Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HEMOXYMED, INC.
MOLECULAR GERIATRICS ACQUISITION INC.
and
MOLECULAR GERIATRICS CORPORATION
Dated as of July 29, 2002
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER.................................................2
SECTION 1.1 The Merger..............................................2
SECTION 1.2 Consummation of the Merger;
Effective Date..........................................2
SECTION 1.3 Effect of the Merger....................................2
ARTICLE 2 CONVERSION AND CANCELLATION OF SECURITIES..................2
SECTION 2.1 Conversion of Shares; Treatment of Warrants, Options
and Convertible Securities............................2
SECTION 2.2 Appraisal Rights........................................5
SECTION 2.3 Surrender and Payment...................................5
SECTION 2.4 Common Stock of Sub.....................................5
SECTION 2.5 Closing.................................................5
ARTICLE 3 CERTIFICATES OF INCORPORATION AND BY-LAWS .................5
SECTION 3.1 Certificate of Incorporation and By-Laws................5
SECTION 3.2 Directors of Sub........................................5
ARTICLE 4 CERTAIN PROVISIONS RELATING TO SHARES......................6
SECTION 4.1 No Fractional Shares of ACQUIROR Common Stock...........6
SECTION 4.2 ACQUIROR to Make Merger Consideration Available.........6
SECTION 4.3 Dividends; Transfer Taxes; Voting Rights................6
SECTION 4.4 Abandoned Property; Lost Certificates...................7
SECTION 4.5 Taking of Necessary Action; Further Action..............7
SECTION 4.6 Closing of TARGET's Transfer Books......................7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TARGET...................7
SECTION 5.1 Organization and Qualification; Subsidiaries............8
SECTION 5.2 Certificates of Incorporation and By-Laws...............8
SECTION 5.3 Capitalization..........................................8
SECTION 5.4 Authority...............................................9
SECTION 5.5 No Conflict; Required Filings and Consents..............9
SECTION 5.6 Permits; Compliance....................................10
SECTION 5.7 Reports; Financial Statements..........................10
SECTION 5.8 Absence of Certain Changes or Events...................11
SECTION 5.9 Absence of Litigation..................................11
SECTION 5.10 Taxes..................................................11
SECTION 5.11 Certain Business Practices.............................11
SECTION 5.12 Brokers................................................12
SECTION 5.13 Board Recommendation...................................12
SECTION 5.14 Books and Records......................................12
SECTION 5.15 No Undisclosed Liabilities.............................12
SECTION 5.16 Contracts..............................................12
SECTION 5.17 Disclosure.............................................13
SECTION 5.18 Affiliates.............................................13
SECTION 5.19 Investments............................................13
SECTION 5.20 Employee Benefit Plans.................................13
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB........13
SECTION 6.1 Organization and Qualification; Subsidiaries...........14
SECTION 6.2 Certificate of Incorporation and By-Laws...............14
SECTION 6.3 Capitalization.........................................14
SECTION 6.4 Authority..............................................15
SECTION 6.5 No Conflict; Required Filings and Consents.............15
SECTION 6.6 Permits; Compliance....................................16
SECTION 6.7 Reports; Financial Statements..........................16
SECTION 6.8 Absence of Certain Changes or Events...................17
SECTION 6.9 Absence of Litigation..................................17
SECTION 6.10 Taxes..................................................17
SECTION 6.11 Certain Business Practices.............................18
SECTION 6.12 Brokers................................................18
SECTION 6.13 Books and Records......................................18
SECTION 6.14 Contracts..............................................18
SECTION 6.15 No Undisclosed Liabilities.............................18
SECTION 6.16 Board Recommendation...................................19
SECTION 6.17 Disclosure.............................................19
SECTION 6.18 Investments............................................19
SECTION 6.19 Employee Benefit Plans.................................19
ARTICLE 7 COVENANTS.................................................19
SECTION 7.1 Affirmative Covenants of TARGET and ACQUIROR...........19
SECTION 7.2 Negative Covenants of TARGET...........................20
SECTION 7.3 Negative Covenants of ACQUIROR.........................22
SECTION 7.4 Access and Information.................................24
SECTION 7.5 Confidentiality........................................24
SECTION 7.6 No Shopping............................................24
SECTION 7.7 Directors' and Officers' Indemnification...............25
ARTICLE 8 ADDITIONAL AGREEMENTS.....................................25
SECTION 8.1 Stockholder Approval...................................25
SECTION 8.2 Disclosure.............................................26
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SECTION 8.3 Appropriate Action; Consents; Filings..................26
SECTION 8.4 Public Announcements...................................27
ARTICLE 9 CLOSING CONDITIONS........................................27
SECTION 9.1 Conditions to Obligations of
Each Party Under This Agreement.........................27
(a) SEC and State Action............................27
(b) Stockholder Approval............................28
(c) No Order........................................28
(d) Exempt Transaction..............................28
SECTION 9.2 Additional Conditions to Obligations of ACQUIROR........28
(a) Representations and Warranties..................28
(b) Agreements and Covenants........................28
(c) Consents and Approvals..........................28
(d) No TARGET Material Adverse Effect...............28
(e) Appraisal Rights................................29
(f) Certificates....................................29
SECTION 9.3 Additional Conditions to Obligations of TARGET.........29
(a) Representations and Warranties.....................29
(b) Agreements and Covenants...........................29
(c) Consents and Approvals.............................29
(d) No ACQUIROR Material Adverse Effect................30
(e) Certificates.......................................30
(f) Appraisal Rights...................................30
(g) Directors..........................................30
(h) Officers...........................................30
ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER.........................30
SECTION 10.1 Termination............................................30
SECTION 10.2 Effect of Termination..................................31
SECTION 10.3 Amendment..............................................32
SECTION 10.4 Waiver.................................................32
SECTION 10.5 Fees, Expenses and Other Payments......................32
ARTICLE 11 GENERAL PROVISIONS........................................32
SECTION 11.1 Effectiveness of Representations,
Warranties and Agreements...........................32
SECTION 11.2 Notices................................................33
SECTION 11.3 Certain Definitions....................................34
SECTION 11.4 Headings...............................................35
SECTION 11.5 Severability...........................................35
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SECTION 11.6 Entire Agreement.......................................35
SECTION 11.7 Assignment.............................................35
SECTION 11.8 Parties in Interest....................................35
SECTION 11.9 Failure or Indulgence Not Waiver; Remedies Cumulative..35
SECTION 11.10 Governing Law..........................................35
SECTION 11.11 Counterparts...........................................35
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated as of July 29, 2002 (the
"Agreement"), by and among HEMOXYMED, INC., a Delaware corporation ("ACQUIROR"),
MOLECULAR GERIATRICS ACQUISITION INC., a Delaware corporation and wholly-owned
subsidiary of ACQUIROR ("Sub"), and MOLECULAR GERIATRICS CORPORATION, a Delaware
corporation ("TARGET") (Sub and TARGET being hereinafter collectively referred
to as the "Constituent Corporations").
WHEREAS, ACQUIROR and TARGET are each small life sciences companies
pursuing the development of therapeutics to treat cancer and other diseases,
such as Alzheimer's disease, and the respective boards of directors of each
company have determined that the value of each company can best be maximized by
means of establishing a strategic alliance between the two companies;
WHEREAS, the respective boards of directors of ACQUIROR, Sub, and
TARGET have each determined that it is advisable and for the benefit and in the
best interests of their corporations and their respective stockholders that this
form of strategic alliance between ACQUIROR AND TARGET can best be accomplished
in a transaction in which TARGET is acquired by ACQUIROR (the "Strategic
Transaction") by means of a merger of Sub with and into TARGET, with TARGET
being the surviving corporation, on the terms and conditions hereinafter set
forth (the "Merger");
WHEREAS, the board of directors of ACQUIROR has determined that the
Strategic Transaction is consistent with and in furtherance of the long-term
business strategy of ACQUIROR and is fair to, and in the best interests of,
ACQUIROR and the holders of ACQUIROR Common Stock (as hereinafter defined), and
has approved and adopted this Agreement and has approved the Merger and the
other transactions contemplated hereby; and
WHEREAS, the board of directors of TARGET has determined that the
Strategic Transaction is fair to, and in the best interests of, TARGET and the
holders of TARGET Common Stock (as hereinafter defined), and has approved and
adopted this Agreement and has approved the Merger and the other transactions
contemplated hereby and recommended approval and adoption of the Agreement and
approval of the Merger by the stockholders of TARGET;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a)(1)(A)
and 368(a)(2)(D) of the Code (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises, the mutual
covenants, representations and warranties herein contained, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto intending to be bound hereby agree as follows:
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ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions hereof,
on the Effective Date (as defined in Section 1.3), Sub shall be merged with and
into TARGET in accordance with the applicable provisions of the General
Corporation Law of the State of Delaware ("Delaware Law"); TARGET, as the
surviving corporation in the Merger (the "Surviving Corporation"), shall
continue its corporate existence under Delaware Law; the separate existence of
Sub shall thereupon cease; and the corporate existence of Sub shall be merged
into and transferred to the Surviving Corporation.
SECTION 1.2 Consummation of the Merger; Effective Date. As soon as
practicable following the Closing (as that term is hereinafter defined in
Section 2.5), the parties hereto will file with the Secretary of State of the
State of Delaware a Certificate of Merger in such form as required by, and
executed in accordance with, the relevant provisions of Delaware Law. The Merger
shall become effective at such time (the "Effective Time") as the Certificate of
Merger shall have been duly filed with the Secretary of State of the State of
Delaware (the "Effective Date").
SECTION 1.3 Effect of the Merger. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed, without any other action, to
all rights and property of each of the Constituent Corporations, and shall be
subject to all the debts and liabilities of each of the Constituent Corporations
in the same manner as if the Surviving Corporation had itself incurred them, all
with the effect set forth in Delaware law.
ARTICLE 2
CONVERSION AND CANCELLATION
OF SECURITIES
SECTION 2.1 Conversion of Shares; Treatment of Warrants, Options and
Convertible Securities. As of the Effective Date, by virtue of the Merger and
without any action on the part of the holders thereof:
Common Stock. (i) On the Effective Date, the shares of TARGET's
Common Stock, par value $0.0001 per share (the "TARGET Common Stock"), issued
and outstanding immediately prior to the Effective Date, other than Dissenting
Shares (as hereinafter defined) and other than any shares of TARGET Common Stock
held by ACQUIROR, Sub or TARGET, shall, by virtue of the Merger automatically
and without any action on the part of the holder thereof, become and be
converted into the right to receive shares of fully paid and
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nonassessable Common Stock, $.0025 par value, of ACQUIROR (the "ACQUIROR Common
Stock"). The shares of ACQUIROR Common Stock issuable in the Merger are
sometimes collectively referred to hereinafter as the "Merger Consideration" and
the ratio of shares of ACQUIROR Common Stock to one share of TARGET Common Stock
is herein referred to as the "Final Exchange Ratio".
(ii) A preliminary exchange ratio (the "Preliminary Exchange Ratio") is
initially established as .6578 share of ACQUIROR Common Stock for each one
share of issued and outstanding TARGET Common Stock. This Preliminary
Exchange Ratio is based upon the following formula:
Preliminary Exchange Ratio = A + B + C
---------
X + Y + Z
where,
A= the number of shares of ACQUIROR Common Stock currently issued and
outstanding;
B= the number of shares of ACQUIROR Common Stock issuable upon the exercise or
conversion of currently outstanding options or warrants to purchase common stock
or other convertible securities of ACQUIROR, excluding those certain outstanding
"out of the money" options or warrants listed on Schedule 2.1 of the ACQUIROR
Disclosure Schedule (the "Excluded ACQUIROR Options and Warrants");
C= the anticipated aggregate additional or decreased number of shares of
ACQUIROR Common Stock, if any, being issued, cancelled or redeemed after the
date hereof and prior to the Effective Date or issuable upon the exercise or
conversion of outstanding options, warrants or convertible securities
anticipated to be issued, cancelled or redeemed by ACQUIROR prior to the
Effective Date (where C can be a negative number);
X= the number of shares of TARGET Common Stock currently issued and outstanding;
Y= the number of shares of TARGET Common Stock issuable upon the exercise or
conversion of currently outstanding options or warrants to purchase common stock
or other convertible securities of TARGET, excluding those certain outstanding
"out of the money" options or warrants listed on Schedule 2.1 of the TARGET
Disclosure Schedule (the "Excluded TARGET Options and Warrants"; together with
the Excluded ACQUIROR Options and Warrants, the "Excluded Options and
Warrants"); and
Z= the anticipated aggregate additional or decreased number of shares of TARGET
Common Stock, if any, being issued, cancelled or redeemed after the date hereof
and prior to the Effective Date or issuable upon the exercise or conversion of
outstanding options, warrants or convertible
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securities anticipated to be issued, cancelled or redeemed by TARGET prior to
the Effective Date (where Z can be a negative number).
The sum of A, B and C above is referred to as the "Anticipated Fully Diluted
ACQUIROR Capitalization" and the sum of X, Y and Z above is referred to as the
"Anticipated Fully Diluted TARGET Capitalization."
If the actual number of shares of TARGET Common Stock or ACQUIROR Common
Stock issued and outstanding at the Effective Date or issuable upon the exercise
or conversion of the options, warrants or convertible securities outstanding as
of the Effective Date, other than the Excluded Options and Warrants (the "Actual
Fully Diluted TARGET Capitalization" or the "Actual Fully Diluted ACQUIROR
Capitalization", as the case may be) differs from the Anticipated Fully Diluted
TARGET Capitalization or the Anticipated Fully Diluted ACQUIROR Capitalization,
then the Preliminary Exchange Ratio will be adjusted to the "Final Exchange
Ratio" referred to above, as determined by the following formula:
Final Exchange Ratio = Actual Fully Diluted ACQUIROR Capitalization
--------------------------------------------
Actual Fully Diluted TARGET Capitalization
In no event will the Final Exchange Ratio be greater than .68 or less than
..63.
(iii) For example, if the Anticipated Fully Diluted TARGET Capitalization is
25,000,000 and the Anticipated Fully Diluted ACQUIROR Capitalization is
20,000,000, the Preliminary Exchange Ratio will be 0.8. If the Actual Fully
Diluted TARGET Capitalization is 30,00,000 and the Actual Fully Diluted ACQUIROR
Capitalization is 20,000,000, the Preliminary Exchange Ratio will be adjusted
and the Final Exhange Ratio will be 0.667.
(iv) Capital Stock Held by TARGET, ACQUIROR or Sub. On the Effective Date, each
share of capital stock of TARGET held in the treasury of TARGET, or by ACQUIROR
or Sub immediately prior to the Effective Date shall, by virtue of the Merger
and without any action on the part of the holder thereof, be automatically
cancelled and retired and cease to exist and no securities or other
consideration shall be payable in respect thereof.
Warrants, Options and Convertible Securities. On the Effective Date,
all outstanding options, warrants and other securities exercisable or
convertible into shares of TARGET Common Stock, including the Excluded TARGET
Options and Warrants, shall be converted into options, warrants or other
convertible securities to acquire shares of ACQUIROR Common Stock; provided that
the number of shares of ACQUIROR Common Stock issuable upon the exercise or
conversion thereof shall equal the number of shares of TARGET Common Stock
previously issuable multiplied by the Final Exchange Ratio and that the exercise
price or conversion rate in effect before the Merger shall remain unchanged.
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SECTION 2.2 Appraisal Rights. Holders of shares of TARGET Common
Stock, who duly exercise and perfect appraisal rights under the provisions of
the Delaware General Corporation Law (the "DGCL") (such shares referred to
herein as "Dissenting Shares") shall have the appraisal rights set forth in the
DGCL and no other rights; provided, however, that Dissenting Shares beneficially
and legally owned by the holder thereof at the Effective Date who shall, after
the Effective Date, withdraw the demand for appraisal or lose the right of
appraisal as provided in such law, shall be deemed to be converted as of the
Effective Date, into the right to receive the Merger Consideration set forth in
Section 2.1 hereof.
SECTION 2.3 Surrender and Payment. After the Effective Date, each
holder of a certificate (a "Certificate") that formerly represented shares of
TARGET Common Stock, issued and outstanding on the Effective Date (other than
any Dissenting Shares and shares held by TARGET, ACQUIROR or Sub) shall be
entitled, upon surrender thereof to the Surviving Corporation, to receive the
Merger Consideration as provided in Section 2.1 hereof, and the certificate so
surrendered shall forthwith be cancelled.
SECTION 2.4 Common Stock of Sub. Each share of common stock, par
value $.01 per share, of Sub issued and outstanding on the Effective Date shall,
by virtue of the Merger and without any action on the part of the holder
thereof, remain outstanding and shall thereafter represent one share of common
stock of the Surviving Corporation, all of which shall be owned by Acquiror as
of the Effective Date.
SECTION 2.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place, unless the parties shall
otherwise agree, at the offices of Xxxxxx Xxxxxxxx & Xxxx, P.C., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M. local time (i) as soon as practicable
after the day on which the last condition set forth in Article 9 shall have been
fulfilled or waived or (ii) at such other time as TARGET and ACQUIROR may
mutually agree (the "Closing Date").
ARTICLE 3
CERTIFICATES OF INCORPORATION and BY-LAWS
SECTION 3.1 Certificate of Incorporation and By-Laws. As of the
Effective Date, the Certificate of Incorporation and By-laws of TARGET as in
effect on the Effective Date shall be the Certificate of Incorporation and
by-laws of the Surviving Corporation until thereafter amended as provided by
Delaware Law.
SECTION 3.2 Directors of Sub. The directors of Target at the
Effective Time shall be the initial directors of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the
5
manner provided in the Certificate of Incorporation or By-Laws of the Surviving
Corporation or as otherwise provided by Delaware Law.
ARTICLE
CERTAIN PROVISIONS RELATING TO SHARES
SECTION 4.1 No Fractional Shares of ACQUIROR Common Stock. No
fractional shares of ACQUIROR Common Stock shall be issued by ACQUIROR in the
Merger. Each stockholder of TARGET who otherwise would be entitled to a
fractional interest in any share of ACQUIROR Common Stock will receive, in lieu
of cash thereof or a fractional interest, one full share of ACQUIROR Common
Stock for such fractional interest.
SECTION 4.2 ACQUIROR to Make Merger Consideration Available.
ACQUIROR shall designate its stock transfer agent to act as exchange agent (the
"Exchange Agent") in connection with the Merger. As soon as practicable after
the Effective Date, ACQUIROR shall make available and, subject to Section 4.1,
each holder of a Certificate shall be entitled to receive, upon surrender to the
Exchange Agent of such Certificate for cancellation and subject to any required
withholding of taxes under any applicable federal income tax laws ("Backup
Withholding"), the aggregate number of shares of ACQUIROR Common Stock into
which the shares of TARGET Common Stock, previously represented by each
Certificate, shall have been converted in the Merger. Until so surrendered and
exchanged, each Certificate (other than Certificates representing any Dissenting
Shares or shares of the capital stock of TARGET held by TARGET, ACQUIROR or Sub)
shall represent solely the right to receive the Merger Consideration into which
the shares of TARGET Common Stock it represented prior to the Effective Date
shall have been converted pursuant to Section 2.1, less any Backup Withholding.
As soon as practicable after the Effective Date, ACQUIROR shall cause the
Exchange Agent to mail a transmittal form to each holder of a Certificate
advising such holder of the procedure for surrendering to the Exchange Agent
such Certificates for payment in accordance with this Section 4.2.
SECTION 4.3 Dividends; Transfer Taxes; Voting Rights. No dividends
or distributions that are otherwise payable on ACQUIROR Common Stock will be
paid to persons entitled to receive ACQUIROR Common Stock until such persons
surrender their Certificates. Upon such surrender, there shall be paid to the
person in whose name ACQUIROR Common Stock shall be issued, any dividends or
distributions which shall have become payable with respect to ACQUIROR Common
Stock between the Effective Date and the time of such surrender. After such
surrender, there shall be paid to the person in whose name the ACQUIROR Common
Stock shall be issued any dividends or distributions on ACQUIROR Common Stock
which shall have a record date prior to such surrender and a payment date after
such surrender, and such payment shall be made on such payment date.
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If shares of ACQUIROR Common Stock are to be issued or
delivered to any person other than the person in whose name the Certificate
surrendered for exchange is registered, it shall be a condition of the exchange
that the person requesting such exchange shall deliver to the Exchange Agent all
documents required to evidence and effect such transfer, and pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance or delivery
of a certificate representing such shares of ACQUIROR Common Stock to other than
the registered owner of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
SECTION 4.4 Abandoned Property; Lost Certificates. Notwithstanding
anything to the contrary contained herein, neither the Exchange Agent nor any
party hereto shall have any liability to a holder of a Certificate for the
payment of the Merger Consideration to be issued in accordance with the
provisions hereof if such Merger Consideration is paid to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to three (3) years after the
Effective Date (or immediately prior to such earlier date on which any payment
in respect thereof would otherwise escheat to or become the property of any
governmental unit or agency), the payment in respect of such Certificates shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims of interest of any person previously
entitled thereto. Lost Certificates shall be treated in accordance with the
normal procedures of the Exchange Agent.
SECTION 4.5 Taking of Necessary Action; Further Action. Sub,
ACQUIROR and TARGET shall each take all such action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible, subject
to all of the terms and conditions hereof. If, at any time after the Effective
Date, any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of the Constituent Corporations, the officers and directors of such
corporation are fully authorized in the name of such corporation or otherwise to
take, and shall take, all such action.
SECTION 4.6 Closing of TARGET's Transfer Books. On the Effective
Date, the stock transfer books of TARGET shall be closed and no transfer of
shares of capital stock of TARGET shall thereafter be made, except for transfers
of Dissenting Shares, as permitted by law. If, after the Effective Date,
certificates representing shares of TARGET Common Stock are presented to the
Surviving Corporation, they shall, subject to the provisions of Section 4.4
hereof, be cancelled and exchanged for the Merger Consideration provided in
Section 2.1 hereof.
ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF TARGET
Except as set forth in the Disclosure Schedule to be delivered by
TARGET to ACQUIROR (the "TARGET Disclosure Schedule"), which shall identify
exceptions by specific Section references, to the best of its knowledge, TARGET
hereby represents and warrants to ACQUIROR that:
SECTION 5.1 Organization and Qualification; Subsidiaries. Except as
disclosed in Section 5.1 of the TARGET Disclosure Schedule, TARGET is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary, other than where the failure to be in good standing, or to have such
power and authority, or to be duly qualified and in good standing, as the case
may be, would not have a TARGET Material Adverse Effect. The term "TARGET
Material Adverse Effect" as used in this Agreement shall mean any event, change
or effect that, individually or when taken together with all other such events,
changes or effects, would be materially adverse to the condition (financial or
otherwise), prospects, properties, assets, business or operations of TARGET, at
the time of such event, change or effect. TARGET has no subsidiaries.
SECTION 5.2 Certificate of Incorporation and By-Laws. TARGET has
heretofore furnished to ACQUIROR complete and correct copies of the Certificate
of Incorporation and the By-Laws of TARGET. TARGET is not in violation of any of
the provisions of its Certificate of Incorporation or By-Laws.
SECTION 5.3 Capitalization. As of the date of this Agreement, the
authorized capital stock of TARGET consists of (i) 65,000,000 shares of TARGET
Common Stock, of which: (x) 34,658,707 shares of TARGET Common Stock are issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by statute,
common law, TARGET's Certificate of Incorporation or by-laws or, any agreement
to which TARGET is a party or is bound or otherwise; and (y) no shares of TARGET
Common Stock are held in the treasury of TARGET, and (ii) 15,000,000 shares of
Preferred Stock, none of which are issued and outstanding. As of the date of
this Agreement, there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which TARGET is a party relating to the issued or unissued capital stock or
other securities of TARGET or obligating TARGET to grant, issue or sell any
shares of the capital stock or other securities of TARGET, by sale, lease,
license or otherwise, except as disclosed in Section 5.3 of the TARGET
Disclosure Schedule. As of the date of this Agreement, except as set forth in
Section 5.3 of the TARGET Disclosure Schedule, there are no obligations,
contingent or otherwise, of TARGET to (x) repurchase, redeem or
8
otherwise acquire any shares of TARGET Common Stock or (y) provide funds to, or
make any investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of TARGET
or any other person. TARGET has provided to ACQUIROR a current list of its
stockholders, together with all information it has relating to their status as
"accredited investors" under the Securities Act of 1933, as amended (the
"Securities Act").
SECTION 5.4 Authority. TARGET has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (other than
with respect to the Merger, and the approval and adoption of this Agreement by
the holders of the TARGET Common Stock in accordance with the laws of the State
of Delaware ("Delaware Law")). The execution and delivery of this Agreement by
TARGET and the consummation by TARGET of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of TARGET are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the approval and adoption of this Agreement, by the holders of a
majority of the outstanding shares of TARGET Common Stock in accordance with
Delaware Law). This Agreement has been duly executed and delivered by TARGET
and, assuming the due authorization, execution and delivery thereof by ACQUIROR
and Sub, constitutes the legal, valid and binding obligation of TARGET,
enforceable against TARGET in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights in general from time to time in effect and general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 5.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by TARGET does not, and the performance
of this Agreement by TARGET and the consummation of the transactions
contemplated hereby will not, excepting any shareholder votes required by
Delaware Law, (i) conflict with or violate the Certificate of Incorporation or
By-Laws, or the equivalent organizational documents, in each case as amended or
restated, of TARGET, (ii) conflict with or violate any federal, state, foreign
or local law, statute, ordinance, rule, regulation, order, judgment, arbitration
award or decree (collectively, "Laws") or TARGET Permit (as hereinafter defined)
in effect as of the date of this Agreement and applicable to TARGET or by which
any of its properties is bound or subject to, or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of TARGET pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
order, decree, franchise or other instrument or obligation to which TARGET is a
party or by which TARGET or any of its properties is bound or is subject to,
except for any such conflicts or violations described in clause (ii) or
breaches, defaults, events, rights of termination, amendment, acceleration or
cancellation or liens or encumbrances described in clause (iii) that would not
have a TARGET Material Adverse Effect.
9
(b) The execution and delivery of this Agreement by TARGET
does not, and the performance of this Agreement by TARGET and the ownership and
operation of the business and properties of TARGET by the Surviving Corporation
following the Effective Date will not, as of the date of this Agreement, require
TARGET to obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any governmental or regulatory authority
("Governmental Entities"), except (i) for the filing and recordation of
appropriate merger documents as required by Delaware Law; and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, either individually or in the
aggregate, prevent TARGET from performing its obligations under this Agreement
or otherwise have a TARGET Material Adverse Effect.
SECTION 5.6 Permits; Compliance. TARGET is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "TARGET Permits"), and there is no action or
proceeding or, to the knowledge of TARGET, investigation pending or threatened
regarding suspension or cancellation of any TARGET Permits, except where the
failure to possess, or the suspension or cancellation of, such TARGET Permits
would not have a TARGET Material Adverse Effect. TARGET is not in conflict with,
or in default or violation of (a) any Law applicable to TARGET or by which any
of its properties is bound or subject to or (b) any of TARGET Permits, except
for any such conflicts, defaults or violations which would not have a TARGET
Material Adverse Effect.
SECTION 5.7 Reports; Financial Statements. Except as disclosed in
Section 5.7 of the TARGET Disclosure Schedule, TARGET has filed all forms,
reports, statements and other documents required to be filed with any other
applicable federal or state regulatory authorities, except where the failure to
file any such forms, reports, statements or other documents would not have a
TARGET Material Adverse Effect (all such forms, reports, statements and other
documents being referred to herein, collectively, as the "Reports"). The
Reports, including all Reports filed after the date of this Agreement and prior
to the Effective Date, (i) were or will be prepared in all material respects in
accordance with the requirements of applicable Law, and (ii) did not at the time
they were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Except as disclosed in Section 5.7(b) of the TARGET
Disclosure Schedule, the financial statements (including any related notes
thereto) delivered to ACQUIROR prior to or after the date of this Agreement (i)
have been or will be prepared in accordance with generally accepted accounting
principles applied on a consistent basis covering the periods referred to
therein and in form necessary for disclosure or inclusion in applicable reports
under the Securities Exchange Act of 1934, as amended, (the "Exchange Act") to
be filed by
10
ACQUIROR after the Closing, and (ii) fairly present or will fairly present the
financial position of TARGET as of the respective dates thereof and results of
operations and cash flows for the periods indicated (including reasonable
estimates of normal and recurring year-end adjustments), except that (A) any
unaudited interim financial statements were or will be subject to normal and
recurring year-end adjustments and (B) any pro forma financial information
contained in such financial statements is not necessarily indicative of the
financial position of TARGET as of the respective dates thereof and the results
of operations and cash flows for the periods indicated.
SECTION 5.8 Absence of Certain Changes or Events. During the period
commencing January 1, 2001, and ending on the date of this Agreement, there has
not been (a) a TARGET Material Adverse Effect or (b) any change by TARGET in its
accounting methods, principles or practices.
SECTION 5.9 Absence of Litigation. Except as disclosed in Section
5.9 of the TARGET Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of TARGET,
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of TARGET, threatened
in writing against TARGET or any properties or rights of TARGET (except for
claims, actions, suits, litigations, proceedings, arbitrations, or
investigations which, individually or in the aggregate, would not reasonably be
expected to have a TARGET Material Adverse Effect), and TARGET is not subject to
any continuing order of, consent decree, or, the knowledge of TARGET, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders, except for matters which,
individually or in the aggregate, would not have a TARGET Material Adverse
Effect.
SECTION 5.10 Taxes. Except for such matters that would not have a
TARGET Material Adverse Effect or are disclosed in Section 5.10 of the TARGET
Disclosure Schedule (a) TARGET has timely filed or will timely file all returns
and reports required to be filed by it with any taxing authority with respect to
Taxes for any period ending on or before the Effective Date, taking into account
any extension of time to file granted to or obtained on behalf of TARGET, (b)
all Taxes shown to be payable on such returns or reports that are due prior to
the Effective Date have been paid or will be paid when due, (c) as of the date
hereof, no deficiency for any material amount of Tax has been asserted or
assessed by a taxing authority against TARGET, (d) all liability for Taxes of
TARGET that are or will become due or payable with respect to periods covered by
the financial statements referred to in Section 5.8(b) hereof have been paid or
adequately reserved for on such financial statements and (e) no Tax return or
reports of TARGET are under examination.
SECTION 5.11 Certain Business Practices. As of the date hereof,
except for such actions which would not have a TARGET Material Adverse Effect,
neither TARGET nor, to the knowledge of TARGET, any directors, officers, agents
or employees of TARGET has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses
11
relating to political activity, (ii) made any unlawful payment to government
officials or employees, or (iii) made any other unlawful payment.
SECTION 5.12 Brokers. Except as described in Section 5.12 of the
TARGET Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of TARGET.
SECTION 5.13 Board Recommendation. The board of directors of TARGET,
at a meeting duly called and held, has by requisite vote under applicable Laws
(i) determined that this Agreement and the transactions contemplated hereby,
including the Merger, and the transactions contemplated thereby, taken together,
are fair to and in the best interests of the stockholders of TARGET, and (ii)
resolved to recommend that the holders of the shares of TARGET Common Stock
approve this Agreement and the transactions contemplated herein, including the
Merger. TARGET has obtained binding, written agreements to vote in favor of
approving this Agreement, the Merger and the transactions contemplated hereby
from the current officers and directors of TARGET and from any other stockholder
that is controlled by such persons.
SECTION 5.14 Books and Records. The books of account and other
financial records of TARGET are in all material respects complete and correct,
are maintained in accordance with good business practices and all Laws
applicable to TARGET, and are accurately reflected in the financial statements
of TARGET. The minute books of TARGET contain accurate records of all meetings,
and accurately reflect all other corporate action of the stockholders and
directors of TARGET.
SECTION 5.15 No Undisclosed Liabilities. There are no liabilities of
TARGET of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(a) liabilities disclosed or provided for in the financial
statements;
(b) liabilities incurred in the ordinary course of business
consistent with past practice since January 1, 2001; and
(c) liabilities which either individually or collectively
would not have an TARGET Material Adverse effect.
SECTION 5.16 Contracts. Listed on Section 5.16 of the TARGET
Disclosure Schedule are all contracts and agreements of TARGET, oral (in which
case a summary thereof should be provided) and written, including, but not
limited to, employment contracts, leases and management agreements, which
require the payment by or to TARGET of more than $50,000 annually ($25,000 in
the case of employment contracts). Except as otherwise disclosed in the TARGET
Disclosure Schedule, each contract described therein is legal, valid, in full
force and effect and enforceable in accordance with its terms, and TARGET has
fulfilled, or
12
taken all action reasonably necessary to enable it to fulfill when due, all of
its obligations under such contracts. There has not occurred any default, or any
event which, with the lapse of time or the election of any person other than
TARGET, will become a default, by TARGET under any contract which would result
in a TARGET Material Adverse Effect.
SECTION 5.17 Disclosure. No representation or warranty of TARGET in
this Agreement or any document, certificate or statement issued in connection
herewith contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained herein and
therein, in the light of the circumstances in which they were made, not
misleading.
SECTION 5.18 Affiliates. Concurrently with the execution and
delivery of this Agreement, TARGET has delivered to ACQUIROR a letter
identifying all persons who, to the knowledge of TARGET, may be deemed to be
"Affiliates" of TARGET under Rule 145 of the Securities Act of 1933, as amended
(the "Securities Act") including, without limitation, all directors and
executive officers of TARGET.
SECTION 5.19. Investments. TARGET has not made any investments in,
nor owns or agreed to purchase or otherwise acquire any securities of, any
domestic or foreign business entity, enterprise or organization other than as
set forth in Section 5.19 of the TARGET Disclosure Schedule.
SECTION 5.20 Employee Benefit Plans. TARGET does not maintain or
have any obligation to make contributions to, any employee benefit plan (an
"ERISA Plan") within the meaning of Section (e)(3) of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or, except as set
forth on Section 5.20 of the TARGET Disclosure Schedule hereto, any other
retirement, profit sharing, stock option, stock bonus or employee benefit plan
(a "Non-ERISA Plan"). TARGET has heretofore delivered to ACQUIROR true, correct
and complete copies of each Non-ERISA Plan. All such Non-ERISA Plans have been
maintained and operated in all material respects in accordance with all federal,
state and local laws applicable to such plans, and the terms and conditions of
the respective plan documents.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUB
Except as set forth in the Disclosure Schedule to be delivered by
ACQUIROR and Sub to TARGET (the "ACQUIROR Disclosure Schedule"), which shall
identify exceptions by specific Section references, to the best knowledge of
each of them, ACQUIROR and Sub hereby represent and warrant to TARGET that:
13
SECTION 6.1 Organization and Qualification; Subsidiaries. Each of
ACQUIROR and Sub is a corporation, duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be in good
standing, or to have such power and authority, or to be duly qualified and in
good standing, as the case may be, would not have a ACQUIROR Material Adverse
Effect. The term "ACQUIROR Material Adverse Effect" as used in this Agreement
shall mean any event, change or effect that, individually or when taken together
with all other such events, changes or effects, would be materially adverse to
the condition (financial or otherwise), prospects, properties, assets, business
or operations of ACQUIROR and Sub, taken as a whole, at the time of such event,
change or effect. Other than Sub, ACQUIROR has no subsidiaries.
SECTION 6.2 Certificate of Incorporation and By-Laws. ACQUIROR has
heretofore furnished to TARGET complete and correct copies of the Certificates
of Incorporation and the By-Laws or the equivalent organizational documents in
each case, as amended or restated, of ACQUIROR and Sub. Neither ACQUIROR nor Sub
is in violation of any of the provisions of its Certificate of Incorporation or
By-Laws.
SECTION 6.3 Capitalization. As of the date of this Agreement, the
authorized capital stock of ACQUIROR consists of (a) 50,000,000 shares of
ACQUIROR Common Stock, par value $.0025 per share ("ACQUIROR Preferred Stock").
As of the date of this Agreement: (i) 24,905,151 shares of ACQUIROR Common Stock
are issued and outstanding, all of which are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights created by
statute, common law, ACQUIROR's Certificate of Incorporation or By-Laws, or any
agreement to which ACQUIROR is a party or is bound or otherwise; and (ii) no
shares of ACQUIROR Common Stock are held in treasury. The shares of ACQUIROR
Common Stock to be issued in the Merger have been duly authorized and, when
issued in accordance with the Merger will be validly issued, fully paid and
nonassessable. The shares of ACQUIROR Common Stock to be issued after the Merger
upon the exercise of options, warrants or convertible securities of TARGET
converted in the Merger into options, warrants or convertible securities of
ACQUIROR pursuant to Section 2.1, have been duly authorized, and when issued
after the Merger and subject to the amendment of ACQUIROR's Certificate of
Incorporation as provided in Section 8.5 hereof, will be validly issued, fully
paid and nonassessable. As of the date of this Agreement, there are no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which ACQUIROR is a party
relating to the issued or unissued capital stock or other securities of ACQUIROR
to grant, issue or sell any shares of the capital stock or other securities of
ACQUIROR, by sale, lease, license or otherwise, except (A) as disclosed in
Section 6.3 of the ACQUIROR Disclosure Schedule and (B) for options to purchase
ACQUIROR Common Stock
14
under ACQUIROR's existing stock option plans to the extent stock options for
such shares thereunder have not yet been granted. As of the date of this
Agreement, there are no obligations, contingent or otherwise, of ACQUIROR to
repurchase, redeem or otherwise acquire any shares of ACQUIROR Common Stock.
SECTION 6.4 Authority. Each of ACQUIROR and Sub has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by ACQUIROR and Sub and the
consummation by ACQUIROR and Sub of the transactions contemplated hereby have
been duly authorized by all necessary corporate action, and no other corporate
proceedings on the part of ACQUIROR or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (and, in
particular, the approval and adoption of this Agreement by the holders of a
majority of the outstanding shares of ACQUIROR Common Stock is not required by
Delaware Law). This Agreement has been duly executed and delivered by ACQUIROR
and Sub and, assuming the due authorization, execution and delivery thereof by
TARGET, constitutes a legal, valid and binding obligation of ACQUIROR and Sub
enforceable against ACQUIROR and Sub in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights in general from time to time in effect and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 6.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by ACQUIROR and Sub does not, and the
performance of this Agreement by ACQUIROR and Sub and the consummation of the
transactions contemplated hereby will not, excepting any stockholder votes
required by applicable law or the rules of the NASD, (i) conflict with or
violate the Certificate of Incorporation or By-Laws, as amended or restated, of
ACQUIROR or Sub, (ii) conflict with or violate any Laws or ACQUIROR Permit (as
hereinafter defined) in effect as of the date of this Agreement applicable to
ACQUIROR or Sub or by which any of their respective properties is bound or
subject to, including, without limitation, Section 203 of Delaware Law or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on the properties or assets of ACQUIROR or
Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, order, decree, franchise or other instrument or
obligation to which ACQUIROR or Sub is a party or by which ACQUIROR or Sub or
any of their respective properties is bound or subject to, except for any such
conflicts or violations described in clause (ii) or breaches, defaults, events,
rights of termination, amendment, acceleration or cancellation or liens or
encumbrances described in clause (iii) that would not have a ACQUIROR Material
Adverse Effect. The board of directors of ACQUIROR has taken all actions
necessary under Delaware Law, including approving the transactions contemplated
in this Agreement, to ensure that Section 203 of Delaware Law does not, or will
not, apply to the transactions contemplated in this
15
Agreement. As used herein, "ACQUIROR Permit" shall mean all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary for ACQUIROR to own, lease and
operate its properties and to carry on its business as it is now being
conducted.
(b) The execution and delivery of this Agreement by ACQUIROR
and Sub does not, and the performance of this Agreement by ACQUIROR and Sub will
not, as of the date of this Agreement, require ACQUIROR to obtain any consent,
approval, authorization or permit of, or to make any filing with or notification
to, any Governmental Entities, except (i) for applicable requirements, if any,
of the Securities Act, the Exchange Act (as hereafter defined), blue sky Laws,
and the filing and recordation of appropriate merger documents as required by
Delaware Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
either individually or in the aggregate, prevent either ACQUIROR or Sub from
performing its obligations under this Agreement or otherwise have a ACQUIROR
Material Adverse Effect.
SECTION 6.6 Permits; Compliance. ACQUIROR is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "ACQUIROR Permits"), and there is no action or
proceeding or, to the knowledge of ACQUIROR, investigation pending or threatened
regarding suspension or cancellation of any ACQUIROR Permits, except where the
failure to possess, or the suspension or cancellation of, such ACQUIROR Permits
would not have a ACQUIROR Material Adverse Effect. ACQUIROR is not in conflict
with, or in default or violation of (a) any Law or any rule of professional
conduct applicable thereto and applicable to ACQUIROR or by which any of their
respective properties is bound or subject to or (b) any of ACQUIROR Permits,
except for any such conflicts, defaults or violations which would not have a
ACQUIROR Material Adverse Effect.
SECTION 6.7 Reports; Financial Statements. (a) Since September 1,
2001, ACQUIROR has timely filed (i) all forms, reports, statements and other
documents required to be filed with (A) the Securities and Exchange Commission
("SEC"), including, without limitation, (1) all Annual Reports on Form 10-K, (2)
all Quarterly Reports on Form 10-Q, (3) all proxy statements relating to
meetings of stockholders (whether annual or special), (4) all Current Reports on
Form 8-K, (5) all other reports or registration statements and (6) all
amendments and supplements to all such reports and registration statements
(collectively, the "ACQUIROR SEC Reports") and (B) any other applicable state
securities authorities and (ii) all forms, reports, statements and other
documents required to be filed with any other applicable federal or state
regulatory authorities, except where the failure to file any such forms,
reports, statements or other documents referred to in this clause (ii) would not
have a ACQUIROR Material Adverse Effect (all such forms, reports, statements and
other documents in clauses (i) and (ii) of this Section 6.7(a) being referred to
herein, collectively, as the "ACQUIROR Reports"). The ACQUIROR Reports,
including all ACQUIROR Reports filed after the date of
16
this Agreement and prior to the Effective Date (x) were or will be prepared in
all material respects in accordance with the requirements of applicable Law
(including, with respect to the ACQUIROR SEC Reports, the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such ACQUIROR SEC Reports) and (y) did not at the time
they were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each case,
any related notes thereto) contained in the ACQUIROR SEC Reports filed prior to,
on or after the date of this Agreement (i) have been or will be prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles and (ii) fairly present or will fairly present
the financial position of ACQUIROR as of the respective dates thereof and the
results of operations and cash flows for the periods indicated (including
reasonable estimates of normal and recurring year-end adjustments), except that
(A) any unaudited interim financial statements were or will be Subject to normal
and recurring year-end adjustments and (B) any pro forma financial information
contained in such financial statements is not necessarily indicative of the
financial position of ACQUIROR as of the respective dates thereof and the
results of operations and cash flows for the periods indicated.
SECTION 6.8 Absence of Certain Changes or Events. During the period
commencing January 1, 2001 and ending on the date of this Agreement, there has
not been (a) an ACQUIROR Material Adverse Effect or (b) any change by ACQUIROR
in its accounting methods, principles or practices.
SECTION 6.9 Absence of Litigation. Except as disclosed in the
ACQUIROR Disclosure Schedule or the ACQUIROR SEC Reports filed prior to the date
of this Agreement, there is no claim, action, suit, litigation, proceeding,
arbitration or, to the knowledge of ACQUIROR, investigation of any kind, at law
or in equity (including actions or proceedings seeking injunctive relief),
pending or, to the knowledge of ACQUIROR, threatened in writing against ACQUIROR
or any properties or rights of ACQUIROR (except for claims, actions, suits,
litigations, proceedings, arbitrations, or investigations which, individually or
in the aggregate, would not reasonably be expected to have a ACQUIROR Material
Adverse Effect), and ACQUIROR is not subject to any continuing order of, consent
decree, or, the knowledge of ACQUIROR, continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders, except for matters which, individually or in
the aggregate, would not have a ACQUIROR Material Adverse Effect.
SECTION 6.10 Taxes. Except for such matters that would not have an
ACQUIROR Material Adverse Effect or are disclosed in Section 6.10 of the
ACQUIROR Disclosure Schedule (a) ACQUIROR have timely filed or will timely file
all returns and reports required to be filed by them with any taxing authority
with respect to Taxes for any period ending on or before the Effective Date,
taking into account any extension of time to file granted to or obtained on
behalf of ACQUIROR, (b) all Taxes shown to be payable on such returns or reports
17
that are due prior to the Effective Date have been paid or will be paid when
due, (c) as of the date hereof, no deficiency for any material amount of Tax has
been asserted or assessed by a taxing authority against ACQUIROR, (d) all
liability for Taxes of ACQUIROR that are or will become due or payable with
respect to periods covered by the financial statements referred to in Section
6.7(b) hereof have been paid or adequately reserved for on such financial
statements and (e) no Tax return or reports of ACQUIROR are under examination.
SECTION 6.11 Certain Business Practices. As of the date hereof,
except for such actions which would not have a ACQUIROR Material Adverse Effect,
neither ACQUIROR nor, to the knowledge of ACQUIROR, any directors, officers,
agents or employees of ACQUIROR has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to government officials or
employees, or (iii) made any other unlawful payment.
SECTION 6.12 Brokers. Except as described in Section 6.12 of the
ACQUIROR Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of ACQUIROR.
SECTION 6.13 Books and Records. The books of account and other
financial records of ACQUIROR are in all material respects complete and correct,
are maintained in accordance with good business practices and all Laws
applicable to ACQUIROR, and are accurately reflected in the consolidated
financial statements of ACQUIROR contained in the ACQUIROR SEC Reports. The
minute books of ACQUIROR contain accurate records of all meetings, and
accurately reflect all other corporate action of the shareholders and directors
of ACQUIROR.
SECTION 6.14 Contracts. Listed on Section 6.14 of the ACQUIROR
Disclosure Schedule are all contracts and agreements of ACQUIROR, oral (in which
case a summary thereof should be provided) and written that have not previously
been filed as exhibits to any of the ACQUIROR SEC Reports, including, but not
limited to, employment contracts, leases and management agreements, which
require the payment by or to ACQUIROR of more than $50,000 annually ($25,000 in
the case of employment contracts).
SECTION 6.15 No Undisclosed Liabilities. There are no liabilities of
ACQUIROR of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(x) liabilities disclosed or provided for in the consolidated
financial statements contained in the ACQUIROR SEC Reports;
18
(y) liabilities incurred in the ordinary course of business
consistent with past practice since January 1, 2001; and
(z) liabilities which either individually or collectively
would not have an ACQUIROR Material Adverse effect.
SECTION 6.16 Disclosure. No representation or warranty of ACQUIROR
or Sub in this Agreement or in any document, certificate or statement issued in
connection herewith contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances in which they were made, not
misleading.
SECTION 6.17 Investments. ACQUIROR has not made any investments in,
nor owns or agreed to purchase or otherwise acquire any securities of, any
domestic or foreign business entity, enterprise or organization other than as
set forth in Section 6.18 of the ACQUIROR Disclosure Schedule.
SECTION 6.18 Employee Benefit Plans. ACQUIROR does not maintain or
have any obligation to make contributions to, any ERISA Plan, or, except as set
forth on Section 6.19 of the ACQUIROR Disclosure Schedule hereto, any Non-ERISA
Plan. ACQUIROR has heretofore delivered to TARGET true, correct and complete
copies of each Non-ERISA Plan. All such Non-ERISA Plans have been maintained and
operated in all material respects in accordance with all federal, state and
local laws applicable to such plans, and the terms and conditions of the
respective plan documents.
ARTICLE 7
COVENANTS
SECTION 7.1 Affirmative Covenants of TARGET and ACQUIROR. Each of
TARGET and ACQUIROR hereby covenants and agrees that, during the period
commencing on the date hereof and continuing until the Effective Date unless
otherwise expressly contemplated by this Agreement or consented to in writing by
the other party, it will:
(i) Operate its business only in the usual and ordinary course
consistent with past practices;
(ii) Use its best efforts to preserve substantially intact its
business organizations, maintain its rights and franchises and maintain its
relationships with its customers and suppliers, and otherwise operate its
business in a manner that breaches no Material Contract;
19
(iii) Use its best efforts to maintain and keep its business
relationships intact and unimpaired and its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted;
(iv) Use its best efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that currently
maintained;
(v) Promptly advise the other party of the commencement of, or
threat or (to the extent that such threat comes to its knowledge), any claim,
action, suit, proceeding or investigation against, relating to or involving it
or any of its directors, officers, employees, agents or consultants in
connection with its businesses or the transactions contemplated hereby;
(vi) Provide the other party with unaudited quarterly balance sheets
and income statements and unaudited quarterly statements of cash position for
each fiscal quarter following the date of this Agreement as soon as practicable
following the end of each such fiscal quarter and provide the other party with
monthly management reports;
(vii) Promptly provide the other party with copies of any and all
reports or documents filed with the SEC; and
(viii) TARGET will make stock transfer records relating to, and
stockholder lists of, TARGET available to the extent reasonably necessary to
effectuate the intent of this Agreement; and
(ix) Through its board of directors, TARGET will recommend to its
stockholders approval of the Agreement, the Merger and the transactions
contemplated hereby and use its best efforts to obtain the requisite stockholder
vote by means of a special meeting duly called for such purpose or by sufficient
written consent.
SECTION 7.2 Negative Covenants of TARGET. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by ACQUIROR,
from the date of this Agreement until the Effective Date, TARGET will not do any
of the following:
(a) Except as otherwise provided in Section 7.2(a) of the
TARGET Disclosure Schedule, increase the compensation payable to or to become
payable to any director, officer or employee; grant any severance or termination
pay to, or enter into any employment, consulting or severance agreement with,
any director, officer or employee or their respective affiliates other than
employment or consulting agreements entered into with the consent of ACQUIROR;
or establish, adopt, enter into or amend any employee benefit plan or
arrangement except as may be required by applicable Law;
(b) Declare or pay any dividend on, or make any other
distribution (however characterized) in respect of, outstanding shares of its
capital stock;
20
(c) Except as otherwise provided in Section 7.2(c) of the TARGET
Disclosure Schedule, redeem, purchase or otherwise acquire any shares of
its capital stock or equity interest or any securities or obligations
convertible into or exchangeable for any shares of its' capital stock or
equity interest, or any options, warrants or conversion or other rights to
acquire any shares of its' capital stock or any such securities or
obligations (except in connection with the exercise of outstanding stock
options or stock purchase warrants referred to herein, in accordance with
their terms or, in connection with the conversion of convertible
debentures, in accordance with their terms); effect any reorganization or
recapitalization; or split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its' capital
stock;
(d) Except as otherwise provided in Section 7.2(d) of the
TARGET Disclosure Schedule and except for the issuance in aggregate of no more
than one (1) million shares of TARGET Common Stock and options, warrants or
convertible securities exercisable for or convertible into no more than one (1)
million shares of TARGET Common Stock, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale (including the
grant of any security interests, liens, claims, pledges, limitations in voting
rights, charges or other encumbrances) of, any shares of any class of its'
capital stock or other securities (including shares held in treasury);
(e) Acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division (other than a wholly-owned subsidiary)
thereof, or otherwise acquire or agree to acquire any assets of any other person
(other than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice) in each case which are
material to it;
(f) Sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its assets outside of the ordinary
course of business;
(g) Propose or adopt any amendments to its Certificate of
Incorporation or By-Laws, except as otherwise provided in Section 7.2(g) of the
TARGET Disclosure Schedule;
(h) Change any of its methods of accounting in effect, or make
or rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed $50,000), or change any of its methods of reporting income or deductions
for
21
federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ended 1999, except as may be
required by Law or generally accepted accounting principles;
(i) Except as set forth in Section 7.2(i) of the TARGET
Disclosure Schedule, incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or similar
instrument, except obligations arising from establishment of a line of credit
and borrowings under such line of credit;
(j) Enter into any material arrangement, agreement or contract
with any third party which provides for an exclusive arrangement with that third
party or is substantially more restrictive on TARGET, or substantially less
advantageous to TARGET, than arrangements, agreements or contracts existing on
the date hereof;
(k) Except as set forth in Section 7.2(l) of the TARGET
Disclosure Schedule, (i) make any capital expenditures individually in excess of
$50,000 or in the aggregate in excess of $100,000; enter into or terminate
(except in the ordinary course of business and consistent with past practice)
any lease of, or purchase or sell, any real property; or enter into any leases
of personal property involving individually in excess of $50,000 annually or in
the aggregate in excess of $100,000 annually; and
(l) Agree in writing or otherwise to do any of the foregoing.
SECTION 7.3 Negative Covenants of ACQUIROR. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by TARGET,
from the date of this Agreement until the Effective Time, ACQUIROR will not do
any of the following:
(a) Except as otherwise provided in Section 7.3(a) of the
ACQUIROR Disclosure Schedule, increase the compensation payable to or to become
payable to any director, officer or employee; grant any severance or termination
pay to, or enter into any employment, consulting or severance agreement with,
any director, officer or employee or their respective affiliates other than
employment or consulting agreements entered into with the consent of TARGET; or
establish, adopt, enter into or amend any employee benefit plan or arrangement
except as may be required by applicable Law;
(b) Declare or pay any dividend on, or make any other
distribution (however characterized) in respect of, outstanding shares of its
capital stock;
(c) Except as otherwise provided in Section 7.3(c) of the
ACQUIROR Disclosure Schedule, redeem, purchase or otherwise acquire any shares
of its capital stock or equity interest or any securities or obligations
convertible into or exchangeable for any shares of its capital stock or equity
interest or any options, warrants or conversion or other rights to acquire any
shares of its capital stock or any such securities or obligations (except in
connection
22
with the exercise of outstanding stock options or stock purchase warrants
referred to herein, in accordance with their terms or, in connection with the
conversion of convertible debentures, in accordance with their terms); effect
any reorganization or recapitalization; or split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock;
(d) Propose or adopt any amendments to its Certificate of
Incorporation or by-laws, except as otherwise provided in Section 7.3(d) of the
ACQUIROR Disclosure Schedule;
(e) Change any of its methods of accounting in effect, or make
or rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the amount
of such settlements or controversies, individually or in the aggregate, does not
exceed $50,000), or change any of its methods of reporting income or deductions
for federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ended September 30, 1999, except
as may be required by Law or generally accepted accounting principles;
(f) Enter into any material arrangement, agreement or contract
with any third party which provides for an exclusive arrangement with that third
party or is substantially more restrictive on ACQUIROR, or substantially less
advantageous to ACQUIROR, than arrangements, agreements or contracts existing on
the date hereof;
(g) Issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of any
security interests, liens, claims, pledges, limitations in voting rights,
charges or other encumbrances) of, any shares of any class of its ' capital
stock or other securities (including shares held in treasury), any securities
convertible into or exercisable or exchangeable for any such shares, or any
rights, warrants or options to acquire, any such shares (except for the issuance
of shares upon the exercise of outstanding stock options, stock purchase
warrants or the conversion of outstanding convertible debentures, in accordance
with their terms or (ii) amend or otherwise modify the terms of any such rights,
warrants or options, the effect of which shall be to make such terms more
favorable to the holders thereof;
(h) Acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division (other than a wholly-owned subsidiary)
thereof, or otherwise acquire or agree to acquire any assets of any other person
(other than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice) in each case which are
material to it;
23
(i) Sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its assets outside of the ordinary
course of business;
(j) Except as set forth in Section 7.3(j) of the ACQUIROR
Disclosure Schedule, incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or similar
instrument, except obligations arising from establishment of a line of credit
and borrowings under such line of credit;
(k) Except as set forth in Section 7.3(k) of the ACQUIROR
Disclosure Schedule, (i) make any capital expenditures individually in excess of
$50,000 or in the aggregate in excess of $100,000; enter into or terminate
(except in the ordinary course of business and consistent with past practice)
any lease of, or purchase or sell, any real property; or enter into any leases
of personal property involving individually in excess of $50,000 annually or in
the aggregate in excess of $100,000 annually;
(l) Agree in writing or otherwise to do any of the foregoing.
SECTION 7.4 Access and Information. Between the date of this
Agreement and the Effective Date or earlier termination of this Agreement, each
of ACQUIROR and TARGET shall (a) afford the other party and its officers,
directors, employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Representatives") access upon reasonable
prior notice to its officers, employees, agents, properties, offices and other
facilities and to the books and records thereof; and (b) furnish promptly to the
other party and its Representatives such information concerning its business,
properties, contracts, records and personnel (including, without limitation,
financial, operating and other data and information) as may be requested, from
time to time, by the other party.
SECTION 7.5 Confidentiality. Any and all non-public information
disclosed by Acquiror to Target or by Target to Acquiror as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
hereof, shall remain confidential. If the consummation of the transactions
contemplated by this Agreement does not take place for any reason, each of
Acquiror and Target will return promptly all documents containing non-public
information relating to the other side.
SECTION 7.6 No Shopping. From the date of this Agreement until the
Effective Date or the earlier termination of this Agreement, TARGET and ACQUIROR
each shall direct and cause its employees, agents and representatives (including
any investment banker, attorney or accountant retained by such party) not to,
directly or indirectly, initiate, solicit or encourage, any inquiries in respect
of or the making of, any Acquisition Offer (as defined below) or engage in any
negotiations concerning or provide any confidential or nonpublic information or
data to, or afford access to the employees, properties or books or records of
their respective businesses, or have any discussions with, any person relating
to an
24
Acquisition Offer, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Offer. Within five (5) business days after receipt of
an Acquisition Offer or any request for confidential or nonpublic information
relating to or for access to the employees, properties, books or records of its
business by any person who indicates that they may be considering making, or has
made an Acquisition Offer, TARGET or ACQUIROR shall notify the other of the fact
that such event has occurred and shall notify the other of the person making
such inquiry or an Acquisition Offer. Notwithstanding the foregoing, TARGET or
ACQUIROR may furnish information concerning its business, properties or assets
to any other person or entity if its board of directors or any committee or
independent members thereof, in the exercise of their fiduciary
responsibilities, determines that such information should be provided to such
other party. In the event TARGET or ACQUIROR furnishes such information to a
third party in accordance with its fiduciary responsibilities, it shall still
inform the other person of such action. The term "Acquisition Offer" means any
offer or proposal for any merger, tender offer, sale, lease as lessor, license
as licensor or other disposition of substantial assets, sale of capital stock or
debt securities or similar transaction involving TARGET or ACQUIROR unless the
acquiror expressly acknowledges and confirms the existence of all of the
obligations of TARGET or ACQUIROR under this Agreement.
SECTION 7.7 Directors' and Officers' Indemnification. In the event
the Merger shall become effective, then from and after the Effective Date,
ACQUIROR and the Surviving Corporation (the "Indemnifying Parties") shall
indemnify, defend and hold harmless each person who is now, or who becomes prior
to the Effective Date, an officer, director, employee or agent of ACQUIROR or
TARGET (the "Indemnified Parties") against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts paid with the approval of
the Indemnifying Parties (which approval shall not be unreasonably withheld) in
settlement of, or in connection with, any claim, action, suit, proceeding or
investigation based in whole or in part on, or arising in whole or in part out
of, the fact that such person is or was an officer, director, employee or agent
of ACQUIROR or TARGET, whether pertaining to any matter existing or occurring,
at or prior to, the Effective Date, and whether asserted or claimed prior to, at
or after, the Effective Date (the "Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, including, without limitation, any Indemnified Liabilities arising under
or out of any state or federal securities laws, in each case to the fullest
extent permitted by law, and in addition to such Indemnified Liabilities,
ACQUIROR and the Surviving Corporation, as the case may be, shall pay expenses
in advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking that may be required by Law.
25
ARTICLE 8
ADDITIONAL AGREEMENTS
SECTION 8.1 Stockholder Approval. Promptly after the date of this
Agreement, ACQUIROR shall take all action as the sole stockholder of Sub to
approve this Agreement. TARGET shall take all action necessary in accordance
with Delaware Law, and its Certificate of Incorporation and by-laws to obtain
requisite approval by its stockholders to act on this Agreement by means of a
meeting of stockholders or otherwise. TARGET shall use its reasonable best
efforts to prepare, file (if necessary) and distribute a consent solicitation in
order to solicit from its stockholders consents in favor of the approval and
adoption of this Agreement and to secure the vote or consent of its stockholders
required by Delaware Law to approve and adopt this Agreement, unless otherwise
required by the applicable fiduciary duties of the directors of TARGET, as
determined by such directors in good faith after consultation with independent
legal counsel.
SECTION 8.2 Disclosure. The information supplied by each of ACQUIROR
and TARGET for inclusion in the materials used in connection with TARGET's
consent solicitation of its stockholders shall not, at the time such consent
solicitation is distributed, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. All documents that ACQUIROR
is responsible for filing with the SEC in connection with the transactions
contemplated herein, including without limitation the information to be provided
by TARGET pursuant to Rule 14f-1 of the Exchange Act required to be filed at
least ten (10) days prior to the Closing Date (the "14f-1 Information") will
comply as to form and substance in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
SECTION 8.3 Appropriate Action; Consents; Filings.
(a) Each of ACQUIROR and TARGET shall use its best efforts to
take, or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary, proper or advisable under applicable Law or otherwise to
consummate, satisfy the conditions to, and make effective the transactions
contemplated by this Agreement; obtain from any Governmental Entities or other
persons any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by ACQUIROR or TARGET in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated herein; make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
required under (A) the Securities Act and the Exchange Act and the rules and
regulations thereunder, including the 14f-1 Information, and any other
applicable federal or state securities laws, and (B) any other applicable Laws.
26
(b) Without limiting the application of Article 7 hereof and
subject to the respective fiduciary obligations of the directors of each of
ACQUIROR and TARGET, each of ACQUIROR and TARGET agrees to use its best efforts
vigorously to contest and resist any action, including administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that is in effect and that restricts, prevents or
prohibits the consummation of any of the transactions contemplated by this
Agreement, including, without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal; provided, however, that in no
event shall ACQUIROR or TARGET take, or be required to take, any action that
would have a material adverse effect on its operations, assets, financial
condition or prospects.
(c) Each of ACQUIROR and TARGET shall give any notices to
third parties, and use its best efforts to obtain any third party consents (i)
necessary, proper or advisable to consummate the transactions contemplated in
this Agreement, (ii) disclosed or required to be disclosed in the TARGET
Disclosure Schedule or the ACQUIROR Disclosure Schedule, as the case may be,
(iii) otherwise required under any contracts, licenses, leases or other
agreements in connection with the consummation of the transactions contemplated
herein or (iv) required to prevent a TARGET Material Adverse Effect from
occurring prior to or after the Effective Date or a ACQUIROR Material Adverse
Effect from occurring prior to or after the Effective Date.
(d) In the event that either party shall fail to obtain any
third party consent described in subsection 8.3(c) above, such party shall use
its best efforts, and shall take any such actions reasonably requested by the
other party hereto, to minimize any adverse effect upon TARGET and ACQUIROR, and
their respective businesses resulting, or which could reasonably be expected to
result, after the Effective Date, from the failure to obtain such consent.
SECTION 8.4 Public Announcements. Unless otherwise required by
applicable Law or stock exchange requirements or the requirements of the NASD
(and in that event only if time does not permit), ACQUIROR and TARGET shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and the transactions contemplated
thereby and shall not issue any such press release or make any such public
statement prior to such consultation.
ARTICLE 9
CLOSING CONDITIONS
SECTION 9.1 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions contemplated herein shall be subject to the satisfaction at
or prior to the Effective
27
Date of the following conditions, any or all of which may be waived, in whole or
in part, to the extent permitted by applicable Law:
(a) SEC and State Action. The SEC shall have issued no stop
order suspending the distribution of any information statement of ACQUIROR and
the SEC shall have initiated no proceedings for that purpose. All necessary
state securities and blue-sky permits, approvals and exemption orders required
in connection with the transactions contemplated by this Agreement shall have
been obtained.
(b) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite votes of the stockholders of
TARGET.
(c) No Order. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(d) Exempt Transaction. The issuance of the Merger
Consideration by ACQUIROR in the Merger shall be exempt from registration under
the Securities Act and all state and other securities laws.
SECTION 9.2 Additional Conditions to Obligations of ACQUIROR. The
obligations of ACQUIROR to effect the Merger and the other transactions
contemplated herein are also subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions (any of which may be waived by
ACQUIROR in its sole discretion):
(a) Representations and Warranties. The representations and
warranties of TARGET contained in this Agreement shall be true and correct in
all material respects as of the Effective Date as though made on and as of the
Effective Date, except as expressly permitted or contemplated by this Agreement,
and the aggregate effect of all differences in the representations and
warranties of TARGET between those as of the date of this Agreement and those as
of the Effective Date does not and will not have a TARGET Material Adverse
Effect. ACQUIROR shall have received a certificate of the Chairman and the Chief
Financial Officer of TARGET to such effect.
(b) Agreements and Covenants. TARGET shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it in all material respects prior to the Effective
Date. ACQUIROR shall have received a certificate of the Chairman and the Chief
Financial Officer of TARGET to such effect.
28
(c) Consents and Approvals. All material consents, approvals
and authorizations legally required to be obtained to consummate the Merger
shall have been obtained from all required Governmental Entities and any other
third party.
(d) No TARGET Material Adverse Effect. Since the date of this
Agreement, there shall have been no TARGET Material Adverse Effect nor shall
there have occurred prior to the Effective Date any change, occurrence or
circumstance in the business, results of operations or financial condition of
TARGET likely to have a TARGET Material Adverse Effect. ACQUIROR shall have
received a Certificate of the Chairman or the Chief Financial Officer of TARGET
to such effect.
(e) Appraisal Rights. The holders of more than ten (10%)
percent of the issued and outstanding shares of TARGET Common Stock shall not
have demanded appraisal rights in respect of the Merger.
(f) Certificates. ACQUIROR shall have received such
certificates from officers and representatives of TARGET as it shall have
reasonably requested.
SECTION 9.3 Additional Conditions to Obligations of TARGET. The
obligations of TARGET to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions (any of which may be
waived by TARGET in its sole discretion):
(a) Representations and Warranties. The representations and
warranties of ACQUIROR contained in this Agreement shall be true and correct in
all material respects as of the Effective Date, except as expressly permitted or
contemplated by the terms of this Agreement and the aggregate effect of all
differences in the representations and warranties of ACQUIROR between those as
of the date of this Agreement and those as of the Effective Date does not and
will not have an ACQUIROR Material Adverse Effect. TARGET shall have received a
certificate of the Chairman and its Chief Financial Officer to such effect, or
if such positions are then vacant, by at least two other officers of ACQUIROR.
In the event this Agreement is assigned by Sub pursuant to Section 11.7 of this
Agreement, any representation or warranty made by ACQUIROR in this Agreement
with respect to Sub shall be deemed to have been made by ACQUIROR with respect
to such entity and shall be true and correct in all material respects as of the
Effective Date.
(b) Agreements and Covenants. ACQUIROR shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Date. TARGET shall
have received a certificate of the Chairman and its Chief Financial Officer to
such effect, or if such positions are then vacant, by at least two other
officers of ACQUIROR.
29
(c) Consents and Approvals. All material consents, approvals
and authorizations legally required to be obtained to consummate the Merger
shall have been obtained from and made with all required Governmental Entities
and any other third party.
(d) No ACQUIROR Material Adverse Effect. Since the date of
this Agreement, there shall have been no ACQUIROR Material Adverse Effect nor
shall there have occurred prior to the Effective Date any change, occurrence or
circumstance in the business, results of operations or financial condition of
ACQUIROR likely to have an ACQUIROR Material Adverse Effect. TARGET shall have
received a Certificate of the Chairman or any Vice President of ACQUIROR to such
effect.
(e) Certificates. TARGET shall have received such certificates
from officers and representatives of ACQUIROR as it shall have reasonably
requested.
(f) Appraisal Rights. The holders of more than ten percent
(10%) of the issued and outstanding shares of TARGET Common Stock shall not have
demanded appraisal rights in respect of the Merger.
(g) Directors. TARGET shall receive evidence satisfactory to
TARGET that the directors of ACQUIROR as of the Effective Date are those which
are satisfactory to TARGET, with all such directors to hold office until their
respective successors are duly elected and qualified in a manner consistent with
the Certificate of Incorporation and Bylaws of ACQUIROR or as otherwise provided
by law. Accordingly, to the extent necessary as determined by TARGET, TARGET
shall receive letters of resignation of the directors of ACQUIROR immediately
prior to the effectiveness of the Merger, in form and substance satisfactory to
TARGET.
(h) Officers. TARGET shall receive evidence satisfactory to
TARGET that the officers of ACQUIROR as of the Effective Date are those which
are satisfactory to TARGET, with all such directors to hold office until their
respective successors are duly elected and qualified in a manner consistent with
the Certificate of Incorporation and Bylaws of ACQUIROR or as otherwise provided
by law. Accordingly, to the extent necessary as determined by TARGET, TARGET
shall receive letters of resignation of the officers of ACQUIROR immediately
prior to the effectiveness of the Merger, in form and substance satisfactory to
TARGET.
ARTICLE 10
30
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1 Termination. This Agreement may be terminated at any
time prior to the Effective Date, whether before or after approval of this
Agreement and the Merger by the stockholders of each of TARGET and ACQUIROR:
(a) By mutual written consent of ACQUIROR and TARGET;
(b) By ACQUIROR, if any representation or warranty made by
TARGET in this Agreement shall not have been true when made and such breach
would have been, or would be, reasonably likely to have a TARGET Material
Adverse Effect or the failure of TARGET to satisfy its obligations under Section
9.2(b);
(c) By TARGET, if any representation or warranty made by
ACQUIROR in this Agreement shall not have been true when made and such breach
would have been, or would be, reasonably likely to have an ACQUIROR Material
Adverse Effect or the failure of ACQUIROR to satisfy its obligations under
Section 9.3(b);
(d) By either ACQUIROR or TARGET, if there shall be any Order
which is final and non-appealable preventing the consummation of the Merger,
except if the party relying on such Order has not complied with its obligations
under Section 8.3(b);
(e) By either ACQUIROR or TARGET, if the Effective Date shall
not have occurred before September 30, 2002; provided, however, that the right
to terminate this Agreement pursuant to this Section 10.1(e) shall not be
available to any party whose breach of any representation or warranty or failure
to perform or comply with any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Date to occur on or before such
date;
(f) By either ACQUIROR or TARGET, if the Agreement shall fail
to receive the requisite votes for approval and adoption by the stockholders of
TARGET, or if any of the conditions specified in Section 9.1 shall not have been
met in all material respects or waived prior to such time as such condition can
no longer be satisfied;
(h) by ACQUIROR or TARGET at any time prior to the Effective
Date if (i) in the case of termination by ACQUIROR, any of the conditions
specified in Section 9.2(a) and 9.2(c) through (f) shall not have been met or
waived prior to such time as such condition can no longer be satisfied or (ii)
in the case of termination by TARGET, any of the conditions specified in Section
9.3(a) and 9.3(c) through (j) shall not have been met or waived prior to such
time as such condition can no longer be satisfied; or
31
(i) if the Board of Directors, or any committee or independent
members thereof of ACQUIROR or of TARGET, in the exercise of their fiduciary
responsibilities relating to an Acquisition Offer pursuant to Section 7.6,
determines that it is in the best interests of its stockholders to terminate
this Agreement.
The right of any party hereto to terminate this Agreement pursuant
to this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
SECTION 10.2 Effect of Termination. Subject to the provisions of
Section 11.1(b), in the event of the termination of this Agreement pursuant to
Section 10.1, this Agreement shall forthwith become void, there shall be no
liability on the part of ACQUIROR or TARGET or any of their respective officers
or directors to the other and all rights and obligations of any party hereto
shall cease.
SECTION 10.3 Amendment. To the extent permitted by applicable law,
this Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective Boards of Directors at any time prior to the
Effective Date; provided, however, that, after approval of the Merger by the
stockholders of each of TARGET and ACQUIROR, no amendment may be made which
would reduce the amount or change the type of consideration into which each
share of TARGET Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 10.4 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 10.5 Fees, Expenses and Other Payments. (a) All Expenses (as
defined in paragraph (b) of this Section 10.5) incurred by the parties hereto
shall be borne solely and entirely by the party that has incurred such Expenses.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing thereof of all consent solicitations, information statements or
proxy statements and the mailing,
32
the solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated herein.
ARTICLE 11
GENERAL PROVISIONS
SECTION 11.1 Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 11.1(b), the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement.
(b) Notwithstanding anything to the contrary contained herein,
the representations, warranties and agreements in this Agreement shall terminate
at the Effective Date or upon the termination of this Agreement pursuant to
Article 10, except that the agreements set forth in Articles 1, 2, 3, 4 and 8.5
shall survive the Effective Date and those set forth in Sections 7.5, 10.2, 10.5
and Article 11 hereof shall survive termination.
SECTION 11.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
If to ACQUIROR or Sub:
Hemoxymed, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx or Xxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxxxxx & Xxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxx Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to TARGET:
Molecular Geriatrics Corporation
00 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxxxxx Xxxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
SECTION 11.3 Certain Definitions. For purposes of this Agreement,
the term:
(a) "Affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in the State of New York are authorized or obligated to be closed;
(c) The "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "control" (including the terms "controlled", "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contract or credit arrangement
or otherwise;
(e) "knowledge" or "known" shall mean, with respect to any
matter in question, if an executive officer or director of TARGET, ACQUIROR or
Sub, as the case may be, has actual knowledge of such matter;
34
(f) "Laws" shall mean all applicable federal, state, local or
foreign laws, regulations or orders or any other requirements of any
governmental, regulatory or administrative agency or authority or court or other
tribunal.
(g) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(h) "Tax" or "Taxes" shall mean any and all taxes, charges,
fees, levies, payable to any federal, state, local or foreign taxing authority
or agency, including, without limitation, income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes, customs duties, imposts, charges, levies or other
similar assessments of any kind, and interest, penalties and additions to tax
imposed with respect thereto.
SECTION 11.4 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 11.6 Entire Agreement. This Agreement (together with the
Exhibits and Schedules hereto) constitutes the entire agreement of the parties
and supersede all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
SECTION 11.7 Assignment. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that Sub may assign this
Agreement in its sole discretion to any entity that is, either directly or
indirectly, a wholly-owned subsidiary of ACQUIROR.
SECTION 11.8 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or
35
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.9 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 11.10 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law.
SECTION 11.11 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, ACQUIROR, Sub and TARGET have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HEMOXYMED, INC.
BY: s/ Xxxxxx Xxxxxx
---------------------------------------
NAME: Xxxxxx Xxxxxx
-------------------------------------
TITLE: Interim Chief Financial Officer
------------------------------------
MOLECULAR GERIATRICS ACQUISITION, INC.
BY: s/ Xxxxxx Xxxxxx
---------------------------------------
NAME: Xxxxxx Xxxxxx
-------------------------------------
TITLE: Secretary
------------------------------------
MOLECULAR GERIATRICS CORPORATION
BY: s/ Xxxxx X. Xxxxxx
---------------------------------------
NAME: Xxxxx X. Xxxxxx
-------------------------------------
TITLE: Chairman and Chief Executive Officer
------------------------------------
