of this
Agreement (collectively, the "Additional Sellers").
(c) Immediately prior to the Closing, Annex A shall be amended and
restated such that (i) each Seller (other than Management Sellers (as defined in
Section 12.15(a))) shall sell to Buyer, and Buyer shall purchase from such
Seller, such number of shares of Company Stock as is equal to the Selling
Percentage (as defined in Section 12.15(a)) multiplied by the total number of
shares of Vested Stock (as defined in Section 12.15(a)) owned by such Seller as
of the Closing Date and (ii) each Management Seller shall sell to Buyer, and
Buyer shall purchase from such Management Seller, such number of shares of
Company Stock as is equal to 0.20 multiplied by the total number of shares of
Vested Stock owned by such Management Seller as of the Closing Date (the
aggregate number of shares sold by the Management Sellers, the "Management
Shares Sold"), with appropriate rounding to the nearest whole number of shares
of Company Stock, such that the number of shares of Company Stock sold pursuant
to this Section 1.1(c) shall represent fifty-one percent (51%) of the
Fully-Diluted Common Stock Deemed Outstanding as of the Closing Date (such
amended and restated Annex A, as mutually agreed upon by Buyer, the Company and
the Consenting Sellers (as defined in Section 12.15(a)), the "Adjusted Annex
A"). It is understood and agreed that the Purchased Shares shall not include
shares of Company Stock that are subject to a right of repurchase in favor of
the Company.
(d) Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall pay to each Seller, pursuant to Section 2.2, in
consideration of such Seller's Shares set forth opposite such Seller's name on
Adjusted Annex A (x) an amount in cash equal to the product of (A) the
Percentage Ownership (as defined in Section 12.15(a)) of such Seller and (B) two
hundred fifty-five million dollars ($255,000,000) (such resulting product, the
"Individual Closing Consideration") and (y) subject to the terms and conditions
set forth in Section 1.2, the right to receive the consideration set forth in
Section 1.2(b) and/or Section 1.2(c).
(e) On the first day of the Joinder Period, the Company shall mail or
personally deliver to each holder of Company Stock and each holder of options to
purchase shares of Common Stock which will be vested on or prior to the Closing
Date (in each case, other than the Initial Sellers) (i) a disclosure document,
jointly prepared by
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the Company, Buyer and Parent (as defined in Section 12.15(a)) making available
to such holders the opportunity to offer for sale to Buyer, and Buyer's offer to
purchase, a portion of the shares of Company Stock held by such holder on the
Closing Date that are not subject to a right of repurchase in favor of the
Company on the terms and subject to the conditions in this Agreement and the
procedures set forth in the disclosure document (the "Disclosure Statement") and
(ii) the Additional Seller Documents.
1.2 SUBSEQUENT CONTINGENT PAYMENTS.
(a) As additional consideration for the Purchased Shares, subject to
Buyer's rights of offset pursuant to Section 12.1(p), Buyer will pay Sellers in
cash, Parent ADSs (as defined in Section 12.15(a)) or any combination thereof,
at Buyer's election, the consideration set forth in Sections 1.2(b) and 1.2(c)
subject to the conditions set forth herein and the procedures set forth in this
Section 1.2; provided, however, that each Seller shall be treated in the same
manner with respect to the portion of the consideration paid to each Seller
pursuant to such Sections in Parent ADSs and cash, except that each
Non-Accredited Seller (as defined in Section 12.15(a)) shall receive only cash
in accordance with Sections 1.2(b)(iii) and 1.2(c)(iii).
(b) [**]
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(i) Subject to Section 1.2(d) below, issue and deliver to each
Accredited Seller (as defined in Section 12.15(a)) that number of Parent
ADSs equal to the product of (A) the Accredited Seller Percentage (as
defined in Section 12.15(a)) of such Accredited Seller and (B) [**];
provided, however, that if such Accredited Seller notifies Buyer that a
filing pursuant to the requirements of the HSR Act (as defined in Section
3.5), EC Regulation (as defined in Section 12.15(a)) or any other similar
foreign antitrust or trade regulation law is required, Buyer shall delay
the issuance of Parent ADSs to such Accredited Seller pursuant hereto
until the earlier of expiration or termination of any waiting period
relating to any such requirements;
(ii) pay to each Accredited Seller an amount in cash equal to the
product of (A) the Accredited Seller Percentage of such Accredited Seller
and (B) [**]; and
(iii) pay to each Non-Accredited Seller an amount in cash equal to
the product of (A) the Percentage Ownership of such Non-Accredited Seller
and (B) [**].
(c) [**]
(i) Subject to 1.2(e) below, issue and deliver to each Accredited
Seller that number of Parent ADSs equal to the product of (A) the
Accredited Seller Percentage of such Accredited Seller and (B) [**];
provided, however, that if such Accredited Seller notifies Buyer that a
filing pursuant to the requirements of the HSR Act, EC Regulation or any
other similar foreign antitrust or trade
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regulation law is required, Buyer shall delay the issuance of Parent ADSs
to such Accredited Seller pursuant hereto until the earlier of expiration
or termination of any waiting period relating to any such requirements;
(ii) pay to each Accredited Seller an amount in cash equal to the
product of (A) the Accredited Seller Percentage of such Accredited Seller
and (B) [**]; and
(iii) pay to each Non-Accredited Seller an amount in cash equal to
the product of (A) the Percentage Ownership of such Non-Accredited Seller
and (B) [**].
(d) If Buyer intends to deliver [**] to the Accredited Sellers in
satisfaction of all or a portion of the Contingent Payment due on the [**], not
less than five (5) days prior to such date Buyer shall deliver written notice
thereof to each Accredited Seller. Buyer agrees that any [**] to be issued to
the Accredited Sellers will be issued on the [**] without any legends thereon
and will be listed for trading on the New York Stock Exchange or such other
exchange on which Parent ADSs are traded at such time (the "ADS Exchange"), if,
to the extent deemed reasonably necessary by Buyer (in which case, the notice
sent to such Accredited Sellers described in the immediately preceding sentence
shall so request), such Accredited Seller delivers, prior to the [**], an
opinion of counsel (which opinion may (x) assume that the representations of
Buyer contained in Section 5.4 are true and correct and (y) rely on a
certificate of such Accredited Seller as to its status as an affiliate of Parent
for purposes of the Securities Act of 1933, as amended (the "Securities Act"))
reasonably acceptable to Parent to the effect that the [**] to be issued to such
Accredited Seller may lawfully be transferred without registration and without
legends thereon under the Securities Act immediately upon their issuance. In the
event that Buyer, in its reasonable discretion, determines that any of the [**]
to be so issued to any Accredited Seller are not eligible for immediate resale
pursuant to Rule 144(k) under the Securities Act, or comparable provision of a
successor rule thereto, cannot be issued without a legend or will not be
immediately transferable on the ADS Exchange, and Buyer intends to deliver [**]
to such Accredited Seller in satisfaction of all or a portion of the Contingent
Payment due on the [**] to such Accredited Seller, Buyer will promptly notify
such Accredited Seller of such fact and shall not be obligated to deliver, and
shall not deliver, such [**] on the [**] and Parent shall use reasonable efforts
to file with the SEC (as defined in Section 5.3) as promptly as practicable, a
registration statement covering the resale to the public by such Accredited
Sellers of such [**] upon issuance of the [**] and to have the [**] declared
effective within 90 days of the [**]. If the [**] is declared effective within
such 90 day period, Buyer shall deliver the [**]
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[**] as promptly as practicable after such effective date of the [**] (and in no
event later than the earlier of (i) three business days after the [**] is
declared effective and (ii) 90 days after the [**]); provided, however, that if
such [**] is not declared effective by the SEC within such 90 day period or if
such shares are not listed on the ADS Exchange, Buyer shall not be obligated to
deliver, and shall not deliver, any [**] to such Accredited Seller and shall pay
to such Accredited Seller within such 90 day period an amount in cash equal to
the product of (A) the Accredited Seller Percentage of such Accredited Seller
and (B) [**].
(e) If Buyer intends to deliver [**] to the Accredited Sellers in
satisfaction of all or a portion of the Contingent Payment due on the [**], not
less than five (5) days prior to such date Buyer shall deliver written notice
thereof to each Accredited Seller. Buyer agrees that any [**] to be issued to
the Accredited Sellers will be issued on the [**] without any legends thereon
and will be listed for trading on the ADS Exchange, if, to the extent deemed
reasonably necessary by Buyer (in which case, the notice sent to such Accredited
Seller as described in the immediately preceding sentence shall so request),
such Accredited Seller delivers, prior to the [**], an opinion of counsel (which
opinion may (x) assume that the representations of Buyer contained in Section
5.4 are true and correct and (y) rely on a certificate of such Accredited Seller
as to its status as an affiliate of Parent for purposes of the Securities Act)
reasonably acceptable to Parent to the effect that the [**] to be issued to such
Accredited Seller may lawfully be transferred without registration and without
any legend thereon under the Securities Act immediately upon their issuance. In
the event that Buyer, in its reasonable discretion, determines that any of the
[**] to be so issued to any Accredited Seller are not eligible for immediate
resale pursuant to Rule 144(k) under the Securities Act, or comparable provision
of a successor rule thereto, or cannot be issued without a legend or will not be
immediately tradeable on the ADS Exchange, and Buyer intends to deliver [**] to
the Accredited Sellers in satisfaction of all or a portion of the Contingent
Payment due on the [**] to such Accredited Seller, Buyer will promptly notify
such Accredited Seller of such fact and shall not be obligated to deliver, and
shall not deliver, such [**] on the [**] and Parent shall use reasonable efforts
to file with the SEC as promptly as practicable, a registration statement
covering the resale to the public by such Accredited Seller of such [**] upon
issuance of the [**] and to have the [**] declared effective within 90 days of
the [**]. If the [**] is declared effective within such 90 day period, Buyer
shall deliver the [**] as promptly as practicable after such effective date of
the [**]
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(and in no event later than the earlier of (i) three business days after the
[**] is declared effective and (ii) 90 days after the [**]); provided, however,
that if such [**] is not declared effective by the SEC within such 90 day period
or if such shares are not listed on the ADS Exchange, Buyer shall not be
obligated to deliver, and shall not deliver, any [**] to such Accredited Seller
and shall pay to such Accredited Seller within such 90 day period an amount in
cash equal to the product of (A) the Accredited Seller Percentage of such
Accredited Seller and (B) [**].
(f) [**] (each, a "Registration Statement") Parent shall:
(i) promptly furnish to each applicable Accredited Seller such
number of copies as such Accredited Seller may reasonably request of the
prospectus relating thereto, including a preliminary prospectus, in
conformity with the requirements of the Securities Act. Parent shall use
its reasonable efforts to register or qualify the Parent ADSs covered by
each Registration Statement under the securities laws of each state of the
United States; provided, however, that Parent shall not be required in
connection therewith to qualify as a foreign corporation or execute a
general consent to service of process in any jurisdiction. If Parent has
delivered preliminary or final prospectuses to such Accredited Sellers and
after having done so the prospectus is amended or supplemented to comply
with the requirements of the Securities Act, Parent shall promptly notify
such Accredited Sellers and Parent shall promptly provide such Accredited
Sellers with revised or supplemented prospectuses. Parent shall pay all
expenses incurred by it in complying with its obligations under this
Section 1.2, including all registration, qualification and filing fees,
printing fees, exchange listing fees, fees and expenses of counsel for
Parent, and fees and expenses of accountants for Parent, but excluding the
fees and expenses of counsel to such Accredited Sellers and any brokerage
fees, selling commissions or underwriting discounts incurred by such
Accredited Sellers in connection with sales under each Registration
Statement. With respect to each Registration Statement, Parent agrees to
indemnify such Accredited Sellers in the same manner that the Company is
obligated to indemnify each Participating Holder (as defined in the
Stockholders' Agreement) and each such Accredited Seller agrees to
indemnify Parent in the same manner that each Participating Holder is
obligated to indemnify the Company, in each case pursuant to Section 2.6
of the Stockholders' Agreement. Once declared effective, Parent shall
cause the applicable Registration Statement to remain effective for 180
days, which 180 day period shall be extended for a period of time equal to
any period during which such Registration Statement is subject to a stop
order or otherwise suspended:
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(ii) notify in writing each applicable Accredited Seller at any time
when a prospectus relating to a Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing and of any SEC stop orders or other material
modifications in connection therewith. In such case, Parent shall promptly
prepare a supplement or amendment to such prospectus and furnish each such
Accredited Seller a reasonable number of copies of such supplement to or
amendment of such prospectus as may be necessary so that, after delivery
to such purchaser of such Parent ADSs, such prospectus shall not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and
(iii) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Parent ADSs included in such Registration Statement
for sale in any jurisdiction, use its reasonable best efforts promptly to
obtain the withdrawal of such order.
(g) Notwithstanding any other provision of this Agreement, each
Accredited Seller entitled to receive a fraction of a Parent ADS under Sections
1.2(b) or 1.2(c) (after taking into account all such Parent ADSs to be issued to
such Accredited Seller) shall receive cash from Buyer on the applicable
Contingent Payment Date in lieu of such fraction of a share, without interest
and less any required withholding Taxes (as defined in Section 12.15(a)), in an
amount equal to the product of (i) such fraction of a Parent ADS (rounded to the
second decimal place) and (ii) [**].
(h) The Parties hereto acknowledge and agree that the aggregate
consideration payable by Buyer pursuant to (i) Section 1.1 shall in no event
exceed two hundred fifty-five million dollars ($255,000,000) and (ii) [**], as
the case may be, or any combination thereof; provided, however, that for
purposes of determining compliance with this Section 1.2(h), to the extent a
Contingent Payment is made [**], the value of each Parent ADS delivered in
connection therewith shall be calculated in accordance with [**].
9
(i) The Parties hereto acknowledge and agree that the right to receive
the consideration set forth in Sections 1.2(b) and/or 1.2(c), if any, (i) is an
integral part of the consideration provided for in this Agreement, (ii) does not
give the Sellers dividend rights, voting rights, liquidation rights, preemptive
rights or other rights of holders of Company Stock or Parent ADSs, (iii) shall
not be evidenced by a certificate or other instrument, (iv) shall not be
assignable or otherwise transferable (other than by operation of law or by will
or descent after the death of a natural holder thereof), (v) shall not accrue or
pay interest on any portion thereof and (vi) does not represent any right other
than the right to receive the consideration set forth in Sections 1.2(b) and/or
1.2(c). Any attempted transfer of the right to a Contingent Payment by any
holder thereof (other than as permitted by the immediately preceding sentence)
shall be null and void.
2. CLOSING DATE, DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the Purchased
Shares hereunder shall be held after the completion of Adjusted Annex A pursuant
to the terms and conditions of this Agreement and on or prior to the second
business day after the satisfaction or waiver of all of the conditions to the
Closing (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of those conditions) or
such later date as the Consenting Sellers, the Company and Buyer may mutually
agree upon in writing (the "Closing") at 10:00 a.m. at the offices of Xxxxx
Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The date
of the Closing is hereinafter referred to as the "Closing Date." The Closing
shall be deemed to be effective as of 5:00 p.m., New York City time, on the
Closing Date.
10
2.2 DELIVERY AT CLOSING.
(a) Initial Sellers. At the Closing, each Initial Seller shall deliver
(or cause to be delivered) to Buyer one or more stock certificates in form and
substance reasonably satisfactory to Buyer, registered in such Initial Seller's
name, representing the number of Seller's Shares set forth opposite such Initial
Seller's name on Adjusted Annex A, duly endorsed or accompanied by duly executed
stock powers in blank and having all necessary stock transfer tax stamps affixed
thereto at the expense of such Initial Seller in form suitable for transfer of
valid title thereto to Buyer free and clear of any lien, pledge, option,
security interest, claim, third party right or any other restriction or
encumbrance of any nature whatsoever ("Encumbrances") (other than restrictions
on transfer under applicable Securities Laws (as defined in Section 4.24) and
restrictions on transfer contained in Sections 3 and 5 of the Stockholders'
Agreement) against payment of the Individual Closing Consideration payable to
such Initial Seller in same day funds by wire transfer per such Seller's wiring
instructions (such wire instructions to be delivered in writing to Buyer at
least three (3) business days prior to the Closing Date). Payment by Buyer to
the Initial Sellers of that portion of the Aggregate Purchase Price payable to
such Initial Sellers in accordance with this Section 2.2 shall fully satisfy and
discharge Buyer's payment obligations due as of the Closing Date to the Initial
Sellers.
(b) Additional Sellers. Prior to the Closing, each Additional Seller
shall place (i) one or more stock certificates, registered in such Additional
Seller's name, representing the number of Seller's Shares of such Additional
Seller set forth opposite such Additional Seller's name on Adjusted Annex A,
duly endorsed or accompanied by duly executed stock powers in blank and having
all necessary stock transfer tax stamps affixed thereto at the expense of such
Additional Seller in form suitable for transfer of valid title thereto to Buyer
free and clear of any Encumbrances (other than restrictions on transfer under
applicable Securities Laws and restrictions on transfer contained in Sections 3
and 5 of the Stockholders' Agreement) in custody, for delivery under this
Agreement, under the Custody Agreement and/or (ii) a written notice, in form and
substance acceptable to the Company, specifying that, effective upon
consummation of the transaction contemplated by this Agreement, vested options
to purchase shares of Common Stock held by such Additional Seller shall be
exercised for that number of Seller's Shares of such Additional Seller set forth
opposite such Additional Seller's name on Adjusted Annex A less such number of
Seller's Shares represented by stock certificates placed in custody under the
Custody Agreement pursuant to clause (i) above, accompanied by duly executed
stock powers in blank and having all necessary stock transfer tax stamps affixed
thereto at the expense of such Additional Seller in form suitable for transfer
of valid title to such Seller's Shares to be issued upon exercise of such vested
options to Buyer free and clear of any Encumbrances (other than restrictions on
transfer under applicable Securities Laws and restrictions on transfer contained
in Sections 3 and 5 of the Stockholders' Agreement) in custody, for delivery
under this Agreement, under the Custody Agreement. At the Closing, the Buyer
will deliver to the Custodian the Individual Closing Consideration payable to
all Additional Sellers in same day funds by wire transfer to an account at a
bank acceptable to the Custodian drawn to the order of the Custodian and the
Custodian will (i) deliver to the Company the aggregate exercise price for all
options placed in custody under the Custody Agreement
11
to be exercised upon consummation of the transaction contemplated by this
Agreement and the aggregate amount of any applicable withholding Taxes, (ii)
deliver to the Buyer all such Seller's Shares of the Additional Sellers
(including Seller's Shares issued upon exercise of options placed in custody
under the Custody Agreement) and (iii) deliver to each Additional Seller the
consideration payable to such Additional Seller pursuant to Section 1.1 and the
Custody Agreement on the Closing Date less the sum of (i) the exercise price for
any options placed in custody under the Custody Agreement by such Additional
Seller and that were exercised upon consummation of the transactions
contemplated hereby and (ii) the amount of any applicable withholding Taxes.
Payment by Buyer to the Custodian of that portion of the Aggregate Purchase
Price payable to the Additional Sellers in accordance with this Section 2.2 and
the Custody Agreement shall fully satisfy and discharge Buyer's payment
obligations due as of the Closing Date to the Additional Sellers.
(c) In the event that additional cash consideration becomes due and
payable in connection with a Contingent Payment to the Initial Sellers and the
Additional Sellers as set forth in Section 1.2 above, Buyer shall deliver to (i)
the Custodian the appropriate amount of cash consideration to be paid to the
Additional Sellers pursuant thereto by wire transfer of same day funds per the
wiring instructions of the Custodian and the Custodian shall thereafter deliver
an amount of such consideration to each Additional Seller, as determined
pursuant to Section 1.2, and (ii) each Initial Seller an amount of cash
consideration, as determined pursuant to Section 1.2, and paid pursuant thereto
by wire transfer of same day funds per the wiring instructions of the Initial
Sellers, in the case of (i) and (ii) above, against the applicable Contingent
Payment obligation due on the applicable Contingent Payment Date. For purposes
of this Section 2.2(c), it is acknowledged and agreed that the Company may serve
as the Custodian for purposes of receipt of additional cash consideration, if
any, payable to the Additional Sellers as set forth in Section 1.2 above and the
payment of such consideration to the Additional Sellers hereunder.
(d) In the event that additional consideration becomes due and payable
in connection with a Contingent Payment to the Initial Sellers and the
Additional Sellers as set forth in Section 1.2 above, to the extent such Initial
Sellers or Additional Sellers are Accredited Sellers and Buyer elects to make
all or a portion of such payment in Parent ADSs, Parent shall deliver to each
such Accredited Seller, in accordance with Section 2.2, one or more certificates
representing the appropriate number of validly issued, fully paid and
nonassessable Parent ADSs free and clear from any Encumbrances and registered in
the names of such Accredited Sellers on the applicable Contingent Payment Date.
2.3 FURTHER ACTIONS. Each of the Sellers, the Company, Buyer and,
solely with respect to its obligations under this Agreement, Parent, hereby
covenants and agrees without the necessity of any further consideration, to
execute, acknowledge and deliver any and all such other documents and take any
such other action as may be reasonably necessary to carry out the intent and
purposes of this Agreement.
12
3. REPRESENTATIONS AND WARRANTIES OF EACH SELLER. Each Seller hereby
severally, and not jointly, represents and warrants, as of the date hereof and
as of the Closing Date, to Buyer as follows:
3.1 STOCK OWNERSHIP. Such Seller is or, with respect to shares of
Common Stock that will be issued upon such Seller's exercise of outstanding
options to purchase such shares of Common Stock, will be, when such options are
duly exercised and such shares of Common Stock are issued, the beneficial, legal
and record owner of such Seller's Shares and has or, when such options are duly
exercised and such shares of Common Stock are issued, will have, good, valid and
marketable title thereto, free and clear of any Encumbrances, except (i)
restrictions on transfer under applicable Securities Laws and (ii) restrictions
on transfer of such Seller's Shares contained in Sections 3 and 5 of the Second
Amended and Restated Stockholders' Agreement (as defined in Section 3.7), to the
extent such Seller is bound thereby. Upon consummation of the transactions
contemplated hereby, Buyer will acquire good and marketable title to such
Seller's Shares, free and clear of any Encumbrances, except (i) restrictions on
transfer under applicable Securities Laws and (ii) restrictions contained in
Sections 3 and 5 of the Stockholders' Agreement.
3.2 AUTHORITY; EXECUTION AND DELIVERY. Such Seller has the full power,
capacity and authority to enter into this Agreement and execute the Stockholder
Consent (as defined in Section 12.15(a)) (to the extent such Seller is a
signatory thereto) and to sell such Seller's Shares in accordance with the terms
hereof sufficient to convey to Buyer good, valid and marketable title to said
Seller's Shares, free and clear of any Encumbrances, except (i) restrictions on
transfer under applicable Securities Laws and (ii) restrictions on transfer
contained in Sections 3 and 5 of the Stockholders' Agreement. This Agreement and
the Stockholder Consent (to the extent such Seller is a signatory thereto) have
been, and the Stockholders' Agreement and Custody Agreement (in the case of an
Additional Seller) will be, when executed and delivered by such Seller, duly
authorized, executed and delivered by such Seller and constitute the legal,
valid and binding obligations of such Seller, enforceable against such Seller in
accordance with their terms, except as (i) the enforcement hereof or thereof may
be limited by (A) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally or (B) equitable principles, including those
limiting the availability of specific performance, injunctive relief and other
equitable remedies and those providing for equitable defenses and (ii) to the
extent indemnification provisions contained in this Agreement or the
Stockholders' Agreement may be limited by applicable Securities Laws.
3.3 NO CONFLICT. Neither the execution, delivery and performance by
such Seller of this Agreement, the Stockholders' Agreement, the Custody
Agreement (in the case of an Additional Seller) or the Stockholder Consent (to
the extent such Seller is a signatory thereto), nor the consummation by such
Seller of the transactions contemplated hereby or thereby, nor compliance by
such Seller with any of the provisions hereof or thereof, will (i) result in the
creation of any Encumbrance other than pursuant to this Agreement and the
Ancillary Agreements (as defined in Section 4.4) upon such Seller's Shares under
any of the terms, conditions or provisions of any agreement, document,
13
instrument, contract (whether oral or written), license, note, indenture,
mortgage, lease, sublease or other legally binding instrument ("Contract") to
which such Seller is a party or by which such Seller or such Seller's Shares may
be bound or affected, or (ii) violate or conflict with any judgment, injunction,
ruling, charge, order or decree ("Judgment") applicable to such Seller or such
Seller's Shares or any statute, law, rule, ordinance, code, or regulation of any
federal, state, local, municipal or foreign government and all agencies thereof
("Applicable Law") applicable to such Seller or such Seller's Shares, or result
in a breach of, or entitle any party to terminate or call a default with respect
to any material Contract applicable to such Seller or any Contract applicable to
such Seller's Shares.
3.4 NO OTHER AGREEMENTS TO SELL PURCHASED SHARES. Other than pursuant
to this Agreement and the Ancillary Agreements, such Seller has no legal
obligation, absolute or contingent, to any other individual, corporation,
partnership, trust, limited liability company, association, joint venture, or
any similar entity (each, a "Person") or Governmental Entity (as defined in
Section 3.5) to (i) sell such Seller's Shares or, if applicable, options to
purchase shares of Common Stock that will comprise Seller's Shares (other than
distributions to such Seller's partners or beneficial owners of the proceeds
from the sales contemplated hereby, if any, pursuant to such Seller's
contractual obligations or institutional policies), (ii) issue, sell or
otherwise transfer any capital stock or any security convertible into or
exchangeable for capital stock of the Company, or (iii) enter into any agreement
with respect to any of the foregoing.
3.5 CONSENTS. No consents, approvals or authorizations ("Consents") of,
(i) or registration, qualification, designation, declaration, notification or
filing with, any federal, state, local, municipal or foreign court of competent
jurisdiction, governmental agency, authority, instrumentality, regulatory body,
stock market or stock exchange (each a "Governmental Entity") or (ii) any party
to any Contract to which such Seller is a party or by which it is bound, is
required in connection with the sale by such Seller of such Seller's Shares or
required on the part of such Seller in connection with the valid execution,
delivery or performance of this Agreement, the Stockholders' Agreement, the
Custody Agreement (in the case of an Additional Seller) and the Stockholder
Consent (to the extent such Seller is a signatory thereto) by such Seller or the
consummation of the transactions contemplated hereby or thereby, except (A) as
may be required pursuant to Securities Laws which registrations, qualifications,
designations, declarations, notifications or filings, if required, shall be
accomplished by such Seller prior to Closing, (B) as may be required pursuant to
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR Act")
or the EC Regulation or any other similar foreign antitrust or trade regulation
laws to the extent applicable to such Seller or (C) such Consents of (x) or
registrations, qualifications, designations, declarations, notifications or
filings with, any Governmental Entity or (y) any parties to any Contract to
which such Seller is a party or by which such Seller is bound, in the case of
this clause (C), the failure of which Consents to obtain, or registrations,
qualifications, designations, declarations, notifications or filings to make,
would not be reasonably likely to materially and adversely affect the ability of
the Parties to consummate the transactions contemplated hereby.
14
3.6 OFFERING. Subject to the accuracy of Buyer's representations set
forth in Section 5 of this Agreement, the offer and sale by such Seller of such
Seller's Shares in conformity with the terms of this Agreement constitutes a
transaction that is: (i) in full compliance with all Applicable Laws applicable
to such Seller or such Seller's Shares and (ii) exempt from the registration
requirements of the Securities Act and from all applicable state registration or
qualification requirements, other than those with which such Seller has complied
or will comply with prior to Closing. Such Seller or any authorized agent acting
on its behalf has not taken any action, or permitted any action to be taken on
its behalf, that violates or conflicts with Securities Laws in respect of such
Seller's Shares or that would cause the loss of any exemption applicable to the
transactions contemplated by this Agreement or would require such Seller's sale
of the Seller's Shares or the issuance of Parent ADSs to be registered pursuant
to Applicable Law.
3.7 QUALIFIED PRIVATE OFFERING. The transaction contemplated by this
Agreement shall constitute a Qualified Private Offering (as defined in the
Company's Certificate of Incorporation, as amended (the "Current Certificate"),
and Second Amended and Restated Stockholders' Agreement dated April 24, 2001, by
and between the Company and the other parties thereto, as amended (the "Second
Amended and Restated Stockholders' Agreement")), in accordance with the terms of
the Current Certificate and the Second Amended and Restated Stockholders'
Agreement.
3.8 ACCREDITED SELLERS. In addition to the other representations and
warranties contained in Section 3, each Accredited Seller hereby severally, and
not jointly, further represents and warrants, as of the date hereof and as of
the Closing Date, to Buyer and Parent as follows:
(a) Purchase Entirely for Own Account. This Agreement is made with such
Seller in reliance upon such Seller's representation to Buyer and Parent, which
by such Seller's execution of this Agreement such Seller hereby confirms, that
the Parent ADSs, if any, to be received by such Seller will be acquired for
investment for such Seller's own account (or the account of its Affiliates (as
defined in Section 12.15(a)) or general partners, limited partners, retired
partners, shareholders (of a Person not subject to the Exchange Act (as defined
in Section 4.24)), managers, retired managers, members, retired members and any
of its other beneficial owners), not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof (other than distributions
required pursuant to contractual obligations contained in such Seller's
organizational or operational documents or pursuant to such Seller's
institutional policies) in violation of any Applicable Law, and that, such
Seller has no present intention of selling, granting any participation in or
otherwise distributing the same in violation of any Applicable Law. By executing
this Agreement, such Seller represents that, other than pursuant to this
Agreement, such Seller does not have any Contract with any Person to purchase or
otherwise acquire from such Person or to any third person any of the Parent ADSs
in violation of any Applicable Law.
(b) Disclosure of Information. Such Seller represents that it has had
an opportunity to ask questions and receive answers from Buyer and Parent and
review
15
and discuss with Buyer and Parent information regarding the terms and conditions
of its receipt of Parent ADSs, if any, and the business, properties, prospects
and financial condition of Parent.
(c) Investment Experience. Such Seller is an investor in securities of
developed companies and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits and
risks of the investment in Parent ADSs. If other than an individual, such Seller
also represents it has not been organized for the purpose of acquiring Parent
ADSs, if any.
(d) Accredited Seller. Such Seller is an "accredited investor" within
the meaning of Rule 501 of Regulation D of the Securities Act, as presently in
effect.
(e) Restricted Securities. Such Seller understands that, unless a
Registration Statement is in effect with respect to Parent ADSs at the time of
issuance, the Parent ADSs, if any, it is purchasing are characterized as
"restricted securities" under the applicable Securities Laws inasmuch as they
are being acquired from Parent in a transaction not involving a public offering
and that under such laws and applicable regulations such Parent ADSs may be
resold without registration under the Securities Act only in certain limited
circumstances. In the absence of an effective registration statement covering
such Parent ADSs or an available exemption from registration under the
Securities Act, such Parent ADSs must be held indefinitely. In this connection,
such Seller represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
(f) Sellers' Counsel. Such Seller acknowledges that such Seller has had
the opportunity to review this Agreement and the Ancillary Agreements, the
exhibits and the schedules attached hereto and the transactions contemplated
hereby and thereby with such Seller's own legal counsel. Such Seller is relying
solely on such Seller's legal counsel and not on any statements or
representations of Parent or Buyer (other than those representations set forth
in Section 5) or any of Parent's or Buyer's agents, including Xxxxx Xxxxxxxxxx
LLP, for legal advice with respect to this investment or the transactions
contemplated by this Agreement and the Ancillary Agreements.
3.9 DISCLOSURE STATEMENT. None of the information to be supplied by
such Seller expressly for inclusion in the Disclosure Statement will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
representations and warranties contained in this Section 3.9 will not apply to
any other information included in the Disclosure Statement (or other information
omitted to be included in the Disclosure Statement).
3.10 STOCKHOLDER APPROVAL. Each such Seller which is a signatory to the
Stockholder Consent has delivered such Stockholder Consent to the Company on or
prior to the date hereof to approve the matters, actions and transactions
contemplated therein.
16
3.11 RELIANCE. Such Seller understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by Buyer and Parent.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants, as of the date hereof and as of the Closing Date, to
Buyer as follows, except as set forth herein or in the disclosure schedule
provided by the Company to Buyer on the date of this Agreement (the "Company
Disclosure Schedule"), which schedule shall be arranged in sections and
subsections corresponding to the numbered and lettered sections and subsections
contained in this Section 4:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
corporate authority to own and operate its properties and assets, to carry on
its business as now conducted and as currently proposed to be conducted, to
enter into this Agreement and the Ancillary Agreements and to carry out its
obligations hereunder and thereunder. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the nature of its
business or property makes such qualification necessary, except where the
failure to be so qualified would not reasonably be expected to result in a
Company Material Adverse Effect (as defined in Section 12.15(a)). Section 4.1 of
the Company Disclosure Schedule sets forth each jurisdiction in which the
Company is duly qualified to transact business. The Company has delivered or
made available to Buyer true, correct and complete copies of the Current
Certificate and the Company's by-laws (the "By-laws"), each as in effect on the
date hereof.
4.2 CAPITALIZATION AND VOTING RIGHTS.
(a) The authorized capital of the Company as of the date hereof
consists of:
(i) Preferred Stock. 27,908,743 shares of Preferred Stock (as defined
in Section 12.15(a)), of which (A) 12,413,793 shares have been designated
Series A Convertible Preferred Stock (as defined in Section 12.15(a)), all
of which are issued and outstanding, (B) 5,555,556 shares have been
designated Series B Convertible Preferred Stock (as defined in Section
12.15(a)), all of which are issued and outstanding and (C) 9,939,394 shares
have been designated Series C Convertible Preferred Stock (as defined in
Section 12.15(a)), 8,888,890 of which are issued and outstanding.
(ii) Common Stock. 123,091,257 shares of Common Stock, of which
7,676,194 shares are issued and outstanding.
(b) Upon the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, each share of Series A Convertible
Preferred Stock shall convert into one share of Common Stock, each share of
Series B Convertible Preferred Stock shall convert into one share of Common
Stock, each share of Series C
17
Convertible Preferred Stock shall convert into the number of shares of Common
Stock as determined by the provisions of the Current Certificate and each
outstanding warrant (except options issued pursuant to a founder's stock
restriction agreement, an employment agreement, a consulting agreement or the
Company's 1998 Equity Incentive Plan, as amended (the "Plan")) to purchase
shares of capital stock of the Company shall expire.
(c) As of the date hereof, (i) options to purchase 2,500,938 shares of
Common Stock are currently outstanding, of which (x) options to purchase 884,160
shares of Common Stock are vested as of March 19, 2003 and (y) options to
purchase 1,616,778 shares of Common Stock are not vested as of Xxxxx 00, 0000,
(xx) warrants to subscribe for 5,333,334 shares of Common Stock are currently
outstanding, (iii) 269,817 restricted stock awards are outstanding, and (iv) an
aggregate of 369,566 options, restricted stock awards or other rights to acquire
capital stock of the Company shall vest or accelerate upon the consummation of
the transactions contemplated by this Agreement. Except as set forth in the
immediately preceding sentence, there are: (i) no outstanding options (vested or
unvested), warrants, rights (including conversion, preemptive or other rights)
or agreements pursuant to which the Company is or may become obligated to issue,
sell or repurchase any shares of its capital stock or any other securities of
the Company; (ii) no restrictions on the transfer of capital stock of the
Company imposed by the Current Certificate, By-laws, any agreement to which the
Company is a party (other than the Second Amended and Restated Stockholders'
Agreement), any Judgment applicable to the Company, any Governmental Entity or
any Applicable Law (other than (x) applicable Securities Laws restrictions or
(y) with respect to applicable requirements of the HSR Act, EC Regulation and
any other similar foreign antitrust or trade regulation laws applicable to the
Company); (iii) no cumulative voting rights for any of the Company's capital
stock; (iv) no registration rights under the Securities Act with respect to
shares of the Company's capital stock other than those contained in the Second
Amended and Restated Stockholders' Agreement; and (v) to the Company's
knowledge, other than pursuant to this Agreement and the Second Amended and
Restated Stockholders' Agreement, no options or other rights to purchase shares
of capital stock from stockholders of the Company granted by such stockholders.
The Company has reserved up to 1,393,731 shares of its Common Stock (it being
understood that any shares of Common Stock subject to options and other awards
outstanding on the date hereof that expire or terminate unexercised or any
restricted stock repurchased by the Company shall increase such maximum number
of shares reserved for issuance in the future pursuant to the Plan) for the
issuance of Common Stock, restricted stock and other stock-based awards pursuant
to the exercise of options and other awards to be granted in the future pursuant
to the Plan. Section 4.2(c) of the Company Disclosure Schedule sets forth as of
the date of this Agreement (i) the name of each holder of options to purchase
shares of Common Stock, the exercise price of each such option, the number of
shares of Common Stock issuable upon exercise of such option and the number of
options held by such holder that have vested as of March 19, 2003 and the
vesting schedule for options not vested as of March 19, 2003; (ii) the name of
each holder of restricted stock, the number of restricted shares of Company
Stock held by such holder, the number of restricted shares of Company Stock held
by such holder that have vested as of the date hereof and the vesting schedule
for the restricted Common Stock not vested as of the date
18
hereof; (iii) the name of each holder of stock-based awards (other than options
to purchase shares, and restricted shares, of Common Stock), the number of
shares or units of such stock-based awards held by such holder, whether such
stock-based awards are vested or unvested and, to the extent such stock-based
awards are unvested, the vesting schedule thereof; and (iv) the number of
options, and the names of the holders thereof, that will vest as a result of the
consummation of the transactions contemplated in this Agreement and the
Ancillary Agreements.
(d) The Company is not a party or subject to any Contract relating to,
and to the Company's knowledge there is no Contract between any Person which
affects or relates to, the voting of shares of capital stock of the Company or
the giving of written consents by a stockholder or director of the Company other
than the Current Certificate and the Second Amended and Restated Stockholders'
Agreement.
4.3 SUBSIDIARIES.
(a) The Company has never owned and does not presently own or control,
directly or indirectly, any corporation, partnership, limited liability company,
association, joint venture or similar entity and has never owned or controlled
and does not currently own or control, directly or indirectly, any capital stock
or other ownership interest, directly or indirectly, in any corporation,
partnership, limited liability company, association, joint venture or similar
entity. Each Subsidiary (as defined in Section 12.15(a)) is duly organized,
validly existing and in good standing (or, if "good standing" is not applicable
in the jurisdiction in which such Subsidiary is organized, an equivalent status,
if any) under the laws of its jurisdiction or organization and is duly qualified
as a foreign corporation and authorized to do business in all other
jurisdictions in which the nature of its business or property makes such
qualification necessary, except where the failure of a Subsidiary to be so
qualified or be in good standing (or equivalent status, if any) would not
reasonably be expected to result in a Company Material Adverse Effect. Section
4.3(a) of the Company Disclosure Schedule sets forth each jurisdiction in which
each Subsidiary is duly qualified to transact business. Each of the Subsidiaries
has the corporate power to own its properties and to carry on its business as
now conducted and as currently proposed to be conducted. The Company has
delivered or made available to Buyer true, correct and complete copies of the
certificates of incorporation and by-laws of each domestic Subsidiary or other
similar organizational or operational documents of each foreign Subsidiary.
(b) All the outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable and, other than director qualifying
shares, are owned by the Company or a wholly-owned Subsidiary free and clear of
any Encumbrances, other than with respect to applicable Securities Laws.
(c) Other than director qualifying shares, there are no outstanding
securities convertible into, exchangeable for, or carrying the right to acquire,
capital stock of any Subsidiary, or subscriptions, options, warrants,
convertible securities, other rights or Contracts of any character relating to
the capital stock of any Subsidiary.
19
(d) No Subsidiary is a member of (nor is any part of its business
conducted through) any partnership, nor is it a participant in any joint venture
or similar arrangement.
(e) Other than with respect to director qualifying shares, there are no
voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any shares of
capital stock of or any other interests in any Subsidiary.
(f) Section 4.3(f) of the Company Disclosure Schedule sets forth a
complete and accurate list of the number of director qualifying shares relating
to any Subsidiary and the names of the holders thereof.
4.4 AUTHORIZATION, EXECUTION AND DELIVERY. All corporate action on the
part of the Company, its officers, directors and stockholders (including the
Consent of the holders of Company Stock set forth in Section 4.7 of the Company
Disclosure Schedule) necessary for the (i) authorization, execution and delivery
of this Agreement, the Development, License and Commercialization Agreement, to
be executed on the Closing Date (as executed on such Closing Date, without
giving effect to any subsequent amendments thereto, the "Development, License
and Commercialization Agreement"), in the form of Exhibit C attached hereto, the
Master Manufacturing and Supply Agreement, to be executed on as of the Closing
Date (the "Supply Agreement"), in the form of Exhibit D attached hereto, the
Stockholders' Agreement, to be executed on the Closing Date (the "Stockholders'
Agreement"), in the form of Exhibit E attached hereto, and the Credit Agreement,
dated as of the date hereof, by and between the Company, as borrower, and Buyer,
as lender (the "Credit Agreement"), any other agreement executed by the Company
in connection with the transactions contemplated hereby or thereby (the
Development, License and Commercialization Agreement, Supply Agreement,
Stockholders' Agreement, Credit Agreement and such other agreements,
collectively the "Ancillary Agreements"), the Company's (x) Restated Certificate
of Incorporation (the "Restated Certificate of Incorporation (Alternative 1)"),
in the form of Exhibit F attached hereto and (y) Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation (Alternative 2)"), in
the form of Exhibit G attached hereto (each, a "Restated Certificate" and,
together, the "Restated Certificates"), the Amended and Restated By-laws of the
Company, in the form of Exhibit H attached hereto (the "Amended and Restated
By-laws"), and (ii) authorization of the actions of the Company contemplated by
the Stockholder Consent, and, in the case of clauses (i) and (ii) above, the
performance of the obligations of the Company contemplated hereby and thereby
have been taken, or will be taken prior to Closing. This Agreement and the
Credit Agreement have been, and the other Ancillary Agreements will be prior to
Closing, validly executed and delivered, and the actions contemplated by the
Stockholder Consent, to the extent such actions are applicable to, or required
on the part of, the Company, have been validly authorized, by the Company and,
assuming this Agreement and each Ancillary Agreement constitute valid and
legally binding obligations of Buyer and the other parties thereto, constitute
or will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except (i) as
the enforcement hereof or thereof may be limited by (A) applicable bankruptcy,
20
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally or (B) equitable
principles, including those limiting the availability of specific performance,
injunctive relief and other equitable remedies and those providing for equitable
defenses, or (ii) to the extent the indemnification provisions contained in the
Stockholders' Agreement or this Agreement may be limited by applicable
Securities Law.
4.5 NO CONFLICT. Subject to compliance with the applicable requirements
of the HSR Act, EC Regulation and any other similar foreign antitrust or trade
regulation laws applicable to the Company and, in the case of (a), (b) and (c)
below, stockholder approval and adoption of the Restated Certificates and the
Amended and Restated By-laws, and the filing of the appropriate Restated
Certificate (as determined pursuant to Section 6.7) with the Secretary of State
of the State of Delaware, neither the execution, delivery and performance by the
Company of this Agreement and the Ancillary Agreements, nor the authorization of
and performance by the Company of the actions contemplated by the Stockholder
Consent, nor the consummation by the Company of the transactions contemplated
hereby or thereby, nor the compliance by the Company with any of the provisions
hereof or thereof, will:
(a) violate or conflict with any Applicable Law applicable to the
Company or any Subsidiary or Judgment applicable to the Company or any
Subsidiary;
(b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with due notice or lapse of
time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any material Contract to which the
Company is a party or under which the Company or any of its assets is bound
or affected;
(c) conflict with or violate any provision of the Current Certificate
or By-laws; or
(d) result in the creation of any Encumbrance upon (i) any of the
properties or assets of the Company or any Subsidiary (except as
contemplated by the Credit Agreement) or (ii) to the knowledge of the
Company, any of the Purchased Shares.
4.6 VALID ISSUANCE OF STOCK. When originally issued, sold and delivered
by the Company, the Purchased Shares were, and the capital stock of the Company
into which such Purchased Shares are convertible or exchangeable, if any, when
such capital stock is issued upon such conversion or exchange, as the case may
be, will be, duly authorized, validly issued, fully paid and nonassessable.
4.7 CONSENTS. No Consents of, (i) or registration, qualification,
designation, declaration, notification or filing with, any Governmental Entity
or (ii) any party to any Contract to which the Company or any Subsidiary is a
party or by which it is bound, other than with respect to stockholder approval
and adoption of the Restated
21
Certificates and the Amended and Restated By-laws, and the filing of the
appropriate Restated Certificate (as determined pursuant to Section 6.7) with
the Secretary of State of the State of Delaware, (x) is required in connection
with the valid execution, delivery or performance of this Agreement or the
Ancillary Agreements by, or (y) was required in connection with the valid
authorization, and performance of the actions contemplated by the Stockholder
Consent, to the extent such actions are applicable to, or require action on the
part of, the Company or the consummation of the transactions contemplated hereby
or thereby, except (A) as may be required pursuant to Securities Laws, which
registrations, qualifications, designations, declarations, notifications or
filings, if required, shall be accomplished by the Company prior to Closing, (B)
as may be required pursuant to the HSR Act or the EC Regulation or any other
similar foreign antitrust or trade regulation laws to the extent applicable to
the Company or (C) such Consents of (x) or registrations, qualifications,
designations, declarations, notifications or filings with, any Governmental
Entity or (y) any parties to any Contract to which the Company is a party or by
which the Company is bound, in the case of this clause (C), the failure of which
Consents to obtain, or registrations, qualifications, designations,
declarations, notifications or filings to make, would not reasonably be expected
to result in a Company Material Adverse Effect.
4.8 ABSENCE OF CHANGES. From the Balance Sheet Date (as defined in
Section 12.15(a)) through the date of this Agreement, the Company has conducted
its business in the ordinary course and there has not been: (i) a Company
Material Adverse Effect, (ii) any material asset or property of the Company or
any Subsidiary made subject to an Encumbrance of any kind, (iii) any waiver of
any material right of the Company or any Subsidiary, or the cancellation,
payment or discharge of any material debt or claim held by the Company or any
Subsidiary, or the incurrence, guarantee, assumption or creation of any
Indebtedness (as defined in Section 12.15(a)) by the Company or any Subsidiary,
resulting in aggregate Indebtedness of the Company and its Subsidiaries, in
excess of $250,000, (iv) any mortgage, pledge, sale, lease, license, assignment
or transfer of any material tangible or intangible assets of the Company or any
Subsidiary, except in the ordinary course of business, (v) any loan by the
Company to, or any loan to the Company from any officer, director, employee or
stockholder of the Company, or any agreement or commitment therefor except for
travel advances not in excess of (x) $30,000, in the case of the Chief Executive
Officer of the Company, and (y) $15,000, in the case of all others, (vi) any
damage, destruction or loss (whether or not covered by insurance) materially and
adversely affecting the assets, property or business of the Company or any
Subsidiary, (vii) any material change in the accounting methods or practices
followed by the Company, except to conform to changes in GAAP (as defined in
Section 4.18), (viii) any purchase by the Company or any Subsidiary of assets,
other than in the ordinary course of business, or capital stock of another
Person or any agreement by the Company or any Subsidiary to merge or consolidate
with another Person, (ix) any grant by the Company or any Subsidiary of licenses
or sublicenses of, or material modification of, any rights under or with respect
to any Intellectual Property (as defined in Section 4.11(a)), or any settlement
regarding any infringement, misappropriation or alleged infringement or
misappropriation of rights in any Intellectual Property, (x) any issuance, sale
or other disposition or authorization thereof by the Company or any Subsidiary
of any of its capital stock or other securities, or grant of any options,
warrants or other rights to purchase or obtain (including upon conversion,
22
exercise or exchange) any of its capital stock or other securities, other than
under the Plan, (xi) any declaration, set aside or payment by the Company or any
Subsidiary of any dividend or distribution with respect to its capital stock,
other than with respect to Series C Convertible Preferred Stock, or, directly or
indirectly, any redemption, purchase, or other acquisition by the Company or any
Subsidiary of any of its capital stock, (xii) any employment contracts or
collective bargaining agreements, written or oral, entered into between the
Company or any Subsidiary and its directors, officers, employees or independent
contractors or material modifications of the terms of any existing contracts or
agreements or other material changes in employment or compensation terms for any
of its directors, officers, employees or independent contractors, nor has there
been any labor difficulties or claims of unfair labor practices involving the
Company or any Subsidiary, (xiii) any amendment, modification, acceleration,
waiver, termination or cancellation of any terms of any material Contract (or
series of related material Contracts) to which the Company or any Subsidiary is
a party or by which it is bound, (xiv) any conduct of business which is outside
the ordinary course or (xv) any agreement or understanding by the Company or any
Subsidiary to do any of the foregoing.
4.9 LITIGATION. Since January 1, 2000, there have been no, and there
currently are no, material actions, suits, hearings, grievances, arbitrations,
proceedings or investigations of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator ("Proceedings") or, to the Company's knowledge, currently
threatened against the Company or any Subsidiary or any of their respective
assets or properties. There is no Proceeding pending, or to the Company's
knowledge, currently threatened against a stockholder, officer, director, key
employee or founder of the Company in his, her or its capacity as such. To the
knowledge of the Company, there has not occurred any event nor does there exist
any condition on the basis of which any material Proceeding involving the
Company might properly be instituted and there is no reasonable basis for any
such Proceeding. To the Company's knowledge, there are no, and since January 1,
2000 there have not been any, Proceedings involving the employment by or with
the Company or any Subsidiary of any of the Company's current or former
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers or
alleging a violation of any Applicable Law with respect to their relationship
with the Company or any Subsidiary. There is no material Proceeding by the
Company currently pending and the Company does not currently intend to initiate
any material Proceeding.
4.10 EMPLOYEES AND CONSULTANTS.
(a) To the Company's knowledge, none of its officers, employees or
consultants and none of the officers, employees or consultants of any Subsidiary
is obligated under any Contract, or subject to any Judgment applicable to such
persons that would interfere with such person's ability to promote the interests
of the Company or such Subsidiary or that would conflict with the Company's or
such Subsidiary's business as proposed to be conducted. The execution, delivery
and performance of this Agreement and the Ancillary Agreements, the carrying on
of the Company's business or the business of any Subsidiary by the officers,
employees or consultants of the Company
23
or such Subsidiary, the conduct of the Company's business or the business of any
Subsidiary as proposed, (i) do not, and to the Company's knowledge, will not,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any material Contract to which the Company or any
Subsidiary is a party under which any of such officers, employees or consultants
is now obligated and (ii) to the Company's knowledge, do not and will not
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any material Contract to which neither the
Company nor any Subsidiary is a party under which any of such officers,
employees or consultants is now obligated.
(b) Each officer or employee of, or consultant to, the Company and any
Subsidiary, who has access to confidential or proprietary information of the
Company or any Subsidiary, is a signatory to, and is bound by, an agreement with
the Company or such Subsidiary relating to confidentiality, nondisclosure,
proprietary information and assignment of patent, copyright and other
intellectual property rights.
(c) To the Company's knowledge, no officer or employee of, or
consultant to, the Company or any Subsidiary is in violation of any material
term of any employment contract, consulting agreement, patent disclosure
agreement, proprietary information agreement, noncompetition agreement,
nonsolicitation agreement or any other Contract including, but not limited to,
those matters relating to (i) the relationship of any such employee with the
Company or to any other party as a result of the nature of the Company's
business as currently conducted, or (ii) unfair competition, Trade Secrets (as
defined in Section 4.11(a)) or proprietary information, and to the Company's
knowledge, the continued employment or engagement of the Company's or any
Subsidiary's officers, employees and consultants does not subject the Company or
any Subsidiary or Buyer to any liability with respect to any of the foregoing
matters.
(d) The Company does not believe it is or will be necessary to utilize
any Trade Secrets of any of its employees or employees of any Subsidiary (or
people it currently intends to hire) made prior to their employment by the
Company or any such Subsidiary.
(e) Since the Balance Sheet Date, the Company and each Subsidiary has
employed employees sufficient to conduct its business as currently conducted and
since such time no officer or key employee of the Company or any of its
Subsidiaries has terminated his employment with the Company or any such
Subsidiary or, to the knowledge of the Company, advised the Company or any of
its Subsidiaries (orally or in writing) that such person intends to terminate
employment with the Company or any such Subsidiaries and the Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company or any of its
Subsidiaries, except to the extent such termination of the employment of any of
the foregoing would not reasonably be expected to result in a Company Material
Adverse Effect, nor does the Company have any present intention to, or cause any
Subsidiary to, terminate the employment of any of the foregoing. As of the date
hereof, to the Company's knowledge, the key employees are available to commit
their full-time employment efforts to the business of the Company or the
Subsidiaries.
24
4.11 INTELLECTUAL PROPERTY.
[**]
4.12 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any
Subsidiary has taken any action that conflicts with, constitutes a default
under, or results in a violation of, any provision of the Current Certificate,
the By-laws (or, with respect to foreign Subsidiaries, other similar
organizational or operational documents of such foreign Subsidiary) or a
Judgment applicable to the Company or any Subsidiary.
4.13 RELATED PARTY AGREEMENTS; OTHER ACTION
(a) There are no agreements, understandings, transactions or proposed
transactions between the Company or any of its Subsidiaries and, directly or
indirectly, any of their respective officers, directors, stockholders, or any
Affiliate thereof, other than this Agreement, the Ancillary Agreements and the
Second Amended and Restated Stockholders' Agreement.
(b) Neither the Company nor any Subsidiary has admitted in writing its
inability to pay its debts generally as they become due, filed or consented to
the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made an assignment for the benefit of
creditors, consented to the appointment of a receiver for itself or for the
whole or any substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or any
other laws of the United States or any other jurisdiction.
4.14 MATERIAL CONTRACTS AND OBLIGATIONS.
(a) As of the date hereof, Section 4.14(a) of the Company Disclosure
Schedule sets forth a true, complete and accurate list (or summaries as to oral
contracts) of all of the following Contracts to which the Company or any
Subsidiary is a party or by which any of their assets is bound, all:
(i) Contracts for the purchase or sale of services, materials, products
or supplies which involve aggregate payments by the Company or any
Subsidiary of more than one hundred thousand dollars ($100,000) for each
such Contract or involve aggregate payments to the Company or any
Subsidiary of more than one hundred thousand dollars ($100,000) for each
such Contract;
(ii) Contracts or arrangements providing for stock options or stock
purchases, bonuses, pensions, deferred or incentive compensation,
retirement or severance payments, profit-sharing, insurance or other
benefit plans or programs for any founder, officer, consultant, director or
employee of the Company or any of the Subsidiaries other than pursuant to
the Plan;
(iii) Contracts for construction or for the purchase of real estate,
improvements, fixtures, equipment, machinery and other items which under
25
GAAP constitute capital expenditures and involve aggregate payments by
the Company or any Subsidiary in excess of seventy-five thousand
dollars ($75,000);
(iv) Contracts relating to the rental or use of equipment, vehicles,
other personal property or fixtures, except for Contracts individually
involving payment of annual rentals or sums less than fifty thousand
dollars ($50,000) and in the aggregate for the Company or any of the
Subsidiaries less than one hundred thousand dollars ($100,000);
(v) Contracts relating in any way to Indebtedness, except in each case
for Contracts individually involving less than seventy-five thousand
dollars ($75,000);
(vi) Contracts substantially restricting the Company or any
Subsidiaries from engaging in any line of business or competing with any
Person or in any geographical area, or from using or disclosing any
information in its possession other than customary confidentiality and
non-disclosure agreements entered into in the ordinary course of business;
(vii) material license and sublicense agreements with respect to
Intellectual Property, either as licensor, licensee, sublicensor or
sublicensee, other than licenses for "off-the-shelf" software used for
information management and general office tasks;
(viii) material joint venture or collaboration Contracts and other
Contracts involving a sharing of profits, revenue or cash flow;
(ix) Contracts not made in the ordinary course of its business;
(x) written Contracts for services with any officer, consultant,
director or employee and any such oral Contracts which are not terminable
at will by the Company or any Subsidiaries, other than consulting
agreements involving the annual payment of less than twenty thousand
dollars ($20,000);
(xi) Contracts pursuant to which the Company or any Subsidiary is
subject to material indemnification obligations; and
(xii) other material Contracts.
(b) As of the date hereof, the Company is not engaged in any
negotiations with respect to material Contracts that the Company reasonably
expects will lead to execution of any such Contract. All Contracts required to
be disclosed to Buyer pursuant to this Section 4.14 are valid, binding and in
full force and effect as to the Company or a Subsidiary, and neither the Company
nor, to the Company's knowledge, any other party thereto, is in material breach
or violation of, or material default under, nor, to the knowledge of the
Company, is there any reasonable basis for a claim of such breach or violation
by the Company or such default by the Company or Subsidiaries under, the terms
of any such Contract, and no event has occurred which constitutes or,
26
with the lapse of time or the giving of notice or both, would constitute, such a
material breach, violation or default by the Company or Subsidiaries thereunder.
To the knowledge of the Company, all other parties to such Contracts are in
material compliance with the terms and obligations of such Contracts. The
Company has furnished or made available to Buyer a true, complete and correct
copy of all written Contracts, including all amendments thereto, listed in
Section 4.14(a) of the Company Disclosure Schedule.
4.15 OWNED REAL PROPERTY. Neither the Company nor any Subsidiary owns,
nor has ever owned, any real property.
4.16 TITLE TO PROPERTY AND ASSETS. The Company and each Subsidiary has
good and valid title to all of its assets, free and clear of all Encumbrances,
except as would not reasonably be expected to result in a Company Material
Adverse Effect. Each lease of real or personal property to which the Company or
any Subsidiary is a party is in full force and effect, affords the Company and
such Subsidiary, as the case may be, peaceful and undisturbed possession of the
subject matter of the lease, and is free of any material Encumbrances. Each such
lease constitutes a valid and binding obligation of and, to the Company's
knowledge, is enforceable in accordance with its terms against, the respective
parties thereto. With respect to the leased property and assets that are
material to the Company and each Subsidiary, the Company and such Subsidiary is
in compliance in all material respects with such leases, has not received notice
of any allegations that they are in and, to the Company's knowledge no event has
occurred which, with the giving of notice or the lapse of time, or both, would
be, in default thereunder in any material respect and hold a valid leasehold
interest free of any Encumbrances. The Company has furnished or made available
to Buyer a true, complete and correct copy of all leases, including, all
amendments thereto, listed in Section 4.16 of the Company Disclosure Schedule.
This Section 4.16 shall not be deemed to be a representation and warranty with
respect to the subject matter of Section 4.11 (Intellectual Property).
4.17 SUFFICIENCY OF PROPERTY AND ASSETS. The real and personal property
and assets owned, leased by or licensed to the Company and each Subsidiary and
used in the operation or conduct of business of the Company or such
Subsidiaries, constitute all of the material real and personal properties and
assets, tangible and intangible (other than with respect to such property which
is the subject matter of Section 4.11 (Intellectual Property)), which are
necessary in the current operation or conduct of their business and such
property or assets are in good condition and repair, except as would not
reasonably be expected to result in a Company Material Adverse Effect.
4.18 FINANCIAL STATEMENTS. Set forth in Section 4.18(a) of the Company
Disclosure Schedule are the Company's audited Consolidated Statements of
Operations, Consolidated Statements of Shareholders' Deficit and Comprehensive
Loss and Consolidated Statements of Cash Flow, in each case for the years ended
December 31, 2000, 2001 and 2002 and its audited Consolidated Balance Sheets as
of December 31, 2001 and 2002 (the "Financial Statements"). The Company has
delivered to Buyer its unaudited Consolidated Balance Sheets, Consolidated
Statements of Operations, Consolidated Statements of Shareholders' Deficit and
Comprehensive Loss and
27
Consolidated Statements of Cash Flow as of and for all quarterly periods in 2001
and 2002. Set forth in Section 4.18(b) of the Company Disclosure Schedule are
true, correct and complete copies of the Company's fiscal year 2003 annual
budget (the "2003 Annual Budget"). The Financial Statements have been prepared
in accordance with United States generally accepted accounting principles and
practices as in effect from time to time and applied on a consistent basis
throughout the periods indicated ("GAAP") and fairly present, in all material
respects, the financial condition operating results of the Company as of the
dates, and for the periods, indicated therein. Except as set forth in the
Financial Statements, the Company has no material liabilities (matured or
unmatured, contingent or otherwise), other than (i) liabilities incurred in the
ordinary course of business subsequent to December 31, 2002, (ii) obligations
and liabilities of the type not required under GAAP to be reflected in the
Financial Statements and (iii) liabilities, individually or in the aggregate,
which are not material to the financial condition or operating results of the
Company. The Company maintains and consistently applies a standard system of
accounting established and administered in accordance with GAAP.
4.19 EMPLOYEE BENEFIT PLANS
(a) Section 4.19(a) of the Company Disclosure Schedule contains a list
and brief description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA and sometimes referred to
herein as "Welfare Plans") and each other "Benefit Plan" (defined herein as any
Pension Plan, Welfare Plan and any other plan, fund, program, arrangement or
agreement (including any employment or consulting agreement) to provide
employees, directors, independent contractors, consultants, officers or agents
with medical, health, life, bonus, stock or stock-based right (option, ownership
or purchase), retirement, deferred compensation, severance, salary continuation,
vacation, sick leave, fringe, incentive insurance or other benefits) maintained,
or contributed to, or required to be contributed to, by the Company or any
Subsidiary for the benefit of any current or former independent contractors,
consultants, agents, employees, officers or directors of the Company or any
Subsidiary. The Company has no present commitments to pay any employees,
directors, independent contractors, consultants, officers or agents of the
Company or any Subsidiary any bonus for the current fiscal year whether upon the
achievement of any performance target or otherwise. Section 4.19(a) of the
Company Disclosure Schedule contains a brief description of (i) the Company's
historical bonus plan or arrangements (whether written or oral) pursuant to
which any employees, directors, independent contractors, consultants, officers
or agents of the Company or any Subsidiary received a bonus payment of any kind
for services rendered during the fiscal years ended December 31, 2001 and
December 31, 2002 and the amounts actually received by such employees,
directors, independent contractors, consultants, officers or agents for such
periods and (ii) the amount of cash payments that will or could become payable
and the individuals who will or might receive such payments upon the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements. The Company has delivered or made available to Buyer true,
complete and correct copies of (i) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (ii) the most recent annual
28
report on Form 5500 filed with the Internal Revenue Service with respect to each
Benefit Plan (if any such report was required), (iii) the most recent summary
plan description for each Benefit Plan for which such summary plan description
is required, (iv) each trust agreement and group annuity contract relating to
any Benefit Plan; (v) a list of all assets and liabilities of, allocated to or
accounted for separately with respect to every Benefit Plan (including insurance
contracts associated with every Benefit Plan regardless of whether any current
cash value exists); and (vi) the most recent determination letter from the
Internal Revenue Service, if any.
(b) Each Benefit Plan has been established, funded, maintained and
administered in all material respects in accordance with its terms and is in
material compliance with the applicable provisions of ERISA, the Code (as
defined in Section 12.15(a)), all other Applicable Law applicable to the Company
or any Company Benefit Plan.
(c) All Pension Plans have been the subject of favorable and up-to-date
(through any applicable remedial amendment period) determination letters from
the Internal Revenue Service, or a timely application therefor has been filed or
will be filed, to the effect that such Pension Plans are qualified and exempt
from federal income taxes under Section 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has any such Pension
Plan been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification.
(d) None of the Company, nor any Subsidiary, nor any other Person that,
together with the Company, is or was treated as a single employer under Section
414(b), (c), (m) or (o) of the Code has (i) maintained, sponsored or been
required to contribute to a plan subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code or (ii) been required at any time or is required
currently to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(e) Neither the Company nor any Subsidiary has any liability for life,
health, medical or other welfare benefits for former employees or beneficiaries
or dependents thereof with coverage or benefits under Benefit Plans other than
Pension Plans, other than as required by Section 4980B of the Code or Part 6 of
Title I of ERISA.
(f) All contributions or premiums owed by the Company or any Subsidiary
with respect to Benefit Plans under law, Contract or otherwise have been made in
full and on a timely basis.
(g) To the Company's knowledge, no Pension Plan or Welfare Plan or any
"fiduciary" or "party-in-interest" (as such terms are respectively defined by
Sections 3(21) and 3(14) of ERISA) thereto has engaged in a transaction
prohibited by Section 406 of ERISA or 4975 of the Code for which a valid
exception is not available and which resulted in the imposition of a material
tax.
29
(h) There are no pending or, to the Company's knowledge, threatened,
claims, lawsuits, arbitrations or audits asserted or instituted against any
Benefit Plan, any fiduciary (as defined by Section 3(21) of ERISA) thereto, the
Company, any Subsidiary or any employee or administrator thereof in connection
with the existence, operation or administration of a Benefit Plan, other than
routine claims for benefits.
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or in combination with
the occurrence of any additional or subsequent events) constitute an event under
any Benefit Plan or other agreement that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
Indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employee, director or consultant
of the Company or any Subsidiary. No payments or benefits under any Benefit Plan
or other agreement would result in an "excess parachute payment" under Section
280G of the Code. No employment agreement or other agreement between the Company
and an employee or officer of the Company provides for an additional payment to
the employee or officer as reimbursement for the excise tax imposed by Section
4999 of the Code.
4.20 TAXES. The Company and each Subsidiary has filed in a timely
manner all federal, state, local and foreign income (and similar) Tax Returns
(as defined in Section 12.15(a)) and all other material Tax Returns required to
be filed by it. Such Tax Returns are true, correct and complete in all material
respects. The Company and each of its Subsidiaries has timely paid all Taxes
required to be paid by it. The accrued but unpaid Taxes of the Company and each
of its Subsidiaries as of the date of the Financial Statements (including any
such Taxes that are not yet due and payable) did not materially exceed the
reserve for Taxes (excluding reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth in the Financial
Statements. The Tax Returns of the Company and each Subsidiary have never been
audited by the Internal Revenue Service or other taxing authority, and neither
the Company nor any Subsidiary has agreed to an extension of the statute of
limitations with respect to any tax year. Neither the Internal Revenue Service
nor any other taxing authority is now asserting, nor has threatened in writing
to assert, against the Company or any Subsidiary any deficiency or claim for
additional Taxes. All Taxes that the Company or any Subsidiary is or was
required by law to have withheld or collected have been duly withheld or
collected and, to the extent required, have been paid to the proper taxing
authority, and the Company has complied with all other material Applicable Laws
related to withholding Taxes. No claim has ever been made in writing by any
taxing authority with respect to the Company or any Subsidiary in a jurisdiction
where the Company or such Subsidiary does not file Tax Returns that the Company
or such Subsidiary is or may be subject to taxation by that jurisdiction.
Neither the Company nor any Subsidiary has been a member of an affiliated group
filing consolidated, combined or unitary Tax Returns other than a group for
which the Company is the common parent. Neither the Company nor any Subsidiary
is a party to any Contract relating to indemnification for, or allocating or
sharing the payment of, or liability for, Taxes, and neither the Company nor any
Subsidiary has any liability for Taxes of any other Person, as a transferee or
successor, by Contract or otherwise, except liability for Taxes of the Company
and each
30
Subsidiary under Treasury Regulation Section 1.1502-6 (and similar provisions of
state, local or foreign law) for a consolidated, combined or unitary group of
which the Company is the common parent. The Company has not distributed the
stock of any corporation in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997, and the stock of the Company has not been
distributed in such a transaction.
4.21 INSURANCE. Copies of, all policies of title, liability, fire,
worker's compensation and other forms of insurance (including bonds) insuring
the Company's and each Subsidiary's properties, assets and operations have been
provided or made available to Buyer. The Company and each Subsidiary has in full
force and effect fire, casualty and liability insurance policies (including
product liability), with coverage, in the case of property insurance, sufficient
in amount (subject to reasonable deductibles) to allow it to replace any
properties of a type covered by such policies that might be damaged or
destroyed, and in the case of casualty and liability insurance (including
product liability), in amounts customary and adequate for businesses similar to
the business of the Company.
4.22 LABOR AGREEMENTS AND ACTIONS
(a) Neither the Company nor any Subsidiary is a party to or bound by
any collective bargaining or similar agreement with any labor organization, or
work rules or practices agreed to with any labor organization or employee
association applicable to employees of the Company or any Subsidiary. None of
the employees of the Company or any Subsidiary are represented by any labor
organization and the Company does not have any knowledge of any current union
organizing activities among the employees of the Company or any Subsidiary.
There is no labor strike, dispute, slowdown, work stoppage or lockout pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary and during the past three years, there has not been any such action.
There is no unfair labor practice or labor arbitration proceeding pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
relating to their business.
(b) The Company and each Subsidiary is in compliance with all material
Applicable Laws applicable thereto respecting employment, employment practices,
terms and conditions of employment, employee classification and wages and hours,
in each case, with respect to current and former employees of the Company and
any Subsidiary.
4.23 GOVERNMENTAL REGULATIONS. Neither the Company nor any Subsidiary
is an "investment company" as such term is defined in the Investment Company Act
of 1940, as amended. Neither the Company nor any Subsidiary is now, nor has it
been within the past five years, a "United States real property holding
corporation" as defined in Section 897 of the Code.
4.24 OFFERING; SECURITIES LAWS. Neither the Company nor any Subsidiary
or any authorized agent acting on its behalf has (i) offered securities of the
Company or the Parent for sale to any Person, or solicited any offers to buy
securities of
31
the Company or the Parent from, or sold securities of the Company or Parent to
any Person, in any case so as to subject the Company, its promoters, directors
or officers or Buyer or Parent to any liability under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any state
securities or Blue Sky law (collectively, the "Securities Laws"), or any other
Applicable Laws or (ii) taken any action, or permitted any action to be taken on
its behalf, that violates or conflicts with applicable Securities Laws or would
cause the loss of any applicable exemption or would require Buyer's purchase of
the Purchased Shares or the issuance of Parent ADSs to be registered pursuant to
Applicable Law.
4.25 ENVIRONMENTAL MATTERS.
(a) Neither the Company nor any Subsidiary is in material violation of
any Environmental Law (as defined below) and, to its knowledge, no material
expenditures are or will be required in order to comply with any Environmental
Law. As used in this Agreement, "Environmental Law" shall mean any applicable
federal, state and local law, ordinance, rule or regulation of any nation or
government whether federal, state, municipal, local, provincial, regional or
other political subdivision thereof that regulates, fixes liability for, or
otherwise relates to, the environment or workplace health and safety, including,
without limitation, the handling, use (including use in industrial processes, in
construction, as building materials, or otherwise), treatment, storage presence,
actual Release (as defined below) or threatened Release (whether by disposal, a
discharge into any water source or system or into the air, or otherwise) of any
Hazardous Materials (as defined below). The term "Release" shall mean any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, migrating, dumping or disposing into the environment.
(b) Neither the Company nor any Subsidiary has used, generated,
manufactured, refined, treated, transported, stored, handled, transferred,
produced, processed or Released any Hazardous Materials on, from or affecting
any Property (as defined below) in any manner or by any means in material
violation of any Environmental Laws and, to the Company's knowledge, there is no
threat of such use, generation, manufacture, refining, treatment,
transportation, storage, handling, transfer, production, processing or Release.
As used herein, the term "Property" shall include, without limitation, land,
buildings and laboratory facilities owned or leased or otherwise used by the
Company or any Subsidiary or as to which the Company or such Subsidiary now has
any duties, responsibilities (for cleanup, remedy or otherwise) or liabilities
under any Environmental Laws, or as to which the Company or any Subsidiary may
have such duties, responsibilities or liabilities because of past acts or
omissions of the Company or any such Subsidiary or their predecessors, or
because the Company or any such Subsidiary or their predecessors in the past was
such an owner or operator of, or bore some other relationship with, such land,
buildings or laboratory facilities. The term "Hazardous Materials" shall mean
any flammable explosives, petroleum products, petroleum by-products, radioactive
materials, hazardous wastes, hazardous substances, toxic substances, pollutants,
contaminants, or other materials regulated or defined as such by Environmental
Laws.
32
(c) The Company has not received written notice that it or any
Subsidiary is a party potentially responsible for environmental cleanup costs
incurred at a site or for corrective action under any Environmental Laws. The
Company has not received any written requests for information in connection with
any inquiry by any Governmental Entity concerning disposal sites or other
environmental matters.
(d) The stockholders of the Company have had no control over, or
authority with respect to, and have not exercised control over the waste
disposal operations of the Company or any Subsidiary. The Company has not
exercised control over the waste disposal operations of any Subsidiary.
(e) This Section 4.25 shall not be deemed to be a representation and
warranty with respect to the subject matter of Section 4.28 (Regulatory Agency
Matters), and in no event shall this Section 4.25 be deemed to constitute a
representation and warranty relating to the administration of any Regulated
Product (as defined in Section 12.15(a)).
4.26 COMMERCIAL RELATIONSHIPS. No material supplier, distributor,
collaborator, licensor or licensee has canceled or otherwise terminated its
relationship with the Company or any Subsidiary or has, since the Balance Sheet
Date, materially adversely altered its relationship with the Company or any
Subsidiary. The Company does not know of any plan or intention of any such
entity, and has not received any written threat or notice from any such entity,
to terminate, cancel or otherwise materially and adversely modify its
relationship with the Company or any Subsidiary.
4.27 LICENSES AND OTHER RIGHTS; COMPLIANCE WITH LAWS.
(a) The Company and each Subsidiary has all licenses, permits,
franchises, Consents, concessions, registrations or similar rights and other
authorizations of Governmental Entities (collectively, "Permits"), required to
own and lease its properties and assets and to conduct its business as now
conducted, except for such Permits the failure of which to obtain would not
reasonably be expected to result in a Company Material Adverse Effect. Section
4.27 of the Company Disclosure Schedule sets forth a list of each material
Permit so required or used by the Company or any Subsidiaries in the operation
or conduct of its business. No registrations, filings, applications, notices,
transfers, Consents, audits, qualifications or other action of any kind is
required by virtue of the execution and delivery of this Agreement or the
Ancillary Agreements by the Company and the Sellers or of the consummation by
the Company and the Sellers of the transactions contemplated hereby or thereby
(i) to avoid the loss of any such Permit or any material asset, property or
right pursuant to the terms thereof or (ii) to enable the Company or any
Subsidiary to hold and enjoy such Permit after the Closing Date in the operation
or conduct of its business as conducted prior to the Closing Date. To the
Company's knowledge, no event has occurred which (i) is reasonably likely to
result in the finding that the Company or any of the Subsidiaries is unqualified
to hold any material Permit, (ii) permits, or after notice or lapse of time or
both would permit, the revocation or termination of any of the material Permits
or the denial of an application for
33
the renewal thereof or (iii) would result in any impairment of the rights of the
Company or any Subsidiary as holder of any such material Permit.
(b) The Company and each Subsidiary has been and is in compliance with
all material Applicable Laws including, without limitation, all such rules, laws
and regulations relating to fair employment practices. Since January 1, 2000,
neither the Company nor any Subsidiary has entered into or been subject to any
material Judgment or Consent with respect to any aspect of the business,
affairs, properties or assets of the Company or such Subsidiary or received any
request for information, notice, demand letter, administrative inquiry or formal
or informal complaint or claim from any Governmental Entity with respect to any
material aspect of the business, affairs, properties or assets of the Company or
such Subsidiary.
(c) Neither the Company nor any Subsidiary: (i) has made any
contributions, payments or gifts of its property to or for the private use of
any official, employee or agent of any Governmental Entity or educational
institution where either the payment or the purpose of such contribution,
payment or gift is illegal under any Applicable Law, (ii) has established or
maintained any unrecorded fund or asset for any purpose other than promotional
funds, or intentionally made any false or artificial entries on its books or
records for any reason, (iii) has made any payments to any Person or
Governmental Entity where the Company or such Subsidiary intended or understood
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment or (iv) has made any
contribution, or reimbursed any political gift or contribution made by any other
Person, to candidates for public office, whether federal, state or local, where
such contribution would be in violation of Applicable Law.
(d) Sections 4.27(a) and 4.27(b) do not relate to Regulatory Agency (as
defined in Section 12.15(a)) or Regulatory Law (as defined in Section 12.15(a))
matters, which are the subject of Section 4.28 (Regulatory Agency Matters).
4.28 REGULATORY AGENCY MATTERS.
(a) The Company and each Subsidiary possess the Regulatory Agency
approvals and applications (as defined in Section 12.15(a)) required as of the
date hereof based on the current development and marketing status of the
Candidates under applicable Regulatory Laws to conduct its current businesses,
to manufacture Regulated Products and to use and occupy the property used in the
operation and conduct of the Company's or such Subsidiary's business. All such
Regulatory Agency approvals and applications are in full force and effect.
(b) There are no facts or circumstances known to the Company that would
reasonably be expected to lead to any Regulatory Agency approvals and
applications possessed by and material to the Company or any Subsidiary being
revoked, suspended, canceled or not renewed. The Company and each Subsidiary
have submitted all necessary reports and filings to all Regulatory Agencies.
34
(c) The execution and delivery of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated hereby or
thereby, will not adversely affect the validity or require the transfer of any
Regulatory Agency approvals and applications held by the Company or any
Subsidiary.
(d) The Company and each Subsidiary are in material compliance with,
and have materially complied with, all applicable Regulatory Laws and have not
received any notice citing action or inaction by the Company or any Subsidiary
that would constitute any material non-compliance with any Regulatory Laws
within the past three (3) years.
(e) There is no civil, criminal or administrative action, suit, demand,
claim, complaint, hearing, notice of violation, investigation, notice, demand
letter, proceeding or request for information pending or any liability (whether
actual or contingent), in each case, for failure to comply with any Regulatory
Laws that requires any material change in any manufacturing procedures by the
Company or any Subsidiary or any material repair, reinstatement or clean-up of
any property, assets or equipment used in the operation and conduct of the
Company's or any Subsidiary's business. There is no act, omission, event or
circumstance of which the Company has knowledge that would reasonably be
expected to give rise to any such action, suit, demand, claim, complaint,
hearing, notice of violation, investigation, notice, demand letter, proceeding
or request for information or any such liability:
(i) against, involving or of the Company or any Subsidiary; or
(ii) against, involving or of any other Person or Governmental Entity
(including, without limitation, any Company Contractor (as defined in
Section 12.15(a))) which would reasonably be expected to result in a
material liability to the Company.
(f) There has not been any material violation of any Regulatory Laws by
the Company or any Subsidiary in their prior product developmental efforts,
clinical studies, submissions or reports to the Regulatory Agencies (or any
failure to make any such submission or report) that could reasonably be expected
to require investigation, corrective action or enforcement action.
(g) The Company, its Subsidiaries and their respective agents (in their
capacities as such agents) have registered with the Regulatory Agencies all
facilities required to be registered and have listed all Regulated Products
required to be listed with the Regulatory Agencies, in each case, based on the
current development status of the Candidates.
4.29 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Banc of America Securities LLC ("Banc of America"), the Company's financial
advisor, to the effect that, as of the date hereof, the consideration to be
received by each Seller, other than the Major Stockholders (as defined in such
opinion), in the
35
transaction contemplated by this Agreement, is fair from a financial point of
view to such stockholders, and has provided Buyer with a copy of such opinion.
4.30 BROKER OR FINDERS. Except for the fees and expenses of Banc of
America, which are payable by the Company, neither the Company nor any
Subsidiary has incurred, or will incur, directly or indirectly, as a result of
any action taken by the Company or any Subsidiary, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement, any of the Ancillary Agreements or any transaction
contemplated hereby or thereby.
4.31 CORPORATE RECORDS. The Company has made available to Buyer the
minute books of the Company and each Subsidiary and such minute books contain
summaries, complete in all material respects, of all meetings and consents in
lieu of meetings of the Board (as defined in Section 12.15(a)) and the board of
directors or any other similar governing body of such Subsidiaries, committees
thereof and stockholders since the time of incorporation and accurately reflect
all material transactions of the Company and each Subsidiary in all material
respects.
4.32 QUALIFIED PRIVATE OFFERING. The transaction contemplated by this
Agreement shall constitute a Qualified Private Offering in accordance with the
terms of the Current Certificate and the Second Amended and Restated
Stockholders' Agreement.
4.33 TAKEOVER STATUTES . As of the date hereof, no "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
or regulation applies to any of the transactions contemplated by this Agreement,
other than with respect to any of the foregoing that may apply by virtue of the
jurisdiction of organization of Buyer or Parent.
4.34 STOCKHOLDER APPROVAL. The Company has received the Stockholder
Consent executed by certain Sellers and other stockholders that are signatories
thereto to duly authorize and approve the matters, actions and transactions
contemplated therein.
4.35 RESTATED CERTIFICATES AND AMENDED AND RESTATED BY-LAWS. The Board
has duly and validly resolved to adopt the Restated Certificates and the Amended
and Restated By-laws.
4.36 RELIANCE. The Company understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by Buyer.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants, as of the date hereof and as of the Closing Date, and in the case of
Section 5.2(b) and Section 5.2(c) (but only to the extent such representations
and warranties relate to Parent ADSs), Section 5.3 (SEC Reports), Section 5.4
(Issuance of Shares) and Section 5.9 (Offer and Sale of Parent ADSs), as of each
Contingent Payment Date to the extent a Contingent Payment made on such date
consists in whole or in part of Parent ADSs, to the Company and each Seller as
follows:
36
5.1 ORGANIZATION, COMPLIANCE AND QUALIFICATION. Each of Parent and
Buyer is an aktiengesellschaft duly organized, validly existing and in
compliance with the laws of Switzerland. Each of Parent and Buyer has all
requisite corporate power and corporate authority to operate (only as to Buyer)
and own its properties and assets, to carry on its business as now conducted, to
enter into this Agreement and the Ancillary Agreements (only as to Buyer) and to
carry out its obligations hereunder and thereunder. Each of Buyer and Parent is
duly qualified to transact business and is in good standing in each jurisdiction
in which the nature of its business or property makes such qualification
necessary, except where the failure of either of Buyer or Parent to be so
qualified or be in good standing would not reasonably be expected to materially
adversely effect the ability of Buyer or Parent to consummate the transactions
contemplated hereby or thereby.
5.2 AUTHORIZATION, CONSENTS AND COMPLIANCE WITH OTHER INSTRUMENTS.
(a) All corporate action on the part of Buyer and Parent, their
respective officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Ancillary Agreements and the
performance of the obligations of Parent (only as to this Agreement) and Buyer
contemplated hereby and thereby have been taken, or will be taken prior to
Closing or, with respect to the issuance and delivery of Parent ADSs, the
applicable Contingent Payment Date. This Agreement and the Credit Agreement have
been, and the other Ancillary Agreements will be prior to Closing, validly
executed and delivered by Parent (only as to this Agreement) and Buyer and,
assuming this Agreement and each Ancillary Agreement constitute valid and
legally binding obligations of the Company, constitute or will constitute valid
and legally binding obligations of Parent (only as to this Agreement) and Buyer,
enforceable against Parent (only as to this Agreement) and Buyer in accordance
with their terms, except (i) as the enforcement hereof or thereof may be limited
by (A) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally or (B) equitable principles, including those limiting the
availability of specific performance, injunctive relief and other equitable
remedies and those providing for equitable defenses, or (ii) to the extent the
indemnification provisions contained in the Stockholders' Agreement or this
Agreement may be limited by applicable Securities Law.
(b) No Consent of, (i) or registration, qualification, designation,
declaration, notification or filing with, any Governmental Entity or (ii) any
party to any Contract to which Parent or Buyer is a party or by which it is
bound, is required in connection with the valid execution, delivery and
performance of this Agreement or the Ancillary Agreements by Parent (only as to
this Agreement) and Buyer or the consummation by Parent and Buyer of the
transactions contemplated hereby or thereby (only as to Buyer), except (A) as
may be required pursuant to Securities Laws, which registrations,
qualifications, designations, declarations, notifications or filings, if
required, shall be accomplished by Buyer or Parent, as applicable, prior to
Closing, (B) as may be required pursuant to the HSR Act or the EC Regulation or
any other similar foreign antitrust or trade regulation laws to the extent
applicable to Buyer or Parent or (C) such Consents of (x) or registrations,
qualifications, designations, declarations,
37
notifications or filings with, any Governmental Entity or (y) any parties to any
Contract to which Buyer is a party or by which Buyer is bound, in the case of
this clause (C), the failure of which Consents to obtain, or registrations,
qualifications, designations, declarations, notifications or filings to make,
would not be reasonably likely to materially and adversely affect the ability of
the Parties to perform their obligations or to consummate the transactions
contemplated thereby (only as to Buyer) or hereby.
(c) Subject to compliance with the applicable requirements of the HSR
Act, EC Regulation and any other similar foreign antitrust or trade regulation
laws applicable to Buyer or Parent, neither the execution, delivery and
performance by Buyer or Parent of this Agreement and the Ancillary Agreements
(only as to Buyer), nor the consummation by Buyer or Parent of the transactions
contemplated hereby or thereby (only as to Buyer), nor the compliance by Buyer
or Parent with any of the provisions thereof (only as to Buyer) or hereof, will:
(i) violate or conflict with any Applicable Law applicable to Buyer or
Parent or Judgment applicable to Buyer or Parent;
(ii) conflict with or violate any provision of the Articles of
Incorporation or by-laws of Buyer or Parent; or
(iii) conflict with or violate any provision of the Deposit Agreement
(as defined in Section 5.4(c)) or any other agreement to which Parent is a
party relating to the Parent ADSs.
5.3 SEC REPORTS. The Company has had access, via the Securities and
Exchange Commission's (the "SEC") website, to Parent's Annual Report on Form
20-F for the year ended December 31, 2002 and all other documents filed by
Parent with the SEC under the Exchange Act since January 1, 2002 (the "Parent
SEC Reports"). As of their respective dates, each of the Parent SEC Reports
complied in all material respects with applicable SEC requirements and did not
contain any untrue statements of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.4 ISSUANCE OF SHARES.
(a) Each Parent ADS is listed on the New York Stock Exchange and, as of
the date hereof, represents one registered ordinary share of Parent, nominal
value CHF 0.50 per share (a "Registered Share"). Parent ADSs and the Registered
Shares underlying Parent ADSs, when issued in accordance with the provisions of
this Agreement, will be duly authorized, validly issued, fully paid,
nonassessable and free from any Encumbrance.
(b) The offer, issuance, sale and delivery of Parent ADSs and the
Registered Shares underlying such Parent ADSs pursuant to the terms of this
Agreement is in full compliance with all Applicable Laws, is exempt from the
registration
38
requirements of the Securities Laws and will be issued in compliance with such
Securities Laws.
(c) Upon the due issuance by JPMorgan Chase Bank, as depositary, of the
Parent ADSs and any American Depositary Receipts evidencing such Parent ADSs in
accordance with this Agreement and the provisions of the Amended and Restated
Deposit Agreement, dated as of May 11, 2000, as amended as of September 29, 2000
and May 7, 2001, and supplemented by the Restricted Issuance Agreement as of
January 11, 2002, among Parent, JPMorgan Chase Bank, as depositary, all holders
from time to time of Parent ADSs (the "Deposit Agreement"), such Parent ADSs
will be duly and validly issued, and the persons in whose name such Parent ADSs
are registered will be entitled to the rights of registered holders of Parent
ADSs specified in the Deposit Agreement. Assuming that the Depositary Agreement
constitutes a valid and legally binding obligation of JPMorgan Chase Bank, the
Depositary Agreement constitutes a valid and legally binding obligation of
Parent, enforceable against Parent in accordance with its terms, except (i) as
the enforcement thereof may be limited by (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally or (ii) equitable principles,
including those limiting the availability of specific performance, injunctive
relief and other equitable remedies and those providing for equitable defenses.
(d) Parent's registration statement on Form F-6, as amended, on which
Parent ADSs are registered has been declared effective under the Securities Act
and no stop order suspending the effectiveness of such registration statement or
any part thereof has been issued and no proceedings for that purpose have been
instituted or are pending or, to Parent's knowledge, contemplated under the
Securities Act, and such registration statement, and each amendment thereof, as
of the effective date of such amendment, complied as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder.
5.5 BUYER MATTERS.
(a) Buyer is an indirect wholly owned subsidiary of Parent. Novartis
BioVentures Ltd. is an Affiliate of Buyer. The shares of capital stock of the
Company held by Novartis BioVentures Ltd. are beneficially owned (as defined in
Rule 13(d) of the Exchange Act) by Parent. Except for the shares of capital
stock held by Novartis BioVentures Ltd. and, other than as contemplated in this
Agreement and the Ancillary Agreements, neither Parent nor Buyer beneficially
owns, directly or indirectly, any capital stock of the Company or is a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any capital stock of the Company.
(b) [**].
(c) Buyer acknowledges that the Purchased Shares have not been
registered under the Securities Laws or the laws of any other jurisdiction and
cannot be resold without registration under such laws or an exemption therefrom.
39
5.6 PURCHASE ENTIRELY FOR OWN ACCOUNT. Buyer (i) hereby confirms that
the Purchased Shares will be acquired for investment for Buyer's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and Buyer has no present intention of selling, granting any
participation, or otherwise distributing the Purchased Shares and (ii) further
represents that Buyer does not have any Contract or undertaking with any Person
to sell, transfer or grant participation to such Person or to any third person,
with respect to any of the Purchased Shares.
5.7 BROKER OR FINDERS. Buyer has not incurred, nor will incur, directly
or indirectly, as a result of any action taken by Buyer, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement, any of the Ancillary Agreements or any
transaction contemplated hereby or thereby.
5.8 DISCLOSURE STATEMENT. None of the information to be supplied by
Buyer expressly for inclusion or incorporation by reference in the Disclosure
Statement will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The representations and warranties contained in this Section 5.8
will not apply to any other information included in the Disclosure Statement (or
other information omitted to be included in the Disclosure Statement).
5.9 OFFER AND SALE OF PARENT ADSS. The offer and sale of the Parent
ADSs pursuant to the terms of this Agreement constitute transactions that are
(i) in full compliance with all Applicable Laws and (ii) exempt from the
registration requirements of the Securities Act and exempt from all applicable
state registration or qualification requirements. Neither Buyer nor any of its
Affiliates nor any authorized agent acting on their behalf will take any action
hereafter that would cause the loss of any such exemptions.
5.10 LITIGATION. There are no Proceedings pending or, to Buyer's
knowledge, threatened against Buyer or Parent that would materially and
adversely affect Buyer's or Parent's ability to consummate the transaction
contemplated herein or perform their obligations under this Agreement or the
Ancillary Agreements.
5.11 NOVARTIS BIOVENTURES LTD. Novartis BioVentures Ltd. has duly and
validly executed the Stockholder Consent.
5.12 INITIAL SELLERS DISCLOSURE STATEMENT. None of the information
included in the disclosure statement provided to the Initial Sellers prior to
the date hereof contains any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that no representation or warranty is
made herein by Buyer with respect to the descriptions of the transactions
contemplated by this Agreement and the Ancillary Agreements included therein.
40
5.13 RELIANCE. Buyer understands that the foregoing representations and
warranties shall be deemed material and to have been relied upon by the Company
and each Seller.
6. CONDITIONS TO CLOSING OF BUYER. Buyer's obligation to purchase the
Purchased Shares at the Closing pursuant to Section 1.1 of this Agreement is
subject to the satisfaction (or wavier by Buyer) of the following conditions on
or prior to the Closing Date:
6.1 SELLER'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Sellers in Section 3 of this Agreement shall be true and
correct as of the date of this Agreement, and shall be true and correct as of
the Closing Date with the same force and effect as though such representations
and warranties had been made on the Closing Date, in each case except to the
extent such representations and warranties relate to an earlier date (in which
case such representations and warranties shall be true and correct as of such
earlier date).
6.2 THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by the Company in Section 4 of this Agreement shall be true
and correct as of the date of this Agreement, and shall be true and correct as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date (without regard
to materiality or Company Material Adverse Effect qualifiers contained therein),
except to the extent such representations and warranties relate to an earlier
date (in which case such representations and warranties shall be true and
correct as of such earlier date), in each case except where the failure of the
representations and warranties to be true and correct would not be reasonably
likely to result, individually or in the aggregate, in a Company Material
Adverse Effect.
6.3 COVENANTS. All covenants and agreements contained in this Agreement
to be performed by the Company or Sellers on or prior to the Closing Date, as
the case may be, shall have been performed or complied with in all material
respects on or prior to the Closing Date.
6.4 COMPLIANCE CERTIFICATES. The Company shall have delivered to Buyer
a certificate of the Company in form and substance reasonably satisfactory to
Buyer, executed by the President and Chief Executive Officer of the Company,
certifying to the fulfillment of the conditions specified in Sections 6.2 and
6.3 (with respect to the Company) of this Agreement.
6.5 CERTIFICATION OF RESOLUTIONS AND OFFICERS. The Company shall have
delivered to Buyer a certificate or certificates, dated the date of the Closing,
of the Secretary or other authorized Person of the Company certifying as to (i)
the resolutions of the Board or similar governing body (and the vote or written
consent of the stockholders or equity holders, if necessary) in form and
substance reasonably satisfactory to Buyer, authorizing the execution and
delivery of this Agreement, the Ancillary Agreements as to which such Party is a
party and the execution and delivery of such other documents and
41
instruments as may be required by this Agreement or the Ancillary Agreements,
and the consummation of the transactions contemplated hereby and thereby, and
certifying that such resolutions or written consents were duly adopted and have
not been rescinded or amended as of said date, and (ii) the name and the
signature of the officers of the Company authorized to sign, as appropriate,
this Agreement and the Ancillary Agreements as to which such Party is a party
and the other documents and certificates to be delivered pursuant to this
Agreement or the Ancillary Agreements by either the Company or any of their
officers.
6.6 ORGANIZATIONAL DOCUMENTS. The Company shall have delivered to Buyer
(i) a copy of the Current Certificate and the certificates of incorporation or
similar organizational documents of each Subsidiary, certified by the secretary
of state, or equivalent Governmental Entity, of the jurisdiction in which each
such entity is incorporated or organized, as of a date reasonably prior to the
Closing Date and accompanied by a certificate of the Secretary or Assistant
Secretary, or equivalent officer, of each such entity, dated as of the Closing
Date, stating that no amendments have been made to such certificate of
incorporation (or similar organizational documents) since such date (other than
as contemplated by this Agreement), and (ii) a copy of the By-laws (or similar
organizational documents) of the Company and each Subsidiary, certified by the
Secretary or Assistant Secretary, or equivalent officer, of each such entity.
6.7 RESTATED CERTIFICATES. The Board and the requisite holders of
Company Stock shall have approved the Restated Certificates and, if the Restated
Certificate of Incorporation (Alternative 1) shall have received the unanimous
approval of the holders of Company Stock, such Restated Certificate shall have
been filed on the Closing Date with the Secretary of State of the State of
Delaware to be effective as of the Closing or, if the required stockholder
approval for the Restated Certificate of Incorporation (Alternative 1) shall not
have been obtained, the Restated Certificate of Incorporation (Alternative 2)
shall have been filed on the Closing Date with the Secretary of State of the
State of Delaware to be effective as of the Closing.
6.8 AMENDED AND RESTATED BY-LAWS. The Board and the requisite holders
of Company Stock shall have approved the Amended and Restated By-laws, with such
By-laws to be effective as of the Closing.
6.9 QUALIFIED PRIVATE OFFERING. The transaction contemplated by this
Agreement constitutes a Qualified Private Offering in accordance with the terms
of the Current Certificate and the Second Amended and Restated Stockholders'
Agreement and the QPO Determination (as defined in Section 12.15(a)) shall be in
full force and effect.
6.10 CONVERSION OF PREFERRED STOCK. Not later than upon the
consummation of the transactions contemplated hereby, all issued and outstanding
shares of Preferred Stock shall be converted into shares of Common Stock in
accordance with the terms of the Current Certificate.
6.11 NO MATERIAL ADVERSE EFFECT. There shall not have occurred a
Company Material Adverse Effect.
42
6.12 GOOD STANDING CERTIFICATES. At the Closing, the Company shall have
delivered to Buyer (i) good standing certificates issued with respect to the
Company and each Subsidiary issued by the Secretary of State (or other
applicable Governmental Entity) of the relevant entity's state of incorporation
or organization and (ii) good standing certificates issued with respect to the
Company issued by the Secretary of State (or, if "good standing" is not
applicable in the jurisdiction in which such Subsidiary is organized, an
equivalent status, if any) in the states where the Company is qualified as a
foreign corporation.
6.13 OTHER AGREEMENTS AND DOCUMENTS. At the Closing, (i) the Company
shall have delivered to Buyer each of the Development, License and
Commercialization Agreement and the Supply Agreement executed in counterpart by
the Company (or its applicable Subsidiary in the case of the Supply Agreement),
(ii) the Company and each Seller shall have delivered to Buyer the Stockholders'
Agreement executed in counterpart by the Company and the Sellers, and such
agreements shall be in full force and effect and (iii) each Additional Seller
shall have executed and delivered to Buyer a Joinder Agreement and shall have
provided a copy of such Additional Seller's Custody Agreement to Buyer.
6.14 EMPLOYMENT AGREEMENTS. At the Closing, the individuals listed on
Annex B shall have entered into employment agreements with the Company in form
and substance reasonably satisfactory to Buyer, which agreements shall be in
full force and effect and valid and enforceable in accordance with their terms.
6.15 UAB LICENSE AGREEMENT. [**]
6.16 PURCHASED SHARES. Each Initial Seller shall have delivered to
Buyer, and the Custodian shall have delivered to Buyer on behalf of each
Additional Seller, a certificate or certificates representing that number of
Seller's Shares being purchased by Buyer pursuant to Section 1.1 of this
Agreement set forth opposite the name of such Seller on Adjusted Annex A
attached hereto and the Purchased Shares shall constitute fifty-one percent
(51%) of the Fully-Diluted Common Stock Deemed Outstanding.
6.17 CERTAIN AGREEMENTS.
(a) Buyer and the Company (or its applicable Affiliate) shall have
entered into agreements, which shall be in full force and effective as of the
Closing Date, in form and substance reasonably satisfactory to Buyer, with (i)
The Dipartimento di Biologie Sperimentale "Xxxxxxxx Xxxxx" dell'Universita di
Cagliari with respect to the Cagliari Co-Operative Agreement (as defined in
Section 12.15(a)) and the Cagliari License Agreement (as defined in Section
12.15(a)), (ii) Le Centre National de la Recherche Scientifique and L'Universite
Montpellier II with respect to the Montpellier Cooperative Agreement (as defined
in Section 12.15(a)), (iii) [**], and (iv) [**], in each case (w) acknowledging
that the Company is not in default of such agreement(s), (x) amending such
agreement(s) to provide that Buyer shall have the right to cure, on behalf of
the Company (or its applicable Affiliate), any breach or default under such
agreement(s), and that the other party(ies) to such agreement(s) shall provide
Buyer with a copy of any notice of breach or default that is delivered to the
Company, and any related correspondence, at substantially the same time that any
such notice or correspondence is delivered to the Company, (y) amending such
agreement(s) to provide that in the event such agreement(s) is terminated, Buyer
shall have the right to assume the rights and obligations of the Company (or its
applicable Affiliate) thereunder, and (z) amending such agreement(s) to effect
the understanding with respect to each such agreement as set forth in Exhibit I
attached hereto.
(b) The Company shall have entered into an agreement in form and
substance reasonably satisfactory to Buyer, which shall be in full force and
effect as of the Closing, with Sumitomo (as defined in Section 12.15(a)) which
sets forth Sumitomo's confirmation and acknowledgement that the Sumitomo
Amendment (as defined in Section 12.15(a)) shall be effective upon the
effectiveness of the Development, License and Commercialization Agreement, and
such effectiveness (and continued effectiveness) of the Sumitomo Amendment shall
not be conditioned upon the occurrence of any event or the taking of action by
any Person including, without limitation, (i) any obligation of Buyer or its
Affiliates to conduct, or to continue to conduct, any Global Trial for LdT Drug
Product in Northeast Asia (as such terms "Global Trial," "LdT Drug Product" and
"Northeast Asia" are defined in the Sumitomo Amendment or the Development
Agreement to which it relates) or (ii) any obligation of Buyer or its Affiliates
to conduct clinical or non-clinical trials in Northeast Asia in accordance with
the terms of the Global Trial as set forth in Exhibit A to the Sumitomo
Amendment.
6.18 CONSENTS; STOCKHOLDER APPROVAL. The Company shall have received
valid and binding Consents from holders of Company Stock as may be required to
effect the transactions contemplated by this Agreement and the Ancillary
Agreements, including, without limitation, the Stockholder Consent and other
consents from holders of Company Stock listed in Section 4.7 of the Company
Disclosure Schedule, and such Consents shall be in full force and effect and
each Person giving such Consent shall not have amended, revoked, rescinded,
terminated or canceled such Consent or taken any action that would result in the
occurrence of any of the foregoing or rendered such Consent null and void.
43
6.19 COMPULSORY TRANSFER. The Certificate Amendment (as defined in
Section 12.15(a)) and the Compulsory Transfer Determination (as defined in
Section 12.15(a)) each shall be in full force and effect.
6.20 SERIES C PURCHASE AGREEMENT. The Series C Purchase Agreement
Amendment (as defined in Section 12.15(a)) shall be in full force and effect.
6.21 RIGHTS OF FIRST REFUSAL/CO-SALE. The Second Amended and Restated
Stockholders' Agreement Amendment (as defined in Section 12.15(a)) shall be in
full force and effect.
6.22 SERIES C DIVIDEND. Upon consummation of the transactions
contemplated by this Agreement and in accordance with the terms of the Current
Certificate, the Company shall have paid the Series C Cumulative Annual Dividend
Amount (as defined in the Current Certificate) in shares of Common Stock and
satisfied its obligations relating thereto.
6.23 FIRPTA CERTIFICATE. At the Closing, the Company shall have
delivered to Buyer a certification that stock in the Company is not a U.S. real
property interest because the Company is not, and has not been, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code. Such certification shall be in accordance with Treasury Regulation
Section 1.1445-2(c)(3)(i). The Company shall timely deliver to the Internal
Revenue Service the notification required under Treasury Regulation Section
1.897-(2)(h)(2).
6.24 SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT TERMINATION.
The Second Amended and Restated Stockholders' Agreement Termination (as defined
in Section 12.15(a)) shall be in full force and effect.
6.25 WARRANT AMENDMENT. The Series C Warrant Amendment (as defined in
Section 12.15(a)) shall be in full force and effect.
6.26 RESIGNATIONS OF DIRECTORS. Each member of the Board whose
resignation shall be required by Buyer (as indicated to the Company in writing
at least five business days prior to Closing) shall have resigned as a director
of the Company effective as of the Closing Date.
6.27 2004 BUDGET. The Company shall have delivered to Buyer a true,
correct and complete copy of the Company's fiscal year 2004 annual budget, which
budget demonstrates the Company's ability to operate during the fiscal year 2004
in the ordinary course without obtaining additional financing from third parties
(including Buyer or any Affiliates of the Company), other than pursuant to, and
in accordance with, the Development, License and Commercialization Agreement.
6.28 TAKEOVER STATUTES. No "fair price," "moratorium," "control share
acquisition" or other form of anti-takeover statute or regulation shall apply to
any of the
44
transactions contemplated by this Agreement, other than with respect to any of
the foregoing that may apply by virtue of the jurisdiction of organization of
Buyer or Parent.
7. CONDITIONS TO CLOSING OF THE COMPANY. The Company's obligation to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by the Company and the Consenting Sellers) on or prior
to the Closing Date of the following conditions:
7.1 BUYER'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyer in Section 5 of this Agreement shall be true and
correct as of the date of this Agreement, and shall be true and correct as of
the Closing Date with the same force and effect as though such representations
and warranties had been made on the Closing Date, except to the extent such
representations and warranties relate to an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date).
7.2 COVENANTS. All covenants and agreements contained in this Agreement
to be performed by Buyer on or prior to the Closing Date shall have been
performed or complied with in all material respects on or prior to the Closing
Date.
7.3 COMPLIANCE CERTIFICATES. Buyer shall have delivered to the Company
a certificate of Buyer in form and substance reasonably satisfactory to the
Company, executed by an officer of Buyer, certifying to the fulfillment of the
conditions specified in Sections 7.1 and 7.2 of this Agreement.
7.4 OTHER AGREEMENTS AND DOCUMENTS. At the Closing (i) Buyer shall have
delivered to the Company each of the Development, License and Commercialization
Agreement and Supply Agreement executed in counterpart by Buyer and (ii) Buyer,
each Seller and Novartis BioVentures Ltd. shall have delivered to the Company
the Stockholders' Agreement executed in counterpart by Buyer, each Seller and
Novartis BioVentures Ltd. and such agreements shall be in full force and effect.
7.5 CONVERSION OF PREFERRED STOCK. Not later than upon the consummation
of the transactions contemplated hereby, all issued and outstanding shares of
Preferred Stock shall be converted into shares of Common Stock in accordance
with the terms of the Current Certificate.
7.6 COMPANY STOCKHOLDER APPROVAL. The Company shall have received valid
and binding Consents from holders of Company Stock as may be required to effect
the transactions contemplated by this Agreement and the Ancillary Agreements,
including, without limitation, those consents of holders of Company Stock listed
in Section 4.4 of the Company Disclosure Schedule.
8. CONDITIONS TO CLOSING OF SELLERS. Each Seller's obligation to sell
such Seller's Shares at the Closing pursuant to Section 1.1 of this Agreement is
subject to the satisfaction or waiver (in each case asserted by the Consenting
Sellers) on or prior to the Closing Date of the following conditions:
45
8.1 PAYMENT OF INDIVIDUAL CLOSING CONSIDERATION. Buyer shall have
delivered to (i) each Initial Seller the Individual Closing Consideration
payable to such Initial Seller pursuant to Section 2.2(a) and (ii) the
Custodian, on behalf of the Additional Sellers, the Individual Closing
Consideration payable to all Additional Sellers pursuant to Section 2.2(b).
8.2 BUYER'S REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by Buyer in Section 5 of this Agreement shall be true and
correct as of the date of this Agreement, and shall be true and correct as of
the Closing Date with the same force and effect as though such representations
and warranties had been made on the Closing Date, except to the extent such
representations and warranties relate to an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date).
8.3 COVENANTS. All covenants and agreements contained in this Agreement
to be performed by Buyer and the Company on or prior to the Closing Date, as the
case may be, shall have been performed or complied with in all material respects
on or prior to the Closing Date.
8.4 OTHER AGREEMENTS AND DOCUMENTS. At the Closing, (i) each of Buyer,
Novartis BioVentures Ltd. and the Company shall have delivered to the Sellers
the Stockholders' Agreement executed in counterpart by Buyer, Novartis
BioVentures Ltd. and the Company, respectively, (ii) each of the Company and
Buyer shall have delivered to the other each of the Development, License and
Commercialization Agreement and the Supply Agreement executed in counterpart by
the other (or the applicable Subsidiary of the Company in the case of the Supply
Agreement) and (iii) the Company shall have delivered to TVM, MPM and CSFB (each
of the foregoing terms, as defined in Section 12.15(a)) a management rights
letter executed by the Company in the form of Exhibit J attached hereto, and
such agreements shall be in full force and effect.
8.5 CONVERSION OF PREFERRED STOCK. Not later than upon the consummation
of the transactions contemplated hereby, all issued and outstanding shares of
Preferred Stock shall be converted into shares of Common Stock in accordance
with the terms of the Current Certificate.
8.6 SERIES C DIVIDEND. Upon consummation of the transactions
contemplated by this Agreement and in accordance with the terms of the Current
Certificate, the Company shall have paid the Series C Cumulative Annual Dividend
Amount in shares of Common Stock and satisfied its obligations relating thereto.
8.7 JOINDER AGREEMENTS. The Company shall have delivered to each Seller
copies of all executed Joinder Agreements.
9. MUTUAL CONDITIONS OF CLOSING. Each of the Parties' obligations
hereunder are subject to the satisfaction (or waiver by each of Buyer, the
Company and the Consenting Sellers) on or prior to the Closing Date of the
following conditions:
46
9.1 QUALIFICATIONS. All Consents or Permits of any Governmental Entity,
including, without limitation, pursuant to the requirements of the HSR Act, EC
Regulation or any other similar foreign antitrust or trade regulation laws,
including the necessary Blue Sky laws, permits and qualifications required by
any state for the offer and sale to Buyer of the Purchased Shares, that are
required to be made or obtained by the Company, Sellers or Buyer in connection
with the execution and delivery of this Agreement and the Ancillary Agreements
and the performance by such party of the transactions contemplated hereby and
thereby, as applicable, shall be duly obtained and be effective as of the
Closing.
9.2 ABSENCE OF LITIGATION. There shall be no order, decree, ruling or
Proceeding pending or in effect which limits, restrains, enjoins, or otherwise
prohibits, or seeks to limit, restrain, enjoin or otherwise prohibit, Buyer, the
Company or Sellers from entering into this Agreement or the Ancillary Agreements
or consummating the transactions contemplated hereby or thereby.
9.3 JOINDER PERIOD EXPIRATION. The Joinder Period shall have expired.
10. COVENANTS
10.1 REGULATORY FILINGS.
(a) Subject to the terms hereof, including Section 10.1(b), each of the
Parties and Parent shall use reasonable efforts to take all actions and to do
all things reasonably necessary to consummate the transactions contemplated by
this Agreement, including using reasonable efforts to (i) obtain all waivers,
Permits, Consents, approvals or other authorizations from Governmental Entities
and other third parties, (ii) effect all registrations, filings and notices with
or to Governmental Entities and (iii) otherwise comply in all material respects
with all Applicable Laws and regulations in connection with the consummation of
the transactions contemplated by this Agreement. Each of the Parties and Parent
shall promptly notify each of the other Parties and Parent of any fact,
condition or event known to it that would reasonably be expected to prohibit,
make unlawful or delay the consummation of the transactions contemplated by this
Agreement.
(b) Without limiting the generality of the foregoing, each of the
Parties and Parent shall (or shall cause the appropriate Affiliate thereof to)
(i) promptly file any Notification and Report Forms and related material that it
may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, (ii) use
reasonable efforts to obtain an early termination of the applicable waiting
period under the HSR Act, (iii) make any further filings or information
submissions pursuant thereto that may be reasonably necessary or advisable and
(iv) promptly make any filings or submissions required under the EC Regulation
or any other applicable foreign antitrust or trade regulation law. Each of the
Parties and Parent shall use reasonable efforts to resolve any objections that
may be asserted by any Governmental Entity with respect to the transactions
contemplated hereby, and shall cooperate with each other to contest any
challenges to the transactions contemplated
47
hereby by any Governmental Entity; provided, however, that in no event shall
Buyer, Parent or any Affiliate thereof be required to offer or agree to sell,
license or otherwise dispose of, or hold separate or otherwise divest, any
assets in order to resolve any such objections. Each of the Parties and Parent
shall promptly inform each other of any material communication received by such
party from the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any other Governmental Entity regarding any of the
transactions contemplated hereby (unless the provision of such information would
(i) violate the provisions of any Applicable Law (including without limitation
those relating to security clearance or export controls) or any confidentiality
agreement or (ii) cause the loss of the attorney-client privilege with respect
thereto).
10.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Closing or the termination of this Agreement in accordance with its terms,
neither the Company nor any Seller shall, nor shall the Company or any Seller
permit any of its respective Affiliates to, nor shall the Company or any Seller
authorize or permit any of its respective officers, directors or employees to,
and shall use all reasonable efforts to cause any investment banker, financial
advisor, attorney, accountant, or other representatives of theirs retained by
them or any of their respective Affiliates not to: (i) solicit, initiate,
encourage (including by way of furnishing information), knowingly facilitate or
induce (directly or indirectly) any inquiry with respect to, or the making,
submission or announcement of, any proposal that constitutes, or could
reasonably be expected to result in, a proposal or offer for an Acquisition
Proposal (as defined in Section 12.15(a)), (ii) participate in any discussions
or negotiations regarding, or furnish to any Person any nonpublic information
with respect to, or take any other action to knowingly facilitate any inquiries
or the making of any proposal that constitutes or may reasonably be expected to
lead to, an Acquisition Proposal, (iii) approve, endorse or recommend any
Acquisition Proposal or recommend against the transactions contemplated in this
Agreement or (iv) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition Proposal or
transaction contemplated thereby.
(b) From and after the date of this Agreement until the earlier of the
Closing or the termination of this Agreement in accordance with its terms,
within two business days after receipt of an Acquisition Proposal or any request
for nonpublic information or inquiry that the Company or any Seller reasonably
believes could lead to an Acquisition Proposal, the Company or such Seller, as
the case may be, shall provide Buyer with oral and written notice of the
material terms and conditions of such Acquisition Proposal, request or inquiry,
and the identity of the Person making any such Acquisition Proposal, request or
inquiry and a copy of all written materials provided in connection with such
Acquisition Proposal, request or inquiry. Upon receipt of the Acquisition
Proposal, request or inquiry, the Company or such Seller, as the case may be,
shall provide Buyer, as promptly as practicable, with oral and written notice
setting forth all such information as is reasonably necessary to keep Buyer
informed in all material respects of the status and details (including material
amendments or proposed material amendments) of any such Acquisition Proposal,
request or inquiry, and shall promptly
48
provide to Buyer a copy of all written materials subsequently provided in
connection with such Acquisition Proposal, request or inquiry.
(c) The Company and each Seller shall, and shall cause their respective
Affiliates and their respective officers, directors, employees, investment
bankers, consultants, attorneys, accountants, agents and other representatives
to, immediately cease and cause to be terminated, all discussions and
negotiations, if any, that have taken place prior to the date hereof with any
Persons with respect to any Acquisition Proposal and, upon request by Buyer,
shall request the return or destruction of all confidential information provided
to any such Person.
10.3 NOTICE OF BREACHES; UPDATES.
(a) Between the date hereof and the Closing Date, the Company and each
Seller shall deliver to Buyer written notice of any event or development,
promptly upon receiving knowledge thereof, that would (i) render any statement,
representation or warranty of the Company or any Seller, as the case may be, in
this Agreement (including the Company Disclosure Schedule) inaccurate or
incomplete in any material respect or (ii) constitute or result in a breach by
the Company or any Seller, as the case may be, of, or a failure by the Company
or any Seller, as the case may be, to comply with, any agreement or covenant in
this Agreement. No such disclosure shall be deemed to avoid or cure any such
misrepresentation or breach.
(b) Between the date hereof and the Closing Date, Buyer shall, promptly
upon receiving knowledge thereof, deliver to the Company and each Seller written
notice of any event or development that would (i) render any statement,
representation or warranty of Buyer in this Agreement inaccurate or incomplete
in any material respect or (ii) constitute or result in a breach by Buyer or
Parent of, or a failure by Buyer or Parent to comply with, any agreement or
covenant in this Agreement. No such disclosure shall be deemed to avoid or cure
any such misrepresentation or breach.
10.4 EXCLUSIVITY OF PURCHASED SHARES. Except as otherwise provided in
this Agreement, from and after the date of this Agreement until the earlier of
the Closing or the termination of this Agreement, (i) the Sellers shall not
offer to sell, sell or agree to sell the Purchased Shares to any Person other
than to Buyer as contemplated in this Agreement and Sellers shall not offer to
sell, sell or otherwise agree to sell any other shares of capital stock of the
Company owned by such Seller to any Person and (ii) neither the Company nor the
Initial Sellers shall solicit, initiate, discuss, encourage (including by way of
furnishing information), knowingly facilitate or induce (directly or indirectly)
any holder of Company Stock with respect to the sale of such holder's Company
Stock in such a manner that may result in a violation of Applicable Law,
including, without limitation, the Securities Laws.
10.5 CONDUCT OF BUSINESS. Except (i) as set forth in Section 10.5 of
the Company Disclosure Schedule, (ii) as may be otherwise contemplated by this
Agreement or the Ancillary Agreements or (iii) as Buyer may otherwise consent to
in writing (such consent not to be unreasonably withheld), between the date
hereof and the Closing Date:
49
(a) the Company will and will cause each Subsidiary to:
(i) operate their businesses only in the ordinary course of business;
(ii) use their reasonable efforts to preserve the business organization
of the Company and each Subsidiary as a whole intact;
(iii) maintain their properties and assets in sufficient operating
condition (reasonable wear and tear excepted) to enable the Company and
each Subsidiary to operate their business in the manner in which they were
operated immediately prior to the date hereof, except for maintenance
required by reason of fire, flood or other acts of God (except that any
insurance proceeds paid by reason of any such casualty after the date
hereof shall be applied towards such maintenance);
(iv) use their reasonable efforts to keep available until the Closing
Date the services of their present officers and key employees;
(v) pay their accounts payable and all other obligations in the
ordinary course of business (subject to the Company's right to dispute in
good faith any such payable or other obligation);
(vi) use their reasonable efforts to preserve intact their current
business organization and business relationships with their material
lenders, suppliers, customers, licensors and licensees and others having
material business dealings with them such that the business will not be
impaired; and
(vii) perform all of its material obligations under all material
Contracts relating to or affecting its business, assets, property,
equipment and rights (subject to the Company's right to dispute in good
faith its performance under any such Contract); and
(b) the Company will not and will cause each Subsidiary not to:
(i) make any change in their respective certificate of incorporation,
by-laws or similar organizational documents;
(ii) make any change in their issued or outstanding capital stock, or
issue any warrant, option or other right to purchase shares of their
capital stock or any security convertible into or exchangeable for shares
of their capital stock, or redeem, purchase or otherwise acquire any shares
of their capital stock, or declare any dividends or make any other
distribution in respect of their capital stock or issue any shares of their
capital stock (except (a) for shares of Common Stock issued upon exercise
of currently outstanding options granted pursuant to the Plan, (b) shares
of Common Stock issued upon conversion of shares of issued and outstanding
Preferred Stock, (c) for the payment of the Series C Cumulative Annual
Dividend in accordance with the terms of the Current Certificate or (d) for
the acquisition of shares of Common Stock (x) from holders of outstanding
50
options in full or partial payment of the exercise price payable by such
holder upon exercise of such option to the extent provided under the terms
of such option as in effect on the date hereof, or (y) from former
employees, directors and consultants in accordance with agreements
providing for the repurchase of shares at their original issuance price in
connection with any termination of services to the Company or any of its
Subsidiaries);
(iii) voluntarily incur or assume, whether directly or by way of
guarantee or otherwise, any obligation or liability, except obligations and
liabilities incurred in the ordinary course of business;
(iv) create an Encumbrance on any material part of their properties or
assets, tangible or intangible;
(v) sell or transfer any material part of their assets, property or
rights;
(vi) cancel, pay or discharge any Indebtedness or liability, except in
accordance with the payment terms of such Indebtedness or liability (other
than any optional prepayment thereunder);
(vii) amend or terminate any material Contract or Permit to which they
are parties;
(viii) make any change in any Benefit Plans, except as required by law
and except for changes made in the ordinary course of business in
accordance with their customary practices (including increases in
compensation and benefits after normal periodic performance reviews), adopt
any new benefit plan, policy or arrangement, or increase the number of
shares of Common Stock authorized under the Plan, as amended;
(ix) make any changes in the accounting methods, principles or
practices employed by them, except as required by Applicable Law or
generally accepted accounting principles;
(x) make capital expenditures or enter into commitments therefor;
provided, however, that the Company and its Subsidiaries may make capital
expenditures or enter into commitments therefor not to exceed two hundred
and fifty thousand dollars ($250,000) in the aggregate if such expenditures
and commitments are reflected in the 2003 Annual Budget and made in
accordance therewith;
(xi) incur, create, assume or guarantee any Indebtedness, or enter into
any commitment therefor;
(xii) enter into any other agreement, course of action or transaction
material to the Company or any Subsidiary, other than in the ordinary
course of business;
51
(xiii) make, change or revoke any material Tax election, change any
material method of accounting with respect to Taxes, or settle or
compromise any matter with respect to Taxes;
(xiv) commence or settle any Proceeding, other than with respect to the
prosecution of patent applications in the ordinary course of business
consistent with past practice;
(xv) form a Subsidiary or acquire any equity interest or other interest
in any other entity;
(xvi) enter into any Contracts or licenses of the type contemplated in
Section 4.14(a)(i) through 4.14(a)(xii); or
(xvii) agree to do any of the foregoing.
10.6 DELIVERY OF COMMON STOCK CERTIFICATES. The Company shall issue and
deliver to (i) Buyer and each Seller on the Closing Date and (ii) all other
holders of Preferred Stock as promptly as practicable after the Closing Date, a
certificate or certificates for the number of whole shares of Common Stock to
which Buyer or such holder is entitled as a result of the conversion of such
shares of Preferred Stock in to shares of Common Stock pursuant to the terms of
the Current Certificate and this Agreement; provided, however, that each holder
of such Preferred Stock has previously delivered to the Company one or more
certificates representing the number of shares of such Preferred Stock so
converted. To the extent shares of Company Stock owned by an Additional Seller
and sold to Buyer pursuant to the terms of this Agreement constitute less than
all of the Company Stock owned by such Additional Seller and subject to the
Custody Agreement, one or more certificates representing the excess shares of
Company Stock shall be delivered by the Custodian to such Seller pursuant to the
terms of the Custody Agreement.
10.7 STOCKHOLDER APPROVAL. From the date hereof until the Closing Date,
the Company shall use its reasonable efforts to obtain and deliver to Buyer
valid and binding Consents from holders of Company Stock as may be required to
effect the transactions contemplated by this Agreement and the Ancillary
Agreements, including, without limitation, the consents listed in Section 4.4 of
the Company Disclosure Schedule, and each Seller giving such Consent shall not
amend, revoke, rescind, terminate or cancel such Consent or take any action that
would result in the occurrence of any of the foregoing or render such Consent
null and void.
10.8 TAKEOVER STATUTES. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to any of the transactions contemplated by this Agreement or
the Ancillary Agreements, other than with respect to any of the foregoing that
may apply by virtue of the jurisdiction of organization of Buyer or Parent, the
Board shall, from the date hereof until the Closing Date, grant such approvals
to take such actions as are necessary so that the transactions contemplated by
this Agreement, the Ancillary Agreements and the
52
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated herein or therein and otherwise act to
eliminate or minimize the effects of such statute or regulation on this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby.
10.9 CONFIDENTIALITY AGREEMENTS. The Confidentiality Agreements (as
defined in Section 12.15(a)) shall continue in full force and effect in
accordance with their respective terms, except as expressly modified by this
Agreement, including by the final sentence of Section 12.14, which shall be
deemed to amend each of the Confidentiality Agreements.
10.10 PREPARATION OF DISCLOSURE STATEMENT. The Company, Buyer, Parent
and the Initial Sellers shall cooperate with one another in connection with the
preparation and dissemination of the Disclosure Statement, including giving one
another, together with their respective counsel, a reasonable opportunity to
review and comment upon the Disclosure Statement prior to its dissemination to
holders of Company Stock. Each of the Company, Buyer, Parent and each Initial
Seller agree promptly to correct any information provided by it for use in the
Disclosure Statement if and to the extent that such information shall have
become false or misleading in any material respect, and each of Buyer, Parent,
the Company and each Initial Seller further agrees to take all steps necessary
to cause the Disclosure Statement, as so corrected, to be disseminated to
holders of Company Stock, as and to the extent required by Applicable Law.
Whenever any event occurs that is required to be set forth in an amendment or
supplement to the Disclosure Statement, each of Buyer, Parent, the Company and
each Initial Seller will promptly inform the other of such occurrence and
cooperate in disseminating such amendment or supplement to the holders of
Company Stock. The Disclosure Statement will include the recommendation of the
Board to holders of Company Stock recommending the transactions contemplated by
this Agreement and the Ancillary Agreements.
10.11 INSPECTION OF PROPERTIES. The Company shall permit Buyer from
time to time until the Closing, at Buyer's expense, to visit and inspect the
Company's or any Subsidiary's properties and to discuss the Company's or any
Subsidiary's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by Buyer on reasonable prior written notice
and in a manner so as not to interfere with the normal business operations of
the Company; provided, however, that the Company shall not be obligated pursuant
to this Section 10.11 to: (a) provide access to any information to any Person
unless Buyer is responsible, pursuant to the Confidentiality Agreements, for the
use and disclosure of any information obtained by such Person from the Company
or a Subsidiary or (b) provide access to any information that would cause the
loss of the attorney-client privilege with respect thereto.
10.12 QUALIFIED PRIVATE OFFERING. No Seller shall take any action
necessary or required to render or cause the transactions contemplated in this
Agreement to fail to constitute a Qualified Private Offering in accordance with
the terms of the Current Certificate and the Second Amended and Restated
Stockholders' Agreement.
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10.13 RESTATED CERTIFICATES AND AMENDED AND RESTATED BY-LAWS. Prior to
the Closing Date, the Company shall solicit the requisite holders of Common
Stock required to approve the Restated Certificates and the Amended and Restated
By-laws, and the Board shall recommend such approval.
10.14 SERIES C WARRANTS. Each Seller agrees that, on or prior to the
Closing, it shall deliver to the Company for cancellation the Series C Warrants
(as defined in the Second Amended and Restated Stockholders' Agreement) held by
such Seller. Buyer covenants and agrees that Novartis BioVentures Ltd. will, on
or prior to the Closing, deliver to the Company for cancellation the Series C
Warrants held by it.
10.15 DISCLOSURE STATEMENT. The Company covenants and agrees that none
of the information included in the Disclosure Statement (including, without
limitation, the descriptions of the transactions contemplated by this Agreement
and the Ancillary Agreements) will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; provided, however, that no
representation or warranty is made herein by the Company with respect to any
information supplied by any Seller or Buyer for inclusion in the Disclosure
Statement.
11. TERMINATION.
(a) Notwithstanding anything to the contrary contained herein, this
Agreement and the transactions contemplated hereby may be terminated by the
Parties as follows:
(i) upon mutual written agreement of Buyer, the Company and the
Consenting Sellers;
(ii) at the option of Buyer by giving written notice to the other
Parties in the event there has been breach or failure to perform any
representation, warranty, covenant or agreement on the part of the Company
or any Seller, which breach or failure to perform (i) would cause the
conditions set forth in Sections 6.1, 6.2 or 6.3 not to be satisfied and
(ii) has not been cured by the Company or any Seller within thirty (30)
days of its receipt of notice from Buyer of such breach or failure to
perform;
(iii) at the option of the Company or the Consenting Sellers, by giving
written notice to the other Parties in the event there has been a breach or
failure to perform any Buyer representation, warranty, covenant or
agreement on the part of Buyer, which breach or failure to perform (i)
would cause the conditions set forth in Sections 7.1 and 7.2, in the case
of the Company, or Sections 8.2 and 8.3 in the case of the Sellers, not to
be satisfied and (ii) has not been cured by Buyer within thirty (30) days
of its receipt of notice from the Company or a Seller of such breach or
failure to perform; or
54
(iv) at the option of the Company, Buyer or the Consenting Sellers by
giving written notice to the other Parties in the event the Closing has not
occurred on or prior to September 30, 2003.
(b) Notwithstanding the provisions of Section 11(a) above, a Party
shall not be permitted to terminate this Agreement pursuant to this Section 11
if such Party is in breach or default of any of the terms of this Agreement or
is the principal cause of another Party's breach or default of this Agreement
which gives rise to such Party's termination right.
(c) In the event of termination of this Agreement as provided in this
Section 11, this Agreement shall immediately become void and there shall be no
liability or obligation on the part of Buyer, the Company or the Sellers or
their respective officers, directors, stockholders, general partners, limited
partners, retired partners, managers, retired managers, members, retired members
or other beneficial owners of such Seller or Affiliates; provided, however, that
(i) any such termination shall not relieve any Party from liability for any
willful breach of this Agreement and (ii) the provisions of the Confidentiality
Agreements shall remain in full force and effect and survive any termination of
this Agreement.
(d) In the event that, at Closing, any Initial Seller fails to deliver
one or more stock certificates representing the number of Seller's Shares set
forth opposite such Initial Seller's name in Adjusted Annex A in accordance with
Section 2.2, any other Initial Seller or Initial Sellers, acting alone or
together, may sell to Buyer and, if offered, Buyer shall purchase from such
other Initial Seller or Initial Sellers, at the Closing that additional number
of shares of Company Stock held by such other Initial Seller or Initial Sellers
equal to the number of Seller's Shares not delivered in accordance with Section
2.2 (the "Replacement Shares") on the same terms and conditions as set forth in
Section 1.1; provided, however, that Adjusted Annex A shall be adjusted to
include the Replacement Shares set forth opposite the name or names of such
Initial Seller or Initial Sellers to which the Replacement Shares correspond and
as so adjusted shall be the "Adjusted Annex A."
12. MISCELLANEOUS.
12.1 INDEMNIFICATION.
(a) Subject to the terms and conditions of this Section 12.1, after the
Closing, each Seller shall severally, and not jointly, indemnify, defend and
hold harmless Buyer and its Affiliates (other than the Company or any of its
Subsidiaries or Novartis BioVentures Ltd.) and each of their respective
officers, directors and employees (the "Buyer Indemnitees") from and against any
and all losses (including, without limitation, a diminution of the value of the
Purchased Shares)), liabilities, obligations, monetary damages, fines, fees,
penalties, costs and expenses (including, but not limited to, reasonable
attorneys' fees and expenses) (collectively, "Damages"), to the extent arising
or resulting from (i) any untruth, inaccuracy or breach of any representation or
warranty of (A) the Company contained in this Agreement or (B) such Seller
contained in this
55
Agreement and (ii) any non-fulfillment or breach of any covenant or agreement of
such Seller contained in this Agreement.
(b) Subject to the terms and conditions of this Section 12.1, after the
Closing, the Company shall indemnify, defend and hold harmless the Buyer
Indemnitees from and against any and all Damages, to the extent arising or
resulting from any non-fulfillment or breach of any covenant or agreement of the
Company contained in this Agreement.
(c) Subject to the terms and conditions of this Section 12.1, after the
Closing, Buyer shall indemnify, defend and hold harmless each Seller and its
Affiliates (other than the Company or any of its Subsidiaries) and each of their
respective officers, directors, employees, stockholders, general partners,
limited partners, retired partners, managers, retired managers, members, retired
members or other beneficial owners of such Seller (the "Seller Indemnitees")
from and against any and all Damages, to the extent arising or resulting from
(i) any untruth, inaccuracy or breach of any representation or warranty of Buyer
contained in this Agreement and (ii) any non-fulfillment or breach of any
covenant or agreement of Buyer contained in this Agreement.
(d) All claims for indemnification made under this Section 12.1
resulting from, related to or arising out of a third party claim against an
Indemnified Party (as defined below) shall be made in accordance with the
following procedures. A person entitled to indemnification under this Section
12.1 (an "Indemnified Party") shall give prompt written notification to (i) the
applicable Seller (in the case of an indemnification claim under Sections
12.1(a)(i)(B) or 12.1(a)(ii)) or Sellers (in the case of an indemnification
claim under Section 12.1(a)(i)(A)) from which indemnity may be due hereunder as
a result of such claim, (ii) the Company or (iii) Buyer, as the case may be,
hereunder (in each case, the "Indemnifying Parties") of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification may be sought or, if earlier, upon the assertion of any such
claim by a third party. Such notification shall include a reasonable description
(to the extent known by the Indemnified Party) of the facts constituting the
basis for such third party claim and the amount of the Damages claimed (the
"Indemnification Claim"). Within 30 days after delivery of such notification,
the Indemnifying Parties may, upon written notice thereof to the Indemnified
Party, assume control of the defense of such action, suit, proceeding or claim
with counsel reasonably satisfactory to the Indemnified Party. The Indemnified
Party shall be entitled to participate in the defense of such Indemnification
Claim and to employ counsel of its choice for such purpose; provided, however,
that such employment shall be at the Indemnified Party's own expense unless (A)
the employment thereof has been specifically authorized by the Indemnifying
Parties in writing, (B) the Indemnifying Parties have failed to assume the
defense and employ counsel in accordance with this Section 12.1(d) in a timely
manner (in which case the Indemnified Party shall control the defense) or (C)
the Indemnified Party has reasonably concluded that there is an actual or
potential conflict of interest between the parties or there may be one or more
legal defenses that are different from or in addition to those available to the
Indemnifying Parties (in which case the Indemnifying Parties shall not have the
right to assume the defense of such action on behalf of the Indemnified Party
and the Indemnifying Parties
56
shall be liable for all fees and expenses of one legal counsel incurred by the
Indemnified Party in furtherance thereof). The Party controlling such defense
shall keep the other Party advised of the status of such action, suit,
proceeding or claim and the defense thereof and shall consider recommendations
made by the other Party with respect thereto. The Company agrees to use
reasonable efforts to cooperate with the Party controlling such defense to the
extent reasonably requested in connection with the defense of such claim. The
Indemnified Party shall not agree to any settlement of such action, suit,
proceeding or claim without the prior written consent of the Indemnifying
Parties, which consent shall not be unreasonably withheld. The Indemnifying
Parties shall not agree to any settlement of such action, suit, proceeding or
claim that does not include a complete release of the Indemnified Party from all
liability with respect thereto or that imposes any liability or obligation on
the Indemnified Party without the prior written consent of the Indemnified
Party.
(e) Notwithstanding the foregoing provisions of this Section 12.1, (A)
no Seller shall be responsible pursuant to Section 12.1(a) for any Damages
suffered by any Buyer Indemnitee (x) unless a claim therefor is asserted in
writing (i) with respect to the representations and warranties contained in
Section 4.20 (Taxes) within thirty (30) days after the expiration of the
applicable statute of limitation, (ii) with respect to the representations and
warranties contained in Section 3.1 (Stock Ownership) or Section 4.25
(Environmental Matters) within three (3) years of the Closing Date, (iii) with
respect to the representations and warranties contained in Section 4.11
(Intellectual Property), to the extent such representations and warranties do
not relate to the HCV Drug Candidates (as defined in the Development, License
and Commercialization Agreement), within two years of the Closing Date, (iv)
with respect to the representations and warranties contained in Section 4.11
(Intellectual Property), to the extent such representations and warranties
relate to the HCV Drug Candidates, prior to the earliest to occur of (1) the
second anniversary of the first of the Contingent Payments, (2) Buyer failing to
exercise the Novartis HCV Option (as defined in the Development, License and
Commercialization Agreement) in accordance with Section 3.2(a) thereof,
provided, that the Company has provided the Commencement Notice (as defined in
the Development, License and Commercialization Agreement) in accordance with
Section 3.2(a) thereof, (3) Buyer giving notice of termination of the
Development, License and Commercialization Agreement in its entirety or with
respect to the HCV Product throughout the Territory (as defined in the
Development, License and Commercialization Agreement) pursuant to Section 12.3
or Section 12.4 thereof, (4) the termination of the Development, License and
Commercialization Agreement by the Company in its entirety or with respect to
the HCV Product throughout the Territory pursuant to Section 12.3 thereof; and
(5) the six year anniversary of the Closing Date, (v) with respect to the
representations and warranties contained in Section 3.2 (Authority; Execution
and Delivery) at any time from and after the Closing, and (vi) within eighteen
(18) months after the Closing Date with respect to all other representations and
warranties of the Company or such Seller, failing which such claim shall be
waived and extinguished; provided, however, that if notice with respect to an
indemnifiable claim is provided within the applicable time periods specified
above, the right to indemnity thereunder shall remain in full force and effect
until the final resolution thereof; or (y) which exceed (i) with respect to the
representations and warranties of such Seller contained in Section 3.1
57
(Stock Ownership) and the covenants and agreements of such Seller contained in
this Agreement, an amount equal to such Seller's Individual Closing
Consideration (as to each Seller, the "Individual Title/Covenants Cap") or (ii)
with respect to the representations and warranties of the Company and all
representations and warranties of such Seller (other than those contained in
Section 3.1 (Stock Ownership)), an amount equal to the product of (1) such
Seller's Individual Closing Consideration and (2) 0.30 (such product, as to each
Seller, the "Individual Other Reps Cap" and, together with the Individual
Title/Covenants Cap, the "Individual Caps"); and (B) no Buyer Indemnitee shall
be entitled to indemnification pursuant to Section 12.1(a) for any Damages
suffered by any such Buyer Indemnitee unless the aggregate amount of all Damages
suffered by the Buyer Indemnitees exceed, on a cumulative basis, [**]; provided,
however, that in the event such Damages exceed [**], Buyer Indemnitees shall be
entitled to indemnification for the aggregate amount of all such Damages, on a
cumulative basis, from the first dollar thereof (the "Aggregate Basket");
provided further, that Buyer Indemnitees' right to seek indemnification from any
Seller hereunder for any Damages arising out of fraud on the part of such Seller
shall not be subject to, or limited by, the Aggregate Basket or the Individual
Caps with respect to such Seller. Notwithstanding anything herein to the
contrary but subject to the final proviso of the immediately preceding sentence,
in no event shall a Seller's liability hereunder exceed, in the aggregate, its
Individual Title/Covenants Cap. Any claims by any Buyer Indemnitees against the
Company for any Damages arising out of fraud on the part of the Company shall
not be subject to, or limited by, the Aggregate Basket or the Individual Caps.
Any claims by any Buyer Indemnitees against the Sellers for Damages arising out
of fraud of the Company shall be subject to the Individual Other Reps Cap
applicable to each Seller and the Aggregate Basket and must be asserted within
two (2) years of the Closing Date.
(f) Notwithstanding the foregoing provisions of this Section 12.1, (A)
Buyer shall not be responsible pursuant to Section 12.1(c) for any Damages
suffered by any Seller Indemnitee unless a claim therefor is asserted in writing
(i) if and only to the extent Parent ADSs are issued in connection with a
Contingent Payment pursuant to Section 1.2, with respect to the representations
and warranties contained in Section 5.2(b) and Section 5.2(c) (but only to the
extent such representations and warranties relate to such Parent ADSs), Section
5.3 (SEC Reports), Section 5.4 (Issuance of Shares) and Section 5.9 (Offer and
Sale of Parent ADSs), within eighteen (18) months after a Contingent Payment
Date on which Parent ADSs are issued, (ii) with respect to the representations
and warranties contained in Section 5.2(a), at any time from and after the
Closing and (iii) within eighteen (18) months after the Closing Date with
respect to all other representations and warranties of Buyer, failing which such
claim shall be waived and extinguished; provided, however, that if notice with
respect to an indemnifiable claim is provided within the applicable time periods
specified above, the right to indemnity thereunder shall remain in full force
and effect until the final resolution thereof; (B) no Seller Indemnitee shall be
entitled to indemnification pursuant to Section 12.1(c)(i) with respect to the
representations and warranties referenced in the immediately preceding clauses
(A)(ii) and (A)(iii) above, for any Damages suffered by any such Seller
Indemnitee unless the aggregate amount of such Damages suffered by the Seller
Indemnitees exceed, on a cumulative basis, the Aggregate Basket; provided,
however, that in the event such Damages exceed the Aggregate Basket, Seller
Indemnitees shall be entitled to indemnification for the aggregate amount of all
such Damages, on a cumulative basis, from the first dollar thereof; and (C) the
aggregate liability of Buyer hereunder for Damages suffered by Seller
Indemnitees shall in no event exceed (i) (x) [**] plus, in each case, reasonable
attorneys' fees and expenses incurred by the Sellers in connection with the
assertion of a claim for indemnity hereunder, in each case, with respect to
claims brought pursuant to Section 12.1(c)(i) (but only to the extent Parent
ADSs are issued in connection with a Contingent Payment pursuant to Section 1.2
and only with respect to the representations and warranties referenced in the
immediately preceding clause (A)(i) above) and Section 12.1(c)(ii) (as
applicable, the "Buyer Shares/Covenants Cap"), or (ii) [**] with respect to
claims brought pursuant to Section 12.1(c)(i) with respect to the
representations and warranties referenced in clauses (A)(ii) and (A)(iii) above,
(the "Buyer Reps Cap"); provided, further, that the Seller Indemnitees' right to
seek indemnification hereunder for any Damages arising out of fraud shall not be
subject to, or limited by, the Aggregate Basket, the Buyer Shares/Covenants Cap
or the Buyer Reps Cap.
(g) In no event shall any of the Indemnifying Parties be responsible or
liable for any Damages or other amounts under this Section 12.1 that are
consequential, in the nature of lost profits, special or punitive or otherwise
not actual damages, including, without limitation, consequential damages arising
from termination of the Development, License and Commercialization Agreement.
Each Party shall (and shall cause its Affiliates to) use commercially reasonable
efforts to pursue all legal rights and remedies available in order to minimize
the Damages for which indemnification is provided to it under this Section 12.1.
(h) The amount of Damages recoverable by an Indemnified Party under
this Section 12.1 with respect to an indemnity claim shall be reduced by (i) the
amount of any payment received by such Indemnified Party, with respect to the
Damages to which such indemnity claim relates, from an insurance carrier or a
third party and (ii) the proportional amount attributable to such Indemnified
Party of any payment received by the Company, with respect to the Damages
suffered derivatively by such Indemnified Party to which such indemnity claim
relates, from an insurance carrier or a third party. An Indemnified Party, or
the Company, with respect to Damages suffered derivatively by an Indemnified
Party, shall use commercially reasonable efforts to pursue all insurance claims
and claims against third parties to which it may be entitled in connection with
any
58
Damages it incurs, and the Parties shall cooperate with each other in pursuing
such claims with respect to any Damages or any indemnification obligations with
respect to Damages. If an Indemnified Party or the Company receives any
insurance or third party payment in connection with any claim for Damages for
which an Indemnified Party has already received an indemnification payment from
any of the Indemnifying Parties, such Indemnified Party shall pay to such
Indemnifying Parties, pro rata based on the amount paid by such Indemnifying
Parties, within 60 days of such Indemnified Party's or the Company's receipt of
such insurance or third party payment, an amount, not to exceed the amount
previously paid by the Indemnifying Parties under this Section 12.1, equal to
the excess of (A) the amount previously received by the Indemnified Party under
this Section 12.1 with respect to such claim plus the amount of the insurance or
third party payments received by the Indemnified Party or an appropriate amount
to reflect such payments received by the Company, as the case may be, over (B)
the amount of Damages with respect to such claim which the Indemnified Party has
become entitled to receive under this Section 12.1.
(i) Notwithstanding anything herein to the contrary, the amount of
Damages recoverable by a Buyer Indemnitee pursuant to Section 12.1(a)(i)(A)
arising out of or resulting from any untruth, inaccuracy or breach of the
representations and warranties of the Company in Section 4.11(g)(i) shall be
reduced by the amount of reasonable payments made by the Company of royalties,
fees or other amounts pursuant to, and in accordance with, those obligations
provided in Section 8.7 of the Development, License and Commercialization
Agreement which are solely the responsibility of the Company in connection with
obtaining rights under any Blocking Third Party Intellectual Property Rights (as
defined in the Development, License and Commercialization Agreement) which are
the subject of such claim for Damages by a Buyer Indemnitee.
(j) No Seller shall have any right of contribution against the Company
with respect to any breach by the Company of any of its representations,
warranties, covenants or agreements.
(k) The rights of the Indemnified Parties under this Section 12.1 shall
be the sole and exclusive remedies of the Indemnified Parties and their
respective Affiliates with respect to claims relating to the transactions that
are the subject of this Agreement, except to the extent Damages were caused by
fraud; provided, however, that (i) the rights of the Buyer Indemnitees pursuant
to this Section 12.1 shall be the sole and exclusive remedies of the Buyer
Indemnitees and their respective Affiliates from any Seller with respect to
Damages arising out of fraud of the Company and (ii) no Seller shall have any
responsibility or liability for fraud of any other Seller.
(l) Notwithstanding the foregoing, but subject to the Aggregate Basket
and the Individual Other Reps Cap, Buyer hereby agrees for itself and the other
Buyer Indemnitees that any claim asserted by any Buyer Indemnitee under Section
12.1(a)(i)(A) will be asserted (x) (to the extent recovery against a Primary
Seller (as defined in Section 12.15(a)) is available to the Buyer Indemnitees
pursuant to such Primary Seller's then remaining Individual Other Reps Cap)
against each of the Primary Sellers and (y) in a proportionate manner such that
the amount sought from each Primary
59
Seller is equal to the product of (1) the aggregate Damages sought in connection
with such claim and (2) the quotient obtained by dividing (A) such Primary
Seller's Individual Closing Consideration by (B) the sum of the Individual
Closing Consideration received by all Primary Sellers (such product of (1) and
(2), the "Pro Rata Portion"); provided, however, that to the extent any Primary
Seller's Pro Rata Portion of any claim exceeds such Primary Seller's then
remaining Individual Other Reps Cap (i.e., such Seller's Individual Other Reps
Cap less the aggregate amounts actually paid by such Seller under this Section
12.1 to, or on behalf of, Buyer Indemnitees), Buyer may seek such excess amounts
from the other Primary Sellers on the same basis as set forth in this Section
12.1(l) or any other Seller (other than a Primary Seller); provided further,
however, that the aggregate amount of any and all Damages the Buyer Indemnitees
can recover from any Seller under Section 12.1(a)(i)(A) shall not exceed the
portion of such Seller's Individual Other Reps Cap remaining at such time (i.e.,
such Seller's Individual Other Reps Cap less the aggregate amounts actually paid
by such Seller under this Section 12.1 to, or on behalf of, Buyer Indemnitees).
(m) Each member of the CSFB Group (as defined in Section 12.15(a))
hereby irrevocably appoints CSFB as its representative and attorney-in-fact to
receive and give on such member's behalf all notices, to make on such member's
behalf all elections and determinations and to take on such member's behalf all
other actions, in each case, as may be contemplated to be so received, given,
made or taken by any member of the CSFB Group by the provisions of Section 12.1.
Each notice given to CSFB under Section 12.1 by the Company or any Buyer
Indemnitee shall be deemed to have also been given to each member of the CSFB
Group. Each member of the MPM Group (as defined in Section 12.15(a)) hereby
irrevocably appoints MPM as its representative and attorney-in-fact to receive
and give on such member's behalf all notices, to make on such member's behalf
all elections and determinations and to take on such member's behalf all other
actions, in each case, as may be contemplated to be so received, given, made or
taken by any member of the MPM Group by the provisions of Section 12.1. Each
notice given to MPM under Section 12.1 by the Company or any Buyer Indemnitee
shall be deemed to have also been given to each other member of the MPM Group.
Each member of the TVM Group (as defined in Section 12.15(a)) hereby irrevocably
appoints TVM as its representative and attorney-in-fact to receive and give on
such member's behalf all notices, to make on such member's behalf all elections
and determinations and to take on such member's behalf all other actions, in
each case, as may be contemplated to be so received, given, made or taken by any
member of the TVM Group by the provisions of Section 12.1. Each notice given to
TVM under Section 12.1 by the Company or any Buyer Indemnitee shall be deemed to
have also been given to each other member of the TVM Group.
(n) To the extent that any indemnification payment made pursuant to
Section 12.1(a)(i)(A) by any Seller with respect to a claim or claims arising
hereunder is in excess of an amount equal to such Seller's Percentage Ownership
of the total amount of such claim or claims (each such Seller an "Overpaying
Seller"), such Overpaying Seller shall have the right of contribution against
each other Seller that has not paid its Percentage Ownership of the total amount
of such claim (each such Seller, an "Underpaying Seller"). Each Underpaying
Seller hereby agrees to be responsible for
60
contribution, and to pay, each Overpaying Seller the amount equal to the product
of (x) the amount by which such Underpaying Seller's Percentage Ownership of
such claim or claims exceeds the amount paid by such Underpaying Seller with
respect to such claim or claims and (y) a fraction the numerator of which is the
amount by which the amount paid by such Overpaying Seller with respect to such
claim or claims exceeds such Overpaying Seller's Percentage Ownership of such
claim or claims and the denominator of which is the aggregate amount by which
the amount paid by all such Overpaying Sellers exceeds the aggregate amount of
all such Overpaying Sellers' Percentage Ownership of such claim or claims;
provided, however, that in no event shall any such Underpaying Seller be
obligated at any time to pay to the Overpaying Sellers with respect to any claim
more than the portion of such Underpaying Seller's Individual Other Reps Cap
remaining at such time (i.e., such Seller's Individual Other Reps Cap less the
aggregate amounts actually paid by such Seller under this Section 12.1 to, or on
behalf of, Buyer Indemnitees).
(o) Notwithstanding anything herein to the contrary, in no event shall
(A) any Seller (or any Affiliate thereof) have any responsibility or liability
for any Damages to the extent arising or resulting from (i) any untruth,
inaccuracy or breach of any representation or warranty of another Seller (or any
Affiliate thereof) contained in this Agreement and (ii) any non-fulfillment or
breach of any covenant or agreement of another Seller (or any Affiliate thereof)
contained in this Agreement or (B) the Company have any responsibility or
liability for any Damages to the extent arising or resulting from (i) any
untruth, inaccuracy or breach of any representation or warranty of any Seller
(or any Affiliate thereof) contained in this Agreement or (ii) any
non-fulfillment or breach of any covenant or agreement of any Seller (or any
Affiliate thereof other than the Company) contained in this Agreement.
(p) Notwithstanding anything to the contrary contained in this
Agreement, Buyer shall be entitled to offset the amount of any Damages for which
it is entitled to indemnification under this Section 12.1 against any amounts
payable by Buyer to a Seller pursuant to Section 1.2 to the extent such Damages
are not otherwise paid to Buyer Indemnitees; provided, however, that, with
respect to the amount of such Damages pursuant to Section 12.1(a)(i)(A) above,
such offset shall be limited to, in the case of each Seller, an amount equal to
the product of (i) the aggregate amount of such Damages and (ii) such Seller's
Percentage Ownership; provided, further, that, in no event shall any such offset
exceed such Seller's Individual Caps.
12.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, neither this Agreement nor any of the rights, interest or obligations of
the Parties and Parent hereunder shall be assigned or otherwise transferred
(whether voluntarily, by operation or law or otherwise) by any Party or Parent
without the prior written consent of Buyer, the Company and Consenting Sellers.
Notwithstanding the foregoing, prior to the Closing Date, Buyer may assign its
rights, together with all of its obligations, under this Agreement to an
Affiliate of Buyer provided that, in such event, Buyer shall continue to remain
liable for all of its obligations under this Agreement. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the Parties and
Parent and their respective permitted successors, assigns, heirs, executors and
administrators. This
61
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any Person other than the Parties and Parent any rights
or remedies hereunder.
12.3 ENTIRE AGREEMENT. This Agreement together with the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire agreement among the Parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings,
whether written or oral, with respect thereto; provided, however, that this
Agreement is not intended to supersede the Development, License and
Commercialization Agreement, Supply Agreement or Confidentiality Agreements, in
each case between the Company and Buyer.
12.4 GOVERNING LAW AND CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed under the laws of the State of New York (without
regard to the conflict of law principles thereof). Each of the Parties and
Parent irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof shall be brought and determined in the United States District Court for
the Southern District of New York or if such legal action or proceeding may not
be brought in such court for jurisdictional purposes, in the Supreme Court of
New York. Each of the Parties and Parent hereby (x) irrevocably submits with
regard to any such action or proceeding to the exclusive personal jurisdiction
of the aforesaid courts in the event any dispute arises out of this Agreement or
any transaction contemplated hereby and waives the defense of sovereign
immunity, (y) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court or that
such action is brought in an inconvenient forum and (z) agrees that it shall not
bring any action relating to this Agreement or any transaction contemplated
hereby in any court other than any New York state or federal court sitting in
New York, New York.
12.5 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument; provided, however, that
each executed Joinder Agreement signature page shall constitute a counterpart to
this Agreement, each of which shall be deemed an original, but all of which
together with the signature pages hereto shall constitute one and the same
instrument.
12.6 TITLES AND SUBTITLES. The descriptive headings of sections and
paragraphs of this Agreement are used for convenience only and do not constitute
a part of, and are not to be considered in construing or interpreting, this
Agreement.
12.7 NOUNS AND PRONOUNS. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and
vice-versa.
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12.8 NOTICES. All notices, requests, consents and other communications
hereunder to any Party shall be given in writing or upon receipt of a telecopy
(with confirmation of such telecopy being received) and addressed or telecopied
to the Party to be notified at the address or telecopier number indicated for
such Party, as the case may be, set forth below or such other address or
telecopier number, as the case may be, as may hereafter be designated in writing
by the addressees to the addressor listing all Parties and shall be deemed
effectively given upon personal delivery to the Party to be notified or five
days after being duly sent by first class registered or certified mail, postage
prepaid, or the following business day after being sent by overnight courier or
when receipt is mechanically acknowledged, if telecopied:
To Buyer: Novartis Pharma AG
Xxxxxxxxxxxx 00
XX-0000 Xxxxx
Xxxxxxxxxxx
Attention: Chief Executive Officer
Telecopy: 00-00-000-0000
With a copy (which shall not Novartis Pharma AG
constitute notice) to: Xxxxxxxxxxxx 00
XX-0000 Xxxxx
Xxxxxxxxxxx
Attention: General Counsel
Telecopy: 00-00-000-0000
With a copy (which shall not Novartis Corporation
constitute notice) to: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy (which shall not Xxxxx Xxxxxxxxxx LLP
constitute notice) to: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To the Company: Idenix Pharmaceuticals, Inc.
000 XxxxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy: (000) 000-0000
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With a copy (which shall not Idenix Pharmaceuticals, Inc.
constitute notice) to: 000 XxxxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy (which shall not Xxxx and Xxxx LLP
constitute notice) to: 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To Initial Sellers: See Annex A attached hereto.
To Additional Sellers: Idenix Pharmaceuticals, Inc.
000 XxxxxxxxxXxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Provided, however, that upon the Company's
receipt of notice sent to the Company on behalf
of an Additional Seller, the Company covenants
and agrees to promptly forward such notice to
such Additional Seller.
12.9 FINDER'S FEE. Buyer agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finder's fee (and the reasonable costs and expenses of defending against such
liability or asserted liability) for which Buyer or any of its officers,
partners, employees, or representatives is responsible. The Company agrees to
indemnify and hold harmless Buyer from any liability for any commission or
compensation in the nature of a finder's fee (and the reasonable costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is responsible.
12.10 EXPENSES AND FEES. Each Party shall pay its own costs, fees and
expenses incidental to the preparation of this Agreement and the consummation of
the transactions contemplated hereby.
12.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with
64
the written consent of Buyer, the Company and the Consenting Sellers; provided,
however, that if any such waiver would adversely affect the rights of any Party
hereto disproportionately with respect to the rights of the other Parties
hereto, such Party's consent shall be required. Notwithstanding the foregoing,
this Agreement may not be amended or terminated and the observance of any term
hereunder may not be waived with respect to any Seller without the written
consent of such Seller unless such amendment, termination or waiver applies to
all Sellers in the same fashion. Any amendment or waiver effected in accordance
with this Section 12.11 shall be binding upon Buyer, the Company and each
Seller.
12.12 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Party, upon any breach,
default or noncompliance by another Party under this Agreement or the Ancillary
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver of any kind or
character on Buyer's part of any breach, default or noncompliance under this
Agreement or the Ancillary Agreements or any waiver on such party's part of any
provisions or conditions of the Agreement or the Ancillary Agreements must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
12.13 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under Applicable Law, in any jurisdiction, such
provision shall be ineffective, as to such jurisdiction, and the balance of the
Agreement shall be interpreted as if such provision were so excluded, without
invalidating the remaining provisions of this Agreement; provided, however, that
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
12.14 CONFIDENTIALITY AND PUBLICITY. From and after the date hereof,
the provisions of the Confidentiality Agreements shall apply to any information
disclosed pursuant to or in connection with this Agreement. Notwithstanding the
foregoing, to the extent not otherwise disclosed publicly (other than as a
result of a violation of this Section 12.14), none of the Company, the Sellers,
Buyer or Parent will disclose to any Person (other than its Affiliates,
attorneys, accountants, employees, officers, directors, members, managers,
partners and other representatives and beneficial holders thereof) or
Governmental Entity the existence or terms of, or any information obtained in
connection with, this Agreement or any of the transactions contemplated hereby
without the prior written consent of Buyer and the Company, except (i) as may,
in the reasonable opinion of such Party's counsel, be required by Applicable Law
or (ii) as may be required by a Governmental Entity (in which events the
disclosing party will first consult with the other Parties (other than Sellers)
with respect to such disclosure to the extent permissible and practicable). If
Buyer, Parent or the Company is required to provide a copy of this Agreement or
any related document to any third party (other than their respective Affiliates,
attorneys, accountants, employees, officers, directors, members, retired
members, managers, retired managers, partners, retired partners and other
representatives
65
and beneficial holders thereof), the disclosing party shall ensure that such
document is redacted in consultation with the non-disclosing Parties (other than
Sellers), to the extent practicable and permitted by Applicable Law, to
eliminate all confidential information. The non-disclosing Parties (other than
Sellers) shall have the right to review and approve each such document prior to
its submission to any third party; provided, however, that such approval shall
not be unreasonably withheld or delayed. Unless not permitted by law, in which
case the maximum period allowable shall be provided, each Party shall use its
reasonable efforts to complete such review as soon as practicable; provided,
however, that such review shall be completed within ten (10) business days.
Notwithstanding anything in this Agreement to the contrary, not more than five
(5) days prior to the end of the Joinder Period, the Company, Buyer and any
Initial Seller desiring to issue a press release upon the consummation of, and
in connection with, the transactions contemplated by this Agreement, shall
notify the other Parties of such desire and the Parties shall use commercially
reasonable efforts to collaborate and agree upon the proper content of such a
press release; provided, however, that the issuance of such press release shall
require the written consent of the Company, Buyer and the Consenting Sellers
(which consent shall not be unreasonably withheld or delayed). The Company,
Parent, Buyer and such Initial Sellers may each issue a press release after the
Closing containing such agreed upon content. Notwithstanding the foregoing, the
Company or any Seller (and each employee, representative, or other agent
thereof) may disclose to any and all Persons, without limitation of any kind,
the tax treatment and tax structure of the transactions and all materials of any
kind (including opinions or other tax analyses) that are provided to any of them
relating to such tax treatment and tax structure.
12.15 DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Accredited Seller" means any Seller under this Agreement who is listed
on Annex C attached hereto.
"Accredited Seller Percentage" means, as to each Accredited Seller, the
quotient obtained by dividing (A) the number of Seller's Shares of such
Accredited Seller by (B) the sum of the number of Seller's Shares of all of the
Accredited Sellers.
"Acquisition Proposal" means any (i) offer or proposal for, or any
indication of interest in, any (A) direct or indirect acquisition or purchase of
the Company or any Subsidiary that constitutes 10% or more of the net revenues,
net income or assets of the Company and such Subsidiaries, taken as a whole; (B)
direct or indirect acquisition or purchase of 10% or more of any class of equity
securities, or 10% of the voting power, of the Company or any Subsidiary whose
business constitutes 10% or more of the net revenues, net income or assets of
the Company and such Subsidiaries, taken as a whole; (C) tender offer or
exchange offer that, if consummated, would result in any Person beneficially
owning 10% or more of any class of equity securities, or 10% of the voting
power, of the Company or any Subsidiary whose business constitutes 10% or more
of the net revenues, net income or assets of the Company and such Subsidiaries,
taken as
66
a whole; or (D) merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Subsidiary whose business constitutes 10% or more of the net revenue, net income
or assets of the Company and such Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement; or (ii) offer or proposal to enter
into, or any indication of interest in entering into, a Contract relating to the
Development or Commercialization of any product to which Buyer has or will have
rights pursuant to the Development, License and Commercialization Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person.
"Aggregate Accredited Contingent Amount" means [**].
"Aggregate Accredited Contingent Cash Payment" means [**].
"[**]" means [**].
"[**]" means [**].
"[**]" means the average closing price of a
Parent ADS on the New York Stock Exchange, as reported in The Wall Street
Journal, Northeastern edition, for the thirty (30) consecutive trading days
ending on the trading day immediately preceding the [**].
"[**]" means the average closing price of a
Parent ADS on the New York Stock Exchange, as reported in The Wall Street
Journal, Northeastern edition, for the thirty (30) consecutive trading days
ending on the trading day immediately preceding the [**].
"Balance Sheet Date" means December 31, 2002.
"Board" means the board of directors of the Company.
"Cagliari Co-Operative Agreement" means the Co-operative Antiviral
Research Activity Agreement, dated as of January 4, 1999, by and among Idenix
SARL, as successor to Novirio SARL, on behalf of itself and the Company (as
successor to Novirio Pharmaceuticals Limited), and the Dipartimento di Biologia
Sperimentale "Xxxxxxxx Xxxxx" dell'Universita di Cagliari, as amended.
"Cagliari License Agreement" means the License Agreement, dated as of
December 14, 2000, by and between the Company (as successor to Novirio
Pharmaceuticals Limited) and the Dipartimento di Biologia Sperimentale "Xxxxxxxx
Xxxxx" dell'Universita di Cagliari, as amended.
"Certificate Amendment" means the amendment to the Current Certificate
included in the Stockholder Consent that provides, among other things, that the
67
provisions of Section B(4)(e) of Article FOURTH of the Current Certificate shall
not apply to any transaction unless the holders of the Requisite Percentage (as
defined in Section 12.15(a)) of the outstanding Preferred Stock determine that
such provision shall apply.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, and
the resolutions promulgated thereunder.
"Common Stock" means common stock, par value $0.001 per share, of the
Company.
"Company Material Adverse Effect" means any material adverse effect on
the condition (financial or otherwise), results of operations, assets,
liabilities or business of the Company and its Subsidiaries, taken as a whole,
other than changes, effects or circumstances (i) that are the result of factors
generally affecting the pharmaceutical industry or (ii) that are attributable to
the announcement or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
"Company Contractor" means any Person with which the Company or any of
its Subsidiaries formerly or presently had or has any agreement or arrangement
(whether oral or written) under which that Person has or had physical possession
of, or was or is obligated to develop, test, process, investigate, manufacture
or produce, any Regulated Product on behalf of the Company or any of its
Subsidiaries.
"Company Stock" means Preferred Stock and Common Stock.
"Compulsory Transfer Determination" means the determination included in
the Stockholder Consent by holders of the Requisite Percentage of the
outstanding Preferred Stock that the terms of Section B(4)(e) of Article FOURTH
of the Current Certificate shall not apply to the transactions contemplated by
this Agreement.
"Confidentiality Agreements" mean the Confidentiality Agreements
between the Company and Buyer entered into as of February 1, 2002, September 6,
2002 and October 8, 2002.
"Contingent Payment" means the consideration set forth in Sections
1.2(b) and/or 1.2(c), as applicable.
"Consenting Sellers" means, prior to the Closing Date, the holders of
sixty-six and two-thirds percent (66-2/3)% of the shares of Company Stock held
by the Initial Sellers prior to the Closing, and, after the Closing Date, the
holders of a sixty-six and two-thirds percent (66-2/3)% of the shares of Common
Stock sold by the Sellers pursuant to this Agreement; provided, however, that,
after the Closing Date with respect to matters relating to Sections 12.2
(Successor and Assigns) and 12.14 (Confidentiality and Publicity) of this
Agreement, "Consenting Sellers" shall mean the Sellers representing sixty
percent (60.0)% of the Purchased Shares.
"CSFB" means Credit Suisse First Boston Equity Partners, L.P.
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"CSFB Group" means CSFB, Credit Suisse First Boston Equity Partners
(Bermuda), L.P., Credit Suisse First Boston U.S. Executive Advisors, L.P., EMA
Private Equity Fund 2000, L.P. and EMA Partners Fund 2000, L.P.
"EC Regulation" means Council Regulation (EEC) No. 4064/89 of December
21, 1989, on the control of concentrations between undertakings, as amended, of
the Council of the European Union or any other similar regulation of the
European Union and/or applicable in Europe.
"FDA" means the United States Food and Drug Administration or its
successor and corresponding regulatory agencies in other counties and states of
the United States.
"Fully-Diluted Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock (whether vested or unvested)
outstanding at such time (including any restricted stock), assuming conversion
of (i) all outstanding securities that are exercisable for, convertible into or
exchangeable for Common Stock (including any shares of Common Stock issuable in
satisfaction of a dividend payable thereon) and (ii) all outstanding options
(whether vested or unvested), warrants (other than the Series C Warrants) and
other rights to subscribe for or acquire (A) Common Stock or (B) other
securities that are convertible into or exchangeable for Common Stock, in each
case, whether at the time of issuance or upon passage of time or the occurrence
of some future event; provided, however, that the rights to subscribe for shares
of Common Stock or other securities contained in Section 4 of the Second Amended
and Restated Stockholders' Agreement shall not be included in such definition.
"Indebtedness" means (i) all debt for borrowed money and similar
monetary obligations, whether direct or indirect; (ii) all liabilities secured
by any mortgage, pledge, security interest, lien, charge or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; (iii) all guaranties,
endorsements and other obligations whether direct or indirect in respect of
indebtedness or performance of others relating to payment obligations, including
any obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor, to purchase indebtedness, or to assure the owner of
indebtedness against loss, through an agreement to purchase goods, supplies or
services for the purpose of enabling the debtor to make payment of the
indebtedness held by such owner or otherwise; or (iv) obligations to reimburse
issuers of any letters of credit.
"Management Seller" means (i) the individuals listed on Annex B
attached hereto and (ii) any other individual who enters into an employment
agreement or consulting agreement with the Company between the date hereof and
the Closing Date.
"Montpellier Cooperative Agreement" means the Cooperative Agreement,
dated as of January 4, 1999, by and among Idenix SARL, as successor to Novirio
SARL, acting on behalf of the Company (as successor to Novirio Pharmaceuticals
Limited), Le
69
Centre National de la Recherche Scientifique and L'Universite Montpellier II, as
amended.
"MPM" means BB BioVentures L.P.
"MPM Group" means MPM, MPM BioVentures Parallel Fund, L.P., MPM Asset
Management LLC and MPM Asset Management Investors 1998 LLC.
"Non-Accredited Seller" means each Seller other than an Accredited
Seller.
"Parent" means Novartis AG, a corporation organized under the laws of
Switzerland, with its principal place of business at Xxxxxxxxxxxx 00, XX-0000,
Xxxxx, Xxxxxxxxxxx.
"Parent ADSs" means the American Depositary Shares of Parent
representing the Registered Shares and evidenced by the American Depositary
Receipts. References in this Agreement to Parent ADSs include the American
Depositary Receipts evidencing the Parents ADSs.
"Percentage Ownership" means, with respect to each Seller, the quotient
obtained by dividing (a) the number of Seller's Shares of such Seller as set
forth on Adjusted Annex A as of the Closing Date by (y) the number of Purchased
Shares.
"Preferred Stock" means preferred stock par value $0.001 per share, of
the Company.
"Primary Sellers" means the Initial Sellers plus the next six largest
Sellers of Purchased Shares (as set forth on Adjusted Annex A) hereunder who are
not Initial Sellers (who shall be indicated as such on Adjusted Annex A).
"Purchased Shares" means the number of shares set forth on Adjusted
Annex A as of the Closing Date, which shares represent the sum of all Seller's
Shares as determined pursuant to Section 1.1(c) of this Agreement.
"QPO Determination" means the determination included in the Stockholder
Consent by the holders of the Requisite Percentage of the outstanding Preferred
Stock that the transaction contemplated by this Agreement constitutes a
Qualified Private Offering in accordance with the terms of the Current
Certificate and the Second Amended and Restated Stockholders' Agreement.
"Requisite Percentage" means eighty-five percent (85.0%).
"Regulated Product" means any product which is subject to the
jurisdictions of a Regulatory Agency.
"Regulatory Agency" means any Governmental Entity with authority over
the marketing, pricing and/or sale of a pharmaceutical product in a country,
including,
70
without limitation, the FDA (as defined in Section 12.15(a)) and the European
Medicines Evaluation Agency and foreign and international equivalents thereof
(or their successors).
"Regulatory Agency approvals and applications" means any effective
investigational new drug application, an approved new drug application or its
equivalent approved by a Regulatory Agency, and any application that has been
filed with a Regulatory Agency pursuant to any Regulatory Law.
"Regulatory Law" means any statute, regulation or judicial
interpretation relating to any Regulated Product, including, without limitation,
the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. sec. 301 et seq., as
amended, and equivalent statutes and regulations adopted by countries,
international bodies and other jurisdictions, in addition to the United States,
where the Company or any of its Subsidiaries has facilities, does business, or
directly or through others sells or offers for sale any Regulated Product.
"Second Amended and Restated Stockholders' Agreement Amendment" means
the amendment to the Second Amended and Restated Stockholders' Agreement and
included in the Stockholder Consent that, among other things, rendered the
provisions of Section 5 thereof inapplicable to the transactions contemplated by
this Agreement.
"Second Amended and Restated Stockholders' Agreement Termination" means
the agreement of certain Sellers and other signatories thereto to be effective
upon the Closing and included in the Stockholder Consent to terminate the Second
Amended and Restated Stockholders' Agreement upon the Closing at which time such
agreement shall be of no further force and effect.
"Selling Percentage" means the result obtained by dividing (i) the
result obtained by subtracting (A) the number of Management Shares Sold from (B)
the result obtained by multiplying (1) 0.51 by (2) Fully Diluted Common Stock
Deemed Outstanding on the Closing Date by (ii) the total number of shares of
Vested Stock owned by the Sellers (other than the Management Sellers) as of the
Closing Date in the aggregate.
"Series A Convertible Preferred Stock" means Series A Convertible
Preferred Stock, par value $0.001 per share, of the Company.
"Series B Convertible Preferred Stock" means Series B Convertible
Preferred Stock, par value $0.001 per share, of the Company.
"Series C Convertible Preferred Stock" means Series C Convertible
Preferred Stock, par value $0.001 per share, of the Company.
"Series C Purchase Agreement Amendment" means the amendment to the
Securities Purchase Agreement among Novirio Pharmaceuticals Limited and the
several parties named therein, dated as of April 24, 2001, that, among other
things, terminates Articles VII and VIII thereof upon the Closing.
71
"Series C Warrant Amendment" means the amendment of the Series C
Warrants included in the Stockholder Consent that amended Sections 5.3(b)(i),
5.4(a)(i) and 5.4(b) of the Series C Warrant, as more fully set forth in the
Stockholder Consent.
"Stockholder Consent" means the Consent executed by Initial Sellers and
other stockholders of the Company that are signatories thereto delivered to the
Company on or prior to the date hereof and set forth in Section 4.7 of the
Company Disclosure Schedule, which Consent includes, among other things, (i) the
approval of this Agreement, the Ancillary Agreements, the Certificate Amendment,
the Series C Purchase Agreement Amendment, the Second Amended and Restated
Stockholders' Agreement Amendment and the Series C Warrant Amendment and the
consummation of the transactions contemplated hereby and thereby, (ii) the QPO
Determination and the Compulsory Transfer Determination and (iii) the Second
Amended and Restated Stockholders' Agreement Termination.
"Subsidiaries" (or, individually, a "Subsidiary") means any and all
corporations, partnerships, joint ventures, associations and other entities
controlled by the Company directly or indirectly through one or more
intermediaries.
"Sumitomo" means Sumitomo Pharmaceuticals Co. Ltd.
"Sumitomo Amendment" means the consolidated First Amendment Agreement,
dated October 8, 2002, to both the Development Agreement, dated June 29, 2001,
by and between the Company and Sumitomo and the Commercialization Agreement,
dated as of September 7, 2001, by and between the Company and Sumitomo.
"Taxes" means any and all federal, state, local, foreign or other
taxes, fees or assessments in the nature of taxes (together with any and all
interest, penalties and additions to tax) imposed by any taxing authority
including, without limitation, taxes or other charges on or with respect to
income, franchise, windfall or other profits, net or gross receipts, property,
sales, use, intangibles, capital stock, transfer, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth, and
taxes or other charges in the nature of excise, estimated, withholding, ad
valorem or value added taxes.
"Tax Returns" means any and all returns, reports or similar statements
(including any related exhibits and schedules) required to be filed with respect
to any Tax, including any information return, claim for refund, amended return
or declaration of estimated tax.
"TherapX License Agreement" means the License Agreement, dated as of
June 20, 1998, by and among the Company (as successor to Novirio Pharmaceuticals
Ltd.) TherapX Pharmaceuticals, L.L.C. and Xx. Xxxxxxx X. Xxxxxxxx.
"TVM" means TVM V Life Science Ventures GmbH & Co. KG.
"TVM Group" means TVM and TVM Medical Ventures GmbH & Co. KG.
72
"Vested Stock" means outstanding shares of Company Stock assuming (i)
conversion of all outstanding shares of Preferred Stock after taking into
account payment of the dividend payable on the shares of Series C Convertible
Preferred Stock through the Closing Date in shares of Common Stock and (ii)
exercise of all vested and exercisable options outstanding as of the Closing
Date, excluding shares subject to a repurchase right by the Company (other than
those shares that would no longer be subject to a repurchase right upon the
consummation of the transaction contemplated in this Agreement).
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Additional Seller(s) ............................................... 1.1(b)
Additional Seller Documents......................................... 1.1(b)
Adjusted Annex A.................................................... 1.1(c)
ADS Exchange........................................................ 1.2(d)
Aggregate Basket.................................................... 12.1(e)
Aggregate Purchase Price............................................ 1.1(a)
Agreement........................................................... Preamble
Amended and Restated By-laws........................................ 4.4
Ancillary Agreements................................................ 4.4
Applicable Law...................................................... 3.3
Banc of America..................................................... 4.29
Benefit Plan........................................................ 4.19(a)
Blocking Third Party Intellectual Property Rights................... 12.1(i)
Buyer............................................................... Preamble
Buyer Reps Cap...................................................... 12.1(f)
Buyer Shares/Covenants Cap.......................................... 12.1(f)
Buyer Indemnitees................................................... 12.1(a)
By-laws............................................................. 4.1
Candidate Intellectual Property..................................... 4.11(a)
Candidates.......................................................... 4.11(a)
Closing............................................................. 2.1
Closing Date........................................................ 2.1
Commencement Notice................................................. 12.1(e)
Commercialization................................................... 4.11(m)
Company............................................................. Preamble
Company Disclosure Schedule......................................... 4 Preamble
Company Patents..................................................... 4.11(a)
Company Property.................................................... 4.11(a)
Computer Software................................................... 4.11(a)
Consents............................................................ 3.5
[**] ............................................................... [**]
Contract............................................................ 3.3
Credit Agreement.................................................... 4.4
Current Certificate................................................. 3.7
73
Term Section
---- -------
Custodian........................................................... 1.1(b)
Custody Agreement................................................... 1.1(b)
Damages............................................................. 12.1(a)
Deposit Agreement................................................... 5.4(c)
Development......................................................... 4.11(m)
Development, License and Commercialization
Agreement....................................................... 4.4
Disclosure Statement................................................ 1.1(e)
Encumbrances........................................................ 2.2(a)
Environmental Law................................................... 4.25(a)
ERISA............................................................... 4.19(a)
Exchange Act........................................................ 4.24
Financial Statements................................................ 4.18
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
GAAP................................................................ 4.18
Global Trial........................................................ 6.17(b)
Governmental Entity................................................. 3.5
Hazardous Materials................................................. 4.25(b)
HBV Drug Candidates................................................. 4.11(a)
HCV................................................................. 4.11(l)
HCV Drug Candidates................................................. 12.1(e)
[**]................................................................ [**]
Hepatitis B Drug Candidates......................................... Recitals
Hepatitis C Drug Candidates......................................... Recitals
HSR Act............................................................. 3.5
Indemnified Party................................................... 12.1(d)
Indemnifying Parties................................................ 12.1(d)
Indemnification Claim............................................... 12.1(d)
Individual Caps..................................................... 12.1(e)
Individual Closing Consideration.................................... 1.1(d)
Individual Other Reps Cap........................................... 12.1(e)
Individual Title/Covenants Cap...................................... 12.1(e)
Initial HCV Drug Candidate.......................................... 4.11(a)
Initial Seller(s) .................................................. Preamble
Initial Shares...................................................... Recitals
Intellectual Property............................................... 4.11(a)
Intellectual Property Rights........................................ 4.11(m)
IP Contracts........................................................ 4.11(a)
Joinder Agreement................................................... 1.1(b)
Joinder Period...................................................... 1.1(b)
74
Term Section
---- -------
Judgment............................................................ 3.3
LdT Drug Product.................................................... 6.17(b)
Licensed Technology................................................. 4.11(m)
[**]................................................................ [**]
Major Stockholders.................................................. 4.29
Management Shares Sold.............................................. 1.1(c)
Manufacture......................................................... 4.11(m)
Material Owned Property............................................. 4.11(a)
Non-Material IP..................................................... 4.11(a)
Northeast Asia...................................................... 6.17(b)
[**]................................................................ [**]
Novartis HCV Option................................................. 12.1(e)
Overpaying Seller................................................... 12.1(n)
Owned Property...................................................... 4.11(a)
Parent SEC Reports.................................................. 5.3
Participating Holder................................................ 1.2(f)(i)
Parties............................................................. Preamble
Patent Offices...................................................... 4.11(e)
Patents............................................................. 4.11(a)
Pension Plans....................................................... 4.19(a)
Permits............................................................. 4.27(a)
Person.............................................................. 3.4
Plan................................................................ 4.2(b)
Pro Rata Portion.................................................... 12.1(l)
Proceedings......................................................... 4.9
Property............................................................ 4.25(b)
Qualified Private Offering.......................................... 3.7
Registered Intellectual Property.................................... 4.11(a)
Registered Share.................................................... 5.4(a)
Registration Statement.............................................. 1.2(f)
Release............................................................. 4.25(a)
Replacement Shares.................................................. 11(d)
Restated Certificate of Incorporation (Alternative 1) .............. 4.4
Restated Certificate of Incorporation (Alternative 2) .............. 4.4
Restated Certificate(s)............................................. 4.4
SEC................................................................. 5.3
Second Amended and Restated
Stockholders' Agreement....................................... 3.7
Securities Act...................................................... 1.2(d)
Securities Laws..................................................... 4.24
[**]................................................................ [**]
Seller Indemnitees.................................................. 12.1(c)
[**]................................................................ [**]
Sellers............................................................. Preamble
75
Term Section
---- -------
Seller's Shares..................................................... 1.1(a)
Series C Cumulative Annual Dividend Amount.......................... 6.22
Series C Warrants................................................... 10.14
Stockholders' Agreement............................................. 4.4
Subject Trade Secrets............................................... 4.11(h)
Supply Agreement.................................................... 4.4
Territory........................................................... 12.1(e)
Trade Secrets....................................................... 4.11(a)
UAB License......................................................... 6.15
Underpaying Seller.................................................. 12.1(n)
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
[**]................................................................ [**]
Welfare Plans....................................................... 4.19(a)
2003 Annual Budget.................................................. 4.18
76
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
IDENIX PHARMACEUTICALS, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
NOVARTIS PHARMA AG
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
77
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
NOVARTIS AG
(only with respect to Sections
1.2(b)(i), 1.2(c)(i), 1.2(d),
1.2(e), 1.2(f), 2.2(d), 2.3,
10.1, 10.10, 12.2, 12.3, 12.4,
12.8 and 12.14 hereof)
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
78
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
CREDIT SUISSE FIRST BOSTON EQUITY
PARTNERS, L.P.
By: Hemisphere Private Equity
Partners, Ltd.,
its General Partner
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
CREDIT SUISSE FIRST BOSTON EQUITY
PARTNERS (BERMUDA), L.P.
By: Hemisphere Private Equity
Partners, Ltd.,
its General Partner
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
CREDIT SUISSE FIRST BOSTON U.S.
EXECUTIVE ADVISORS, L.P.
By: Hemisphere Private Equity
Partners, Ltd.,
its General Partner
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
EMA PARTNERS FUND 2000, L.P.
By: Credit Suisse First Boston
(Bermuda) Limited,
its General Partner
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
79
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
EMA PRIVATE EQUITY FUND 2000,
L.P.
By: Credit Suisse First
Boston (Bermuda) Limited,
its General Partner
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
80
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
BB BIOVENTURES L.P.
By: BAB BIOVENTURES L.P., its General
Partner
By: BAB BIOVENTURES, N.V., its General
Partner
By:
-------------------------
Name: Ansbert X. Xxxxxxx
Title: Managing Director
MPM ASSET MANAGEMENT INVESTORS 1998 LLC
By:
-------------------------
Name: Ansbert X. Xxxxxxx
Title: Manager
MPM ASSET MANAGEMENT LLC
By:
-------------------------
Name: Ansbert X. Xxxxxxx
Title: Manager
MPM BIOVENTURES PARALLEL
FUND, L.P.
By: MPM BIOVENTURES I L.P., its General
Partner
By: MPM BIOVENTURES I LLC, its General
Partner
By:
-------------------------
Name: Ansbert X. Xxxxxxx
Title: Manager
81
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
TVM MEDICAL VENTURES GMBH
& CO. KG
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
TVM V LIFE SCIENCE VENTURES
GMBH & CO. KG
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
82
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
KB LUX VENTURE CAPITAL FUND-
BIOTECHNOLOGY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
83
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
NOMURA INTERNATIONAL PLC
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
84
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the date first above written.
---------------------------
XXXX-XXXXXX SOMMADOSSI
85
