EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER
AMONG
MEDAREX, INC.,
MEDAREX ACQUISITION CORP.
AND
HOUSTON BIOTECHNOLOGY INCORPORATED
DATED: DECEMBER 18, 1996
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TABLE OF CONTENTS
PAGE
NUMBER
------
AGREEMENT AND PLAN OF MERGER.......................................... A-1
Article I The Merger.................................................. 1
Section 1.1 The Merger........................................... 1
Section 1.2 Closing.............................................. 1
Section 1.3 Effective Time of the Merger......................... 1
Section 1.4 Effects of the Merger................................ 1
Section 1.5 Certificate of Incorporation; By-Laws................ 1
Section 1.6 Directors and Officers............................... 2
Article II Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates................... 2
Section 2.1 Effect on Capital Stock.............................. 2
Section 2.2 Exchange of Certificates............................. 3
Section 2.3 Assumption of Options and Warrants................... 4
Article III Representations and Warranties............................ 5
Section 3.1 Representations and Warranties of the Company........ 5
Section 3.2 Representations and Warranties of Parent and Merger
Sub.................................................. 12
Article IV Conduct of Business Pending the Merger; Other Covenants.... 16
Section 4.1 Conduct of Business of the Company Pending the
Merger............................................... 16
Section 4.2 Conduct of Business of Merger Sub.................... 17
Section 4.3 Stockholders' Meeting................................ 17
Section 4.4 Preparation of Form S-4 and the Proxy
Statement/Prospectus................................. 18
Section 4.5 Access to Information; Confidentiality............... 18
Section 4.6 Affiliates........................................... 18
Section 4.7 No Solicitation...................................... 18
Section 4.8 Employee Benefits Matters............................ 19
Section 4.9 Directors' and Officers' Indemnification and
Insurance............................................ 20
Section 4.10 Further Action; Reasonable Best Efforts.............. 20
Section 4.11 Notification of Certain Matters...................... 20
Section 4.12 Public Announcements................................. 20
Section 4.13 Tax Free Reorganization Treatment.................... 21
Section 4.14 Rule 144 Information................................. 21
Section 4.15 Loan to Company...................................... 21
Article V Conditions of Merger........................................ 21
Section 5.1 Conditions to Obligation of Each Party to Effect the
Merger............................................... 21
Section 5.2 Conditions to Obligations of Parent and Merger Sub... 21
Section 5.3 Conditions to Obligations of the Company............. 22
Article VI Termination, Amendment and Waiver.......................... 22
Section 6.1 Termination.......................................... 22
Section 6.2 Effect of Termination................................ 23
Section 6.3 Fees and Expenses.................................... 23
Section 6.4 Amendment............................................ 24
Section 6.5 Waiver............................................... 25
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Article VII General Provisions............................................. 25
Section 7.1 Non-Survival of Representations, Warranties and Agreements.. 25
Section 7.2 Notices..................................................... 25
Section 7.3 Certain Definitions......................................... 26
Section 7.4 Severability................................................ 26
Section 7.5 Entire Agreement; Assignment................................ 27
Section 7.6 Parties in Interest......................................... 27
Section 7.7 Governing Law............................................... 27
Section 7.8 Consent to Jurisdiction..................................... 27
Section 7.9 Headings.................................................... 27
Section 7.10 Counterparts................................................ 27
EXHIBITS
1.3 Certificate of Merger
4.6 Affiliates Letter
ii
TERM PAGE NUMBER
---- -----------
"Additional Loan".................................................. 21
"Agreement"........................................................ 1
"Business Combination"............................................. 24
"Certificate of Merger"............................................ 1
"Certificates"..................................................... 3
"Closing".......................................................... 1
"Closing Date"..................................................... 1
"Code"............................................................. 1
"Company".......................................................... 1
"Company By-laws".................................................. 2
"Company Certificate of Incorporation"............................. 2
"Company Common Stock"............................................. 2
"Company Non-Plan Options"......................................... 5
"Company Options".................................................. 4
"Company Plans".................................................... 9
"Company Preferred Stock".......................................... 5
"Company Securities"............................................... 6
"Company Warrants"................................................. 4
"Confidentiality Agreement"........................................ 18
"Consents"......................................................... 21
"Convertible Note"................................................. 6
"DGCL"............................................................. 1
"Effective Time"................................................... 1
"Environmental Laws"............................................... 12
"ERISA"............................................................ 9
"Exchange Act"..................................................... 7
"Exchange Agent"................................................... 3
"Exchange Fund".................................................... 3
"Exchange Ratio"................................................... 2
"FDA".............................................................. 7
"Form S-4"......................................................... 7
"Fractional Share Payment"......................................... 2
"Governmental Entity".............................................. 7
"Hazardous Substance".............................................. 12
"Indemnified Parties".............................................. 20
"Intellectual Property"............................................ 11
"License Agreement"................................................ 21
"Material Adverse Change".......................................... 23
"Material Adverse Effect" (For the Company)........................ 5
"Material Adverse Effect" (For Parent and Merger Sub).............. 13
"Merger"........................................................... 1
"Merger Consideration"............................................. 2
"Merger Sub"....................................................... 1
"NASD"............................................................. 14
"NASDAQ"........................................................... 2
"Notes"............................................................ 6
"Parent"........................................................... 1
"Parent Common Shares"............................................. 2
"Parent Preferred Shares".......................................... 13
"Parent SEC Reports"............................................... 14
"Plans"............................................................ 4
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TERM PAGE NUMBER
---- -----------
"Proxy Statement/Prospectus"....................................... 7
"Purchase Price"................................................... 24
"Requisite Regulatory Approvals"................................... 21
"Returns".......................................................... 10
"Representatives".................................................. 18
"SEC".............................................................. 7
"SEC Reports"...................................................... 7
"Securities Act"................................................... 7
"Specified Contracts".............................................. 12
"Stockholder's Meeting"............................................ 17
"Surviving Corporation"............................................ 1
"Takeover Proposal"................................................ 23
"Tax".............................................................. 11
"Transaction Proposal"............................................. 19
"Voting Stock"..................................................... 24
"1996 10-Q's"...................................................... 7
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated December 18, 1996 (the "Agreement"),
among Medarex, Inc., a New Jersey corporation (the "Parent"), Medarex
Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary
of Parent ("Merger Sub"), and Houston Biotechnology Incorporated, a Delaware
corporation (the "Company").
WHEREAS, the Board of Directors of the Company, Parent and Merger Sub have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate the business combination transaction provided for
herein in which the Merger Sub will merge with and into the Company with the
Company being the surviving corporation in the Merger (the "Merger"), thereby
becoming a direct wholly-owned subsidiary of Parent.
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, mutual covenants and agreements herein contained
and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), at the Effective Time (as defined in
Section 1.3 below), the Merger Sub shall be merged with and into the Company.
Upon the Effective Time, the separate corporate existence of the Merger Sub
shall cease, and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation") under the name Houston Biotechnology
Incorporated.
Section 1.2 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 6.1, and subject to the satisfaction or waiver of the conditions set
forth in Article V, the closing of the Merger (the "Closing") will take place
as promptly as practicable (and in any event within two business days)
following satisfaction or waiver of the conditions set forth in Article V,
other than those conditions which by their terms are to be satisfied at the
Closing (the "Closing Date"), at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date,
time or place is agreed to in writing by the parties.
Section 1.3 Effective Time of the Merger. As soon as practicable after the
satisfaction of or waiver of the conditions set forth in Article V, the
parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") in substantially the form
attached hereto as Exhibit 1.3 with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as is specified in the Certificate of Merger) being the
"Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Sections 259, 260 and 261 of the DGCL.
Section 1.5 Certificate of Incorporation; By-Laws. (a) At the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall be
the Restated Certificate of Incorporation, as amended, of the
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Company, as in effect immediately prior to the Effective Time (the "Company
Certificate of Incorporation"), as amended by the Certificate of Merger.
(b) At the Effective Time, the By-Laws of the Surviving Corporation shall be
the By-Laws of the Company, as in effect immediately prior to the Effective
Time (the "Company By-laws"), until thereafter amended or repealed in
accordance with their terms and the Certificate of Incorporation of the
Surviving Corporation and as provided by law.
Section 1.6 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed, as the case may be, and qualified.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of
Common Stock, par value $.01 per share, of the Company (the "Company Common
Stock"), or any shares of capital stock of Merger Sub:
(a) Common Stock of Merger Sub. Each share of Common Stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall remain issued, outstanding and unchanged as
validly issued, fully paid and nonassessable shares of Common Stock of the
Surviving Corporation, which shall be all of the issued and outstanding
capital stock of the Surviving Corporation as of the Effective Time;
(b) Conversion of Company Common Stock. Except as otherwise provided
herein and subject to Section 2.1(c), each issued and outstanding share of
Company Common Stock shall be converted into the (the "Merger
Consideration") right to receive from Parent 0.182 of a share of Parent
common stock, $.01 par value per share (the "Parent Common Shares") (said
0.182 hereinafter the "Exchange Ratio"). If Parent declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination
of shares or similar transaction between the date of this Agreement and the
Effective Time, the Exchange Ratio set forth herein shall be appropriately
adjusted for purposes of this Section 2.1(b).
(c) No Fractional Shares. (i) Notwithstanding any other provision of this
Agreement, no certificates or scrip representing fractional Parent Common
Shares shall be issued upon the surrender for exchange of certificates
representing shares of Company Common Stock, and such fractional share
interests will not entitle the owner thereof to vote or to any rights as a
shareholder of Parent.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of
a Parent Common Share (after taking into account all shares of Company
Common Stock held by such holder at the Effective Time) shall receive,
in lieu thereof, an amount in cash ("Fractional Share Payment")
(payable in dollars, without interest) equal to the product obtained by
multiplying (A) the fractional share interest to which such holder
(after taking into account all shares of Company Common Stock held at
the Effective Time by such holder) would otherwise be entitled by (B)
the closing price for a Parent Common Share on The Nasdaq National
Market ("NASDAQ") on the last business day immediately preceding the
Closing Date.
(d) Cancellation and Retirement of Common Stock. As of the Effective
Time, all shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a
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certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration and any Fractional Share Payment.
(e) Prior to the mailing of the Proxy Statement/Prospectus (as defined in
Section 3.1(e)(ii)), Parent shall appoint Continental Stock Transfer &
Trust Company to act as exchange agent (the "Exchange Agent") for the
payment of the Merger Consideration and any Fractional Share Payment.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent shall deposit
with the Exchange Agent, for the benefit of the holders of shares of Company
Common Stock, the estimated aggregate Fractional Share Payment (the "Exchange
Fund") and will authorize the Exchange Agent to issue Parent Common Shares
constituting the Merger Consideration, for exchange in accordance with this
Article II. Parent shall deposit with the Exchange Agent any additional funds
in excess of the Exchange Fund necessary to pay any Fractional Share Payment
required to be paid under this Agreement.
(b) Exchange Procedures. Promptly after the Effective Time, Parent shall
cause the Exchange Agent to mail to each record holder, as of the Effective
Time, of an outstanding certificate or certificates that immediately prior to
the Effective Time represented shares of Company Common Stock (the
"Certificates"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the
Certificate(s) and payment therefor. Upon surrender to the Exchange Agent of
such Certificates, together with such letter of transmittal duly executed, and
acceptance thereof by the Exchange Agent, the holder of a Certificate shall be
entitled to a certificate or certificates representing the number of full
Parent Common Shares and the Fractional Share Payment, if any, into which the
Certificates surrendered shall have been converted pursuant to this Agreement.
The Exchange Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose in order to
effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further transfer on the
records of the Company or its transfer agent of certificates representing
shares of Company Common Stock and if such certificates are presented to the
Company for transfer, they shall be cancelled against delivery of the
certificate or certificates for Parent Common Shares and Fractional Share
Payment as hereinabove provided. If any certificate for such Parent Common
Shares is to be issued to a person other than the registered holder of a
Certificate surrendered for exchange, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to Parent or the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such Parent Common Shares in a name other than that of the registered holder
of the Certificate(s) surrendered, or establish to the satisfaction of parent
or the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration and Fractional Share
Payment, if any, as contemplated by Section 2.1. No interest will be paid or
will accrue on any Fractional Share Payment.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Shares with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Parent Common Shares issuable in respect
thereof and no Fractional Share Payment shall be paid to any such holder until
the surrender of such Certificate in accordance with this Article II. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the Certificate, without interest, the
amount of any Fractional Share Payment to which such holder is entitled and
the amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such Certificate.
(d) No Further Ownership Rights in Company Common Stock. All Parent Common
Shares issued upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any Fractional
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Share Payment) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Company Common Stock
heretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation, with respect to shares of Company Common
Stock outstanding immediately prior to the Effective Time, to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this Agreement
or prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for twelve months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of shares of Company Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Parent and only as general
creditors thereof for payment of their claim for Parent Common Shares, any
Fractional Share Payment and any dividends or distributions with respect to
Parent Common Shares to which such holders may be entitled.
(f) No Liability. None of Parent, Merger Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any Parent Common Shares (or
dividends or distributions with respect thereto) or Fractional Share Payment
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which any Parent Common Shares, any Fractional Share Payment
or any dividends or distributions with respect to Parent Common Shares in
respect of such Certificate would otherwise escheat to or become the property
of any Governmental Entity (as defined in Section 3.1(e)(ii)), any such
shares, cash, dividends or distributions in respect of such Certificates
shall, to the extent permitted by applicable law, become the property of
Parent, free and clear of all claims or interest of any person previously
entitled thereto other than the holder of such Certificate as specified in
Section 2.2(e).
Section 2.3 Assumption of Options and Warrants. (a) As of the Effective
Time, Parent shall assume each option to purchase shares of Company Common
Stock ("Company Options") outstanding at the Effective Time under the
Company's 1992 Subordinated Stock Option Plan, 1994 Replacement Stock Option
Plan and 1994A Stock Option Plan (the "Plans") and each Company Option shall
thereafter be exercisable for a number of shares of Parent Common Shares equal
to the number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio. The
exercise price per share of Parent Company Shares for such Company Options
shall be the exercise price per share under such Company Option divided by the
Exchange Ratio, rounded to the nearest $.01, all in accordance with Section
425(a) of the Code and the regulations promulgated thereunder, without regard
to whether the Company Option qualifies as an incentive stock option with the
meaning of Section 422A of the Code, although an assumed Company Option is
intended to be an incentive stock option if the Company Option so qualifies.
At the Effective Time, Parent shall also assume all of the Company's
obligations under the Plans. Parent shall take all corporate and other action
necessary to reserve and make available sufficient shares of Parent Common
Shares for issuance upon exercise of all such Company Options and shall
prepare and file with the SEC as promptly as practical after the Effective
Time the appropriate registration statements relating to the issuance of such
shares upon exercise of such options and maintain the effectiveness of such
registration statements.
(b) As of the Effective Time, Parent shall assume each of the outstanding
warrants to purchase an aggregate of 4,521,558 shares of Company Common Stock
outstanding at the Effective Time (the "Company Warrants"), and each Company
Warrant shall entitle the holder thereof to purchase the number of shares of
Parent Common Shares equal to the number of shares of Company Common Stock
subject to such Company Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio and the exercise price per share of Parent
Company Shares pursuant to such Company Warrant shall be the exercise price
per Company Common Share under such Company Warrant divided by the Exchange
Ratio, rounded to the nearest $.01. Parent will take all corporate and other
action necessary to reserve and make available sufficient shares of Parent
Common Stock for issuance upon exercise of such Company Warrants. At the
Effective Time, Parent shall assume all of the Company's obligations
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under the warrant agreement under which the Company Warrants were issued and
shall use its best efforts to comply with the terms of such warrant agreement
with respect to causing such Company Warrants to be listed on NASDAQ as of the
Effective Time.
(c) As of the Effective Time, Parent shall assume the options to purchase an
aggregate of 30,600 shares of Company Common Stock issued in favor of ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇, INCO Venture Capital, ▇▇▇▇▇ ▇▇▇▇ and The Woodlands Corporation
(the "Company Non-Plan Options"). Each Company Non-Plan Option shall
thereafter be exercisable for a number of shares of Parent Common Shares equal
to the number of shares of Company Common Stock subject to such Company Non-
Plan Option immediately prior to the Effective Time multiplied by the Exchange
Ratio. The exercise price per share of Parent Common Shares for such Company
Non-Plan Options shall be the exercise price per share under such Company Non-
Plan Option divided by the Exchange Ratio, rounded to the nearest $.01. At the
Effective Time, Parent shall also assume all of the Company's obligations
under the agreements containing the Company Non-Plan Options. Parent shall
take all corporate and other action necessary to reserve and make available
sufficient shares of Parent Common Shares for issuance upon exercise of all
such Company Non-Plan Options.
ARTICLE III
Representations and Warranties
Section 3.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent and Merger Sub as follows:
(a) Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority and
any necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing
or to have such power, authority and governmental approvals would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined below) on the Company. The Company is duly
qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The Company has no subsidiaries.
When used with respect to the Company, the term "Material Adverse Effect"
means any material adverse change in or effect on (i) the business, prospects,
results of operations or condition (financial or other) of the Company or (ii)
the ability of the Company to consummate any of the transactions contemplated
hereby.
(b) Company Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Company
Certificate of Incorporation and the Company By-Laws. The Company is not in
violation of any of the provisions of the Company Certificate of
Incorporation or the Company By-Laws.
(c) Capitalization. The authorized capital stock of the Company consists
of 40 million shares of Company Common Stock and 15 million shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock").
As of the date hereof, (i) 5,638,707 shares of Company Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and were not issued in violation of the preemptive (or
similar) rights of any stockholder of the Company; (ii) no shares of
preferred stock were issued and outstanding; (iii) no shares of Company
Common Stock were held in the treasury of the Company; (iv) 876,814 shares
of Company Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding
Company Options issued pursuant to the Plans; (v) 4,521,558 shares of
Company Common Stock were reserved for issuance and issuable upon
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exercise of Company Warrants and payment of the applicable exercise price;
(vi) 30,600 shares of Company Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding Company Non-Plan Options; and (vii) up to 800,000 shares of
Company Common Stock plus such number of shares to be issued upon the
conversion of any accrued interest were reserved for issuance and issuable
upon or otherwise deliverable in connection with the conversion of the
Convertible Note dated the date hereof issued by the Company to Parent (the
"Convertible Note") or the Additional Note (as defined herein) to be issued
by the Company to Parent pursuant to Section 4.15 hereof (the Convertible
Note and the Additional Note are sometimes hereinafter collectively
referred to as the "Notes"). Since November 30, 1996, no options to
purchase shares of Company Common Stock have been granted and no shares of
Company Common Stock have been issued except for shares issued pursuant to
the exercise of Company Options or upon the exercise of Company Warrants.
Except as set forth above, as of the date hereof, there are outstanding (i)
no shares of capital stock or other voting securities of the Company; (ii)
no securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of the
Company; and (iii) no options, calls, warrants or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable or
exercisable for capital stock or other voting securities of the Company
(collectively, "Company Securities"). There are no outstanding obligations
of the Company to repurchase, redeem or otherwise acquire any Company
Securities or to provide funds to or make any investment (in the form of a
loan, capital contribution, guarantee or otherwise). The Company does not
own any equity securities of any corporation, partnership, trust, company
or other corporate entity.
(d) Authority Relative to Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the approval and
adoption of the Merger and this Agreement by the holders of a majority of
the outstanding shares of Company Common Stock). This Agreement has been
duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally. The only vote of the holders of any class or series of
outstanding securities of the Company required for approval of this
Agreement and the Merger is the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock.
(e) No Conflict; Required Filings and Consents. (i) The execution,
delivery and performance of this Agreement by the Company does not (A)
conflict with or violate the Company Certificate of Incorporation or
Company By-Laws; (B) assuming that all consents, approvals and
authorizations contemplated by subsection (ii) below have been obtained and
all filings described in such subsection have been made, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
the Company or by which its properties are bound or affected; or (C) result
in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both would become a default) or result in
the loss of a benefit under, or give rise to any right 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 the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchises, or other instrument or obligation to
which the Company is a party or by which the Company or its properties are
bound or affected, except, in the case of clauses (B) and (C), for any such
conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
(ii) The execution delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby by
the Company do not require any consent,
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approval, authorization or permit of, action by, filing with or
notification to, any United States federal, state or local court,
administrative agency or commission, or entity created by rule,
regulation or order of any United States federal, state or local
commission or other governmental agency, authority or instrumentality
(a "Governmental Entity"), or any third party to any agreement,
contract, license or other instrument or obligation to which the
Company is a party, except for (A) the filing with the Securities and
Exchange Commission (the "SEC") and the American Stock Exchange of (1)
a registration statement on Form S-4 (the "Form S-4") under the
Securities Act of 1933, as amended (the "Securities Act"), in
connection with the issuance of Parent Common Shares in the Merger and
pursuant to which the Company Warrants, as converted and assumed, shall
be registered, including therein a combined proxy statement and
prospectus as amended or supplemented from time to time, (the "Proxy
Statement/Prospectus") and (2) such other filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions
contemplated hereby and the obtaining from the SEC of such orders as
may be required in connection therewith; (B) consents, authorizations,
approvals or filings pursuant to the applicable provisions of federal
and state securities laws; (C) applicable filings under state anti-
takeover laws, if any; (D) the filing and recordation of the
Certificate of Merger as required by the DGCL; and (E) such consents,
approvals, authorizations or permits of, actions by or notifications to
a Governmental Entity or third party the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company does not conduct business
in, nor is it otherwise subject to the laws of, any jurisdiction
outside the United States as it relates to this Agreement and the
consummation of the Merger and other transactions contemplated hereby
and the Company makes no representation or warranty with respect to any
consent, approval, authorization or permit of, action by, filing with
or notification to any non-United States Governmental Entity that may
be required in connection with the execution, delivery and performance
of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(f) Compliance. (i) The Company holds, and is in compliance with, all
permits, licenses, exemptions, orders and approvals of all Governmental
Entities, including the Food and Drug Administration ("FDA") and U.S.
Department of Health and Human Services, and committees thereof, necessary
for the operation of the business of the Company, except to the extent the
failure to so hold or comply would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Company, there are no proceedings pending, threatened or
contemplated by any Governmental Entity seeking to terminate, revoke or
materially limit any such permit, license, exemption, order or approval.
(ii) Since January 1, 1991, neither the Company nor, to the best
knowledge of the Company, any of its respective executive officers,
directors or employees has been the subject of any investigation or
order of any Governmental Entity arising under applicable laws, and to
the best knowledge of the Company, no such investigation or order is
pending or threatened, except for such investigations or orders,
including those pending or threatened, which individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect.
(g) SEC Filings; Financial Statements. (i) The Company has filed all
forms, reports, statements and documents required to be filed with the SEC
since January 1, 1993, pursuant to Sections 12(b), 12(g), 13, 14 or 15(d)
of the Exchange Act (collectively, the "SEC Reports"), each of which
complied in all material respect with the applicable requirements of the
Exchange Act and the rules and regulations of the SEC thereunder, as in
effect on the date so filed. The Company has delivered to Parent, in the
form filed with the SEC (including any amendments thereto) copies of (A)
its Annual Report on Form 10-K for each of the three fiscal years ended
December 31, 1993, 1994 and 1995, and the Quarterly Report on Form 10-Q for
the quarters ended March 31, June 30, September 30, 1996 (the "1996 10-
Q's"); (B) all definitive proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since January 1,
1993; and (C) all other SEC Reports or registration statements filed by the
Company with the SEC since January 1, 1993. None of such forms, reports or
documents (including any financial statements or schedules included or
incorporated by reference therein) filed by the Company contained, when
filed (in
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the case of documents filed pursuant to the Exchange Act) or when declared
effective by the SEC (in the case of registration statements filed under
the Securities Act), any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(ii) Each of the audited and unaudited consolidated financial
statements of the Company (including, in each case, any related notes
thereto) included in its SEC Reports complied as to form when filed in
all material respects with the rules and regulations of the SEC with
respect thereto, has been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto)
and fairly presents the consolidated financial position of the Company
at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated (subject
in the case of unaudited statements, to normal year-end audit
adjustments).
(iii) Except as and to the extent set forth on the balance sheet of
the Company at December 31, 1995, including the notes thereto, included
in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, the Company does not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) which
would be required to be reflected on a balance sheet or in the notes
thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in the
ordinary course of business since December 31, 1995, which would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) Information Supplied. None of the information supplied or to be
supplied by the Company in writing or otherwise approved in writing by the
Company for inclusion in (i) the Form S-4 will, at the time the Form S-4
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
(ii) the Proxy Statement/Prospectus will not, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders'
Meeting (as defined herein), contain any statement which, in the light of
the circumstances under which such statement is made, is false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Stockholders' Meeting or any amendment or supplement thereto. The Proxy
Statement/Prospectus will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is made by the
Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Merger Sub for inclusion
or incorporation by reference in the Proxy Statement/Prospectus.
(i) Absence of Certain Changes or Events. Since January 1, 1996, except
as disclosed in the SEC Reports filed since that date, the Company has
conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date except as disclosed in
the SEC Reports or in the ordinary course of business and consistent with
past practice, there has not been (A) any change, event or development in
or affecting the Company that constitutes or would reasonably be expected
to have either individually or in the aggregate a Material Adverse Effect
(provided that for the purposes of this clause (A) changes caused by
changes in stock market conditions in the United States that generally
affect companies in the biotechnology industry shall not be deemed to
constitute a Material Adverse Effect); (B) any change by the Company in its
accounting methods or principles except as recommended by the Company's
independent accountants prior to such change; (C) any declaration, setting
aside or payment of any dividends or distributions in respect of any series
of capital stock of the Company; (D) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including without limitation the
granting of stock options, stock appreciation rights, performance awards,
or restricted stock awards), stock purchase or other employee benefit plan
or agreement or arrangement, or any other increase in the compensation
payable or to become payable to any present or
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former directors, officers above the rank of Vice President of the Company,
except for increases in base compensation and annual cash bonuses; or (E)
any other action which, if it had been taken after the date hereof, would
have required the consent of Parent under Section 4.1 hereof.
Except as otherwise disclosed in the SEC Reports or in this Agreement or the
Disclosure Schedule, as of the date hereof the Company does not know or have
reason to know of any facts or circumstances or of any change, event or
development in or affecting the Company that would reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect.
(j) Absence of Litigation. Except as disclosed in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, there are
no suits, claims, actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any properties
or rights of the Company, before any court, arbitrator or other
Governmental Entity, domestic or foreign, that individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
or to delay or prevent the consummation of the transactions contemplated
hereby beyond June 30, 1997. Neither the Company nor any of its properties
is or are subject to any order, writ, judgment, injunction, decree,
determination or award having, or which would reasonably be expected to
have, a Material Adverse Effect on the Company or which would prevent or
delay the consummation of the transactions contemplated hereby beyond June
30, 1997.
(k) Labor Matters. The Company is not a party to any collective
bargaining agreement. Since January 1, 1996, the Company has not (i) had
any employee strikes, work stoppages, slowdowns or lockouts; (ii) received
any requests for certifications of bargaining units or any other requests
for collective bargaining; or (ii) become aware of any efforts to organize
employees of the Company into a collective bargaining unit.
(l) Employee Benefit Plans. (i) Section 3.1(l) of the Disclosure Schedule
contains a true and complete list of each "employee benefit plan" (within
the meaning of section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), including, without limitation, multi-
employer plans within the meaning of ERISA section 3(37)), stock purchase,
stock option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result of
the transaction contemplated by this Agreement), whether formal or
informal, legally binding or not, under which any employee or former
employee of the Company has any present or future right to benefits or
under which the Company has any present or future liability. All such
plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Company Plans."
(ii) Except as set forth in Section 3.1(l) of the Disclosure
Schedule, with respect to each Company Plan, the Company has delivered,
or made available, to the Parent a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate description)
thereof and, to the extent applicable, (A) any related trust agreement,
annuity contract or other funding instrument; (B) the most recent
determination letter; (C) any summary plan description and other
written communications (or a description or any oral communications) by
the Company to its employees concerning the extent of the benefits
provided under a Company Plan; and (D) for the three most recent years
(I) the Form 5500 and attached schedules; (II) audited financial
statements; (III) actuarial valuation reports; and (IV) attorney's
response to auditor's request for information.
(iii) (A) Each Company Plan has been established and administered in
all material respects in accordance with its terms, and in all material
respects in compliance with the applicable provisions of ERISA, the
Code and other applicable laws, rules and regulations; (B) each Company
Plan which is intended to be qualified within the meaning of Code
section 401(a) has received a favorable determination letter or has
filed a timely request for a determination letter as to its
qualification and, to the knowledge of the Company, nothing has
occurred, whether by action or failure to act, which would cause the
loss of such qualification; (C) with respect to any Company Plan, no
actions, suits or claims
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(other than routine claims for benefits in the ordinary course) are
pending or threatened, no facts or circumstances exist which, to the
knowledge of the Company, would give rise to any such actions, suits or
claims, except for such action, suits or claims the effects of which
would not individually or in the aggregate reasonably be expected to
result in a Material Adverse Effect, and the Company will promptly
notify Parent of any pending or threatened claims arising between the
date hereof and the Closing Date; (D) neither the Company nor to the
knowledge of the Company any other party has engaged in a prohibited
transaction, as such term is defined under Code section 4975 or ERISA
section 406, which would subject the Company or Parent to any taxes,
penalties or other liabilities under Code section 4975 or ERISA
sections 409 or 502(i) that is reasonably likely to result in material
liability; (E) no event has occurred and no condition exists that would
subject the Company to any tax, fine or penalty imposed by ERISA, the
Code or other applicable laws, rules and regulations including, but not
limited to, the taxes imposed by Code sections 4971, 4972, 4977, 4979,
4980B, 4976(a) or the fine imposed by ERISA section 502(c) that is
reasonably likely to result in a material liability to the Company; (F)
all insurance premiums required to be paid with respect to Company
Plans as of the date hereof have been or will be paid prior thereto;
(G) all contributions required to be made prior to the date hereof
under the terms of any Company Plan, the Code, ERISA or other
applicable laws, rules and regulations have been or will be made; and
(H) no Company Plan provides for an increase in benefits on or after
the date hereof.
(iv) No Company Plan is, or has ever been, subject to Title IV of
ERISA and, except as set forth in Section 3.1(l) of the Disclosure
Schedule, there are no unfunded Company Plans under which benefits are
payable presently, or in the future, to present or former employees of
the Company.
(v) Each Company Plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of
the Code meets such requirements in all material respects, and the
Company has received a favorable determination from the Internal
Revenue Service with respect to any trust intended to be exempt from
taxation within the meaning of Code section 501(c)(9).
(vi) Except as set forth on Section 3.1(l) of the Disclosure
Schedule, no Company Plan exists which could result in the payment to
any Company employee of any money or other property or rights or
accelerate or provide any other rights or benefits to any Company
employee as a result of the transactions contemplated by this
Agreement, whether or not such payments would constitute a parachute
payment within the meaning of Code section 280G.
(m) Tax Matters. (i) Except as set forth in the SEC Reports filed prior
to the date of this Agreement or except as set forth in Section 3.1(m) of
the Disclosure Schedule, (A) the Company has filed, been included in or
sent, all returns, declarations and reports and information returns and
statements required to be filed or sent by the Company relating to any
Taxes (as defined below) with respect to any income, properties or
operations of the Company (collectively, "Returns"); (B) as of the time of
filing, the Returns were correct in all material respects; (C) the Company
has timely paid or made provision for all Taxes that have been shown as due
and payable on the Returns that have been filed; (D) the Company has made
or will make provisions for all Taxes payable for any periods that end
before the Effective Time for which no Returns have yet been filed and for
any periods that begin before the Effective Time and end after the
Effective Time to the extent such Taxes are attributable to the portion of
any such period ending at the Effective Time; (E) the charges, accruals and
reserves for Taxes reflected on the books of the Company are adequate under
generally accepted accounting principles to cover the Tax liabilities
accruing or payable by the Company in respect of periods prior to the date
hereof; (F) the Company is not delinquent in the payment of any Taxes nor
has requested any extensions of time within which to file or send any
Return, which Return has not since been filed or sent; (G) no deficiency
for any Taxes has been proposed, asserted or assessed, in writing, against
the Company other than those Taxes being contested in good faith by
appropriate proceedings (if necessary, Section 3.1(m) of the Disclosure
Schedule shall set forth the nature of the proceedings, the type of return,
the deficiencies proposed, asserted or assessed and the amount hereof, and
the taxable year in question); (H) the Company has not granted any
extension of the limitation period
A-10
applicable to any Tax claims other than those Taxes being contested in good
faith by appropriate proceedings; (I) the Company is not subject to
liability for Taxes of any person; (J) the Company is not and has not been
a party to any tax sharing agreement; and (K) the Company is not or has not
been a party to any nexus or allocation agreements with any State of the
United States.
(ii) "Tax" means with respect to any person (A) any net income, gross
income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, value-added, windfall profits, custom
duty or other tax, capital stock, social security (or similar),
unemployment, disability, transfer, alternative or add-on minimum,
estimated or other governmental assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax
or additional amount imposed by any taxing authority (domestic or
foreign) on such person and (B) any liability of the Company or any
subsidiary for the payment of any amount of the type described in
clause (A) as a result of being a member of an affiliated or combined
group.
(n) Intellectual Property. (i) The Company owns, is licensed or otherwise
possesses legally enforceable rights to use (in each case, free and clear
of any liens or encumbrances of any kind), the patents, know-how,
trademarks, service marks, brand names and computer software and any
applications for such patents, know-how, trademarks, tradenames, service
marks and brand names, computer software or other intellectual property and
proprietary rights used in or necessary for the conduct of its business as
currently conducted (collectively, "Intellectual Property"). The
Intellectual Property filed with the United States Patent and Trademark
Office is listed in Section 3.1(n) of the Disclosure Schedule. Each license
or other agreement relating to Intellectual Property to which the Company
is a party has been complied with by the Company in all material respects
and is in full force and effect; (ii) the Company has not licensed or
otherwise granted to others any rights to use any such Intellectual
Property except as contemplated by this Agreement, the Notes and the
License Agreement (as defined below) or as set forth in Section 3.1(n) of
the Disclosure Schedule; (iii) to the best of the Company's knowledge and
except as set forth in Section 3.1(n) of the Disclosure Schedule, the use
of such Intellectual Property by the Company does not infringe on or
otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which the Company acquired the right to use
such Intellectual Property; and (iv) to the knowledge of the Company and
except as set forth in Section 3.1(n) of the Disclosure Schedule, no person
is challenging, infringing on or otherwise violating any right of the
Company with respect to such Intellectual Property. To the Company's
knowledge, all such patents, trademarks, service marks, and copyrights held
by the Company or licensed by the Company are valid and subsisting. The
Company is not, nor will it be as a result of the execution and delivery of
this Agreement or the performance of its obligations hereunder, be in
breach of any license, sublicense or other agreement, relating to the
Intellectual Property or any third party right to such Intellectual
Property except for such breaches that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
(o) Title to Properties; Liens and Encumbrances. Section 3.1(o) of the
Disclosure Schedule sets forth a complete and accurate list of all real
properties leased by the Company. Except as set forth in Section 3.1(o) of
the Disclosure Schedule and except for such defects in the title as would
not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, the Company has valid leasehold interests
in its respective real properties and has valid title to all of its
respective other properties and assets (except for leased properties and
assets, in which case the Company has a valid leasehold interest therein),
subject only to (i) statutory liens arising or incurred in the ordinary
course of business with respect to which the underlying obligations are not
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (ii) liens securing indebtedness of the Company
which is created substantially simultaneously with the purchase of the
relevant properties or assets and which do not encumber property other than
such property or assets, and (iii) liens that either individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect. The Company does not own any real property in fee.
(p) Environmental Matters. The property, assets and operations of the
Company are in compliance in all material respects with all applicable
federal, state, local or foreign laws, rules, orders, decrees,
A-11
judgments, injunctions, licenses, permits or regulations relating to
environmental matters (collectively, the "Environmental Laws"), except to
the extent that failure to comply with such Environmental Laws would not
have a Material Adverse Effect. None of the property, assets or operations
of the Company are the subject of any federal state, local or foreign
investigation evaluating whether any remedial action is needed to respond
to a release or threatened release into the environment, of any substance
regulated by, or which would form the basis of liability, under any
Environmental Laws (a "Hazardous Substance"), or are in contravention of
any federal, state, local or foreign law, order or regulation that would
have a Material Adverse Effect. The Company has not received any notice or
claim, nor are there pending, threatened or reasonably anticipated lawsuits
against it with respect to material violations of an Environmental Law or
in connection with the release or threatened release of any Hazardous
Substance into the environment. The Company has no material contingent
liability in connection with any release or threatened release of any
Hazardous Substance into the environment.
(q) Certain Contracts and Agreements. (i) Section 3.1(q) of the
Disclosure Schedule sets forth a list of all material contracts, licenses,
agreements or leases other than this Agreement and the agreements
contemplated hereby (the "Specified Contracts"). True and correct copies of
the most current version of said Specified Contracts have been made
available to Parent. The Company is not in default in the performance of
any of its material obligations under any Specified Contract. No event has
occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default of
any of its material obligations by the Company under any Specified Contract
or, to the Company's knowledge, by any other party thereto.
(ii) The Company is not a party to any contract containing non-
competition clauses, restrictive covenants or similar provisions that
would limit Parent's or the Surviving Corporation's ability after the
Closing to engage in any line of business in any geographic area or to
compete against any person.
(r) Transactions with Affiliates. Except as disclosed in the SEC Reports
filed prior to the date of this Agreement, there are no contracts,
agreements, arrangements or understandings of any kind between any
affiliate of the Company, on the one hand, and the Company, on the other
hand, other than any such contracts, agreements, arrangements and
understandings that either individually or in the aggregate are de minimis
in nature.
(s) The preclinical tests and clinical trials of the Company were and, if
still pending, are being conducted in all material respects in accordance
with protocols filed with the appropriate regulatory authorities for each
such clinical trial or human trial, as the case may be. The Company has no
knowledge of any other studies or tests the results of which are
inconsistent with or otherwise call into question the results described or
referred to in the SEC Reports. The Company has not received any notices or
other correspondence from the FDA or any other Governmental Entity
requiring the termination, suspension or modification of any human trials
that are described in the SEC Reports or the results of which are referred
to in the SEC Reports.
(t) Opinion of Financial Advisor. The Company has received the opinion of
Strategen, L.L.C., to the effect that the Merger is fair to the holders of
the Company Common Stock from a financial point of view.
(u) Brokers. 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 the Company.
(v) Scope of Representations. Anything to the contrary in this Section
3.1 notwithstanding, no representation or warranty made by the Company in
this Agreement shall be deemed to be untrue or incorrect at the date hereof
if the failure of such representation or warranty to be true and correct as
of such date (or as of any other specified date) does not have,
individually or in the aggregate, a Material Adverse Effect on the Company
at the date hereof.
Section 3.2 Representations and Warranties of Parent and Merger Sub. Parent
and Merger Sub, jointly and severally, hereby represent and warrant to the
Company as follows:
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(a) Corporate Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey; Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and each of Parent
and Merger Sub has the requisite corporate power and authority and any
necessary governmental authority to own, operate or lease its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power, authority and governmental approvals could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
Parent and Merger Sub are each duly qualified or licensed as a foreign
corporation to do business, and each are in good standing, in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
When used with respect to Parent or Merger Sub, the term "Material Adverse
Effect" means any material adverse change in or effect on (i) the business,
prospects, results of operations or condition (financial or other) of Parent
and its subsidiaries taken as a whole or (ii) the ability of Parent or Merger
Sub to consummate any of the transactions contemplated hereby.
(b) Charter and By-Laws. Parent has heretofore furnished to the Company
complete and correct copies of the Certificate of Incorporation and By-Laws
of Parent each as currently in effect and of the Certificate of
Incorporation and By-Laws of Merger Sub each as currently in effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of
its respective Certificate of Incorporation or By-Laws.
(c) Capitalization. The authorized capital stock of Parent consists of 40
million Parent Common Shares and two million Preferred Shares, without par
value (hereinafter referred to as "Parent Preferred Shares"). As of
November 30, 1996, (i) 17,592,992 Parent Common Shares were issued and
outstanding, and (ii) no Parent Preferred Shares were issued and
outstanding. All of the Parent Common Shares issuable in exchange for
Company Common Stock at the Effective Time in accordance with the terms of
this Agreement have been duly authorized and reserved for issuance and,
when so issued, will be validly issued, fully paid and nonassessable and
not issued in violation of the preemptive rights of any shareholder of
Parent.
(d) Authority Relative to Agreement. Each of Parent and Merger Sub has
all necessary corporate power and authority to enter into this Agreement,
to perform its obligations hereunder and to consummate the transaction
contemplated hereby. The execution, delivery and performance of this
Agreement by each of Parent and Merger Sub and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part
of Parent or Merger Sub, and no other corporate proceedings on the part of
Parent or Merger Sub or their stockholders are necessary to authorize this
Agreement or to consummate such transaction. This Agreement has been duly
executed and delivered by each of Parent and Merger Sub and, assuming due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of each of Parent and Merger Sub enforceable
against them in accordance with its terms.
(e) No Conflict; Required Filings and Consents. (i) The execution,
delivery and performance of this Agreement by Parent and Merger Sub do not
and will not: (A) conflict with or violate the Certificate of Incorporation
or By-Laws of Parent or Merger Sub; (B) assuming that all consents,
approvals and authorizations contemplated by subsection (ii) below have
been obtained and all filings described in such subsection have been made,
conflict with or violate any law, rule, regulation, order judgment or
decree applicable to Parent or Merger Sub or by which either of them or
their respective properties are bound or affected; or (C) result in any
breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the
loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the property or assets of Parent or Merger
Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which Parent or Merger Sub is a party or by which Parent or Merger Sub or
any of their respective
A-13
properties are bound or affected, except, in the case of clauses (B) and
(C), for any such conflicts, violations, breaches, defaults or other
occurrences which could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on Parent.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub and the consummation of the transactions
contemplated hereby by Parent and Merger Sub do not and will not
require any consent, approval, authorization or permit of, action by,
filing with or notification to, and federal, state or local
Governmental Entity, except for: (A) the filing with the SEC of the
Form S-4 and the obtaining from the SEC of such orders as may be
required in connection therewith; (B) filings with the National
Association of Securities Dealers Inc. ("NASD") on which the Parent
Common Shares are currently eligible for trading; (C) the filing and
recordation of the Certificate of Merger as required by the DGCL; and
(D) applicable filings under state anti-takeover laws, if any.
(f) Compliance. (i) Parent and its subsidiaries hold, and are in
compliance with, all permits, licenses, exemptions, orders and approvals of
all Governmental Entities necessary for the operation of the businesses of
Parent and each subsidiary, except to the extent the failure to so hold or
comply will not have, individually or in the aggregate, a Material Adverse
Effect, and to the best knowledge of Parent there are no proceedings
pending, threatened or contemplated by any Governmental Entity seeking to
terminate, revoke or materially limit any such permit, license, exemption,
order or approval. Neither Parent nor any of its subsidiaries nor the
conduct of their business is in conflict with, or in default or violation
of, (i) any law, rule, regulation, order, judgment or decree applicable to
Parent or any of its subsidiaries or by which its or any of their
respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or
its or any of their respective properties are bound or affected, except for
any such conflicts, defaults or violations which could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
As of the date of this Agreement, no investigation by any United States
Governmental Entity with respect to Parent is pending, or to best knowledge
of Parent, threatened, other than, in each case, those the outcome of
which, individually or in the aggregate, would not have a Material Adverse
Effect.
(g) SEC Filings; Financial Statements. (i) Parent and each of its
subsidiaries has filed all forms, reports, statements and documents
required to be filed with the SEC since January 1, 1993, pursuant to
Sections 12(b), 12(g), 13, 14 or 15(d) of the Exchange Act (collectively,
the "Parent SEC Reports"), each of which complied in all material respect
with the applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder, as in effect on the date so filed.
Parent has delivered to the Company, in the form filed with the SEC
(including any amendments thereto) copies of (A) its Annual Report on Form
10-K for each of the three fiscal years ended December 31, 1993, 1994 and
1995, and the Quarterly Report on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1996; (B) all definitive proxy statements
relating to Parent's meetings of stockholders (whether annual or special)
held since January 1, 1993; and (C) all other Parent SEC Reports or
registration statements filed by Parent with the SEC since January 1, 1993.
None of such forms, reports or documents (including any financial
statements or schedules included or incorporated by reference therein)
filed by Parent contained, when filed (in the case of documents filed
pursuant to the Exchange Act) or when declared effective by the SEC (in the
case of registration statements filed under the Securities Act), any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(ii) Each of the audited and unaudited consolidated financial
statements of Parent (including, in each case, any related notes
thereto) included in the Parent SEC Reports complied as to form when
filed in all material respects with the rules and regulations of the
SEC with respect thereto, has been prepared in accordance with U.S.
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the
notes thereto) and fairly presents the consolidated financial position
of Parent and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and changes in cash flows for
the periods indicated (subject in the case of unaudited statements, to
normal year-end audit adjustments).
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(iii) Except as and to the extent set forth on the balance sheet of
Parent at December 31, 1995, including the notes thereto, included in
Parent's Annual Report on Form 10-K for the year ended December 31,
1995, Parent does not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet or in the notes thereto
prepared in accordance with generally accepted accounting principles,
except for liabilities or obligations incurred in the ordinary course
of business, which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(h) Information Supplied. None of the information supplied or to be
supplied by Parent or Merger Sub in writing or otherwise approved by Parent
for inclusion in (i) the Form S-4 will, at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement/Prospectus will, at the date the Proxy Statement/Prospectus is
first mailed to the Company's stockholders or at the time of the
Stockholders' Meeting, contain any statement which, in the light of the
circumstances under which such statement is made, is false or misleading
with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Stockholders' Meeting or
any amendment or supplement thereto. The Form S-4 will comply as to form in
all material respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, except that no representation
or warranty is made by Parent or Merger Sub with respect to statements made
or incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference in the Form S-4.
(i) Absence of Certain Changes or Events. Since December 31, 1995, except
as disclosed in the Parent SEC Reports filed since that date, Parent has
conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date except as disclosed in
the Parent SEC Reports, there has not been any change, event or development
in or affecting Parent that constitutes or would reasonably be expected to
have a Material Adverse Effect on Parent or to delay or prevent the
consummation of the transactions contemplated hereby beyond June 30, 1997.
In addition to the foregoing, as of the date hereof Parent does not know or
have reason to know of any facts or circumstances or of any change, event
or development in or affecting Parent or its subsidiaries that would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
(j) Absence of Litigation. There are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of Parent,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court, arbitrator
or other Governmental Entity, domestic or foreign, that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect. Neither Parent nor any of its subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which could
reasonably be expected to have, a Material Adverse Effect or to delay or
prevent the consummation of the transactions contemplated hereby beyond
June 30, 1997.
(k) Brokers. No broker, finder or investment banker (other than ▇▇▇▇▇
▇▇▇▇▇▇ Inc.) 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 Parent or Merger
Sub.
(l) Ownership of Company Common Stock. As of the date of this Agreement,
Parent and its subsidiaries beneficially own shares of Company Common Stock
representing less than 5% of the outstanding shares of Company Common
Stock.
(m) Scope of Representations. Anything to the contrary in this Section
3.2 notwithstanding, no representation or warranty made by Parent in this
Agreement shall be deemed to be untrue or incorrect at the date hereof if
the failure of such representation or warranty to be true and correct as of
such date (or as of any other specified date) does not have, individually
or in the aggregate, a Material Adverse Effect at the date hereof.
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ARTICLE IV
Conduct of Business Pending the Merger; Other Covenants
Section 4.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date hereof to
the Effective Time, except as otherwise required by the terms of this
Agreement or unless Parent shall otherwise agree in writing, the business of
the Company shall be conducted only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in compliance with applicable laws; and the Company
shall use its reasonable best efforts to preserve intact the business
organization of the Company, to keep available the services of the present
officers, employees and consultants of the Company and to preserve the present
relationships of the Company with its customers, suppliers and other persons
with whom the Company or any of its subsidiaries has significant business
relations and to preserve and maintain in effect all of the Company's
Intellectual Property.
By way of amplification and not in limitation of the foregoing, the Company
shall not, between the date of this Agreement and the Effective Time, directly
or indirectly do, or propose or commit to do, any of the following without the
prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for,
shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
or agree to acquire any shares of capital stock of the Company or any other
securities convertible into shares of capital stock or any rights, warrants
or options to acquire any such shares or convertible securities;
(b) authorize for issuance, issue, deliver, sell or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock,
any other voting securities or any securities convertible into, or any
rights warrants or options to acquire, any such shares, voting securities
or convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights);
(c) except to the extent required under existing Company Plans as in
effect on the date of this Agreement, (i) increase the compensation or
fringe benefits of any of its directors, officers or employees, except for
increases in compensation of employees and officers of the Company or its
subsidiaries in the ordinary course of business in accordance with past
practice, or (ii) grant any severance or termination pay not currently
required to be paid under existing Company Plans, except on an individual
basis in the ordinary course of business and consistent with past practice,
or (iii) establish, adopt, enter into or amend or terminate any Company
Plan or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees except as required by law
or as provided in this Agreement; provided that the provisions of this
Section 4.1 shall not prohibit the Company and its subsidiaries from hiring
personnel from time to time in the ordinary course of their business,
consistent with past practice and in consultation with Parent;
(d) amend the Company Certificate of Incorporation, the Company By-Laws
or other comparable charter or organizational documents or alter through
merger, liquidation, reorganization, restructuring or in any other fashion
the corporate structure or ownership of the Company;
(e) except as allowed pursuant to Section 4.7 of this Agreement, acquire
or agree to acquire (i) by merging or consolidation with, or by purchasing
a substantial portion of the stock or assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (ii) any assets (not
otherwise subject to paragraph (h) below) other than in the ordinary course
of business consistent with past practice;
(f) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets other than
in the ordinary course of business consistent with past practice and in
amounts that are not, individually or in the aggregate, material to the
Company;
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(g) (i) except for the Notes, incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person (other than or
endorsements of negotiable instruments and similar guarantees in the
ordinary course of business consistent with past practice), issue or sell
any debt securities or warrants or other rights to acquire any debt
securities of the Company, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain the financial
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
(including deposits) incurred in the ordinary course of business consistent
with past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person;
(h) expend, or commit to expend, funds for capital expenditures other
than in accordance with the Company's current capital expenditure plans in
excess of $10,000 in any one transaction or related series of transactions;
(i) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(j) recognize any labor union (unless legally required to do so) or enter
into any collective bargaining agreement;
(k) except as may be required as a result of a change in generally
accepted accounting principles or as recommended by the Company's
independent accountants and consented to in writing by Parent (which
consent shall not be unreasonably withheld) prior to such change, change
any of the accounting methods, practices or principles used by the Company;
(l) make any Tax election or settle or compromise any income Tax
liability in excess of $10,000 except for the sales and use tax matter set
forth in Section 3.1(m) of the Disclosure Schedule or file any federal
income tax return prior to the last day prescribed by law, in the case of
any of the foregoing, material to the business, financial condition or
results of operations of the Company, without the prior consent of Parent,
which consent shall not be unreasonably withheld;
(m) settle or compromise any litigation in which the Company is a
defendant (whether or not commenced prior to the date of this Agreement) or
settle, pay or compromise any claims not required to be paid;
(n) enter into any new line of business;
(o) commence any new preclinical or clinical trials or submit any data or
other materials or enter into any discussions with the FDA or any other
Governmental Entity; or
(p) authorize any of, or commit or agree to take any of, the foregoing
actions or any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue and incorrect
as of the date when made if such action had then been taken.
In addition to the foregoing, the Company hereby further covenants and
agrees that during the period from the date hereof to the Effective Time, the
Company will only use monies received by it from Parent pursuant to the Notes
in consultation with Parent.
Section 4.2 Conduct of Business of Merger Sub. Merger Sub has not engaged,
and during the period from the date of this Agreement to the Effective Time,
Merger Sub shall not engage, in any activities of any nature except as
provided in, or in connection with the transactions contemplated by, this
Agreement.
Section 4.3 Stockholders' Meeting. The Company will take all action
necessary in accordance with and subject to applicable law and the Company
Certificate of Incorporation and the Company By-Laws to convene a meeting of
its stockholders (the "Stockholder's Meeting") as soon as practicable after
the date of this Agreement to consider and vote upon the adoption and approval
of this Agreement. Subject to the next succeeding sentence, the Company,
through its Board of Directors, shall recommend to its stockholders approval
of the foregoing matters, and such recommendation, together with a copy of the
opinion referred to in Section 3.1(t), shall be included in the Proxy
Statement/Prospectus. The Board of Directors of the Company may fail to make
such
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recommendation, or withdraw, modify or change such recommendation, if and only
if the Board, after advice of outside counsel, determines in good faith that
the making of such recommendation, or the failure to so withdraw, modify or
change such recommendation, could reasonably be deemed to constitute a breach
of its fiduciary duties under applicable law.
Section 4.4 Preparation of Form S-4 and the Proxy
Statement/Prospectus. Promptly following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the Proxy
Statement/Prospectus, and Parent shall prepare and file with the SEC the Form
S-4, in which the Proxy Statement/Prospectus will be included as a prospectus.
Each of the Company and Parent shall use its reasonable best efforts to have
the Form S-4 declared effective under the Securities Act as promptly as
practicable after such filing. The Company will use its reasonable best
efforts to cause the Proxy Statement/Prospectus to be mailed to the Company's
stockholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Parent shall also use its reasonable best
efforts to take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of Parent
Common Shares in the Merger, and the Company shall furnish all information
concerning the Company and the holders of the Company Common Stock as may be
reasonably requested in connection with any such action. The information
provided and to be provided by Parent, Merger Sub and the Company,
respectively, for use in the Form S-4 shall, at the time the Form S-4 becomes
effective and on the date of the Stockholder's Meeting referred to above, be
true and correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order to make such
information not misleading, and the Company, Parent and Merger Sub each agree
to correct any information provided by it for use in the Form S-4 which shall
have become false or misleading.
Section 4.5 Access to Information; Confidentiality. (a) From the date hereof
to the Effective Time, the Company (i) shall, and shall cause its officers,
directors, employees, auditors and other agents to, afford the officers,
auditors and other agents of Parent, reasonable access at all reasonable times
(during normal business hours so as not to unduly or unreasonably interfere
with the business of the Company) to its senior officers, agents, properties,
offices and other facilities and to all books and records, and shall furnish
Parent and such other persons with all financial, operating and other data and
information as Parent, through its officers, may from time to time reasonably
request, and (ii) shall make available its senior officers, upon reasonable
prior notice and during normal business hours, to confer on a regular basis
with the appropriate officers of Parent regarding the ongoing operations of
the Company, the implementation of the transactions contemplated hereby and
other matters related hereto. No investigation pursuant to this Section 4.5
shall affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
(b) Each of Parent and Merger Sub will hold information it receives pursuant
to Section 4.5(a)(i) which is nonpublic in confidence to the extent required
by, and in accordance with, the provisions of the letter dated December 18,
1995 between Parent and the Company (the "Confidentiality Agreement").
Section 4.6 Affiliates. Prior to the Closing Date, the Company shall deliver
to Parent a letter identifying all persons who are, on the record date
established for the Stockholders Meeting, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use its
reasonable best efforts to cause each such person to deliver to Parent on or
prior to the Closing Date a written agreement substantially in the form
attached as Exhibit 4.6 hereto.
Section 4.7 No Solicitation. Subject to the proviso below, the Company shall
not, nor shall the Company authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative (collectively, "Representatives") retained by it to,
solicit, initiate, encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to
lead to, any Transaction Proposal (as defined below) or enter into or maintain
or continue any discussions or negotiate with any person in furtherance of
such inquiries or to obtain a Transaction Proposal, or agree to or endorse any
Transaction Proposal, and the Company shall notify Parent orally (as promptly
as practicable, and in any event
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within two business days) as to any Transaction Proposal which it or any of
its Representatives may receive, specifying in reasonable detail the material
terms thereof and, if requested by Parent, the Company shall furnish a written
summary of such material terms (other than the identity of the party making
such Transaction Proposal). Nothing contained in this Section 4.7 or this
Agreement to the contrary shall restrict the Board of Directors of the Company
from (i) furnishing information to any person or entity who makes an
unsolicited inquiry concerning a possible Transaction Proposal, or (ii)
entering into negotiations or discussions with any person or entity that makes
an unsolicited Transaction Proposal regarding that Transaction Proposal, or
(iii) entering into an unsolicited Transaction Proposal, if, in the case of
either clauses (ii) or (iii), the Board of Directors of the Company determines
in good faith, after advice of counsel, that (a) the failure to do so could
reasonably be deemed a breach of its fiduciary duties under applicable law or
(b) failing to make, withdrawing, modifying or changing a recommendation to
the Company's stockholders with respect to the approval and adoption of this
Agreement if the Board of Directors of the Company determines in good faith,
after advice of counsel, that making such recommendation, or failure to
withdraw, modify or change such recommendation, could reasonably be deemed a
breach of its fiduciary duties under applicable law. The Company shall provide
such information to Parent regarding any inquiry, negotiation, discussion or
proposal under this Section 4.7 as is necessary, in the reasonable judgment of
the Board of Directors of the Company, to achieve a level playing field so
that Parent shall not be at a disadvantage, provided that the name of any such
other person need not be disclosed to Parent. The Company shall obtain a
confidentiality agreement from the person making such inquiries or proposals
containing substantially the same terms and provisions as that obtained from
Parent, provided that to the extent such confidentiality agreement with such
third party contains provisions that are more favorable to such third party
than the comparable provisions in the Confidentiality Agreement, such
provisions in the Confidentiality Agreement shall be amended correspondingly.
As use herein, the term "Transaction Proposal" means (x) any acquisition or
purchase of substantially all of the assets of, or any controlling interest
in, or any debt or equity offering of, the Company or any Business
Combination, as defined below, or (y) any proposal, plan or agreement to do
any of the foregoing. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. This
section shall not prohibit accurate disclosure by the Company in any document
that is required to be filed by the Company with the SEC, including without
limitation any filings made in compliance with Rule 14e-2 promulgated under
the Exchange Act.
Section 4.8 Employee Benefits Matters. (a) Except as otherwise provided in
this Section 4.8, on and after the Effective Time, Parent shall, or shall
cause Surviving Corporation to, maintain the Company Plans set forth in
Section 3.1(l) of the Disclosure Schedule (other than the Plans) for the
benefit of employees of the Company as such Company Plans are in effect
immediately prior to the Effective Time; provided that Parent or Surviving
Corporation may replace any Company Plan with a plan of Parent which provides
benefits that are substantially similar to those benefits provided to Parent's
employees.
(b) Except as otherwise provided in this Section 4.8, on and after the
Effective Time, Parent shall, or shall cause Surviving Corporation to maintain
compensation for Company employees, as in effect on the date of this
Agreement, subject to increases in accordance with Company policy.
(c) On and after the Effective Time, Company employees shall be entitled to
participate in the equity compensation plans of Parent for employees of Parent
on the same basis as similarly situated employees of Parent.
(d) On and after the Effective Time, the base salary and other compensation
and benefits described in Section 4.8 (a) through (d) hereof may be altered by
the Surviving Corporation consistent with the Company's past practices, to
remain competitive or in accordance with industry practice; provided that the
aggregate compensation and benefits provided to the Surviving Corporation
employees shall be no less favorable than the compensation and benefits
provided to Company employees immediately prior to the Effective Time and may
be reduced only in the event of a material adverse change in the business of
the Surviving Corporation.
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(e) Neither the Company nor Parent will terminate the employment of any
employee of the Company, unless for cause, prior to April 9, 1997, and Parent
agrees to enter into reasonable severance arrangements with any Company
employee terminated after such date in accordance with its current practice.
Section 4.9 Directors' and Officers' Indemnification and Insurance. It is
understood and agreed that the Company shall defend, indemnify and hold
harmless, and after the Effective Time, the Surviving Corporation and the
Parent shall, jointly and severally, defend, indemnify and hold harmless, each
present and former employee, agent, director and officer of the Company (the
"Indemnified Parties") to the full extent required or permitted under (a)
Delaware law and (b) as provided in their respective charters and by-laws,
which rights to be defended, indemnified and held harmless shall survive the
Merger and shall continue in full force and effect without time limitation
from and after the Effective Time. Without limiting the foregoing, the
Company, and after the Effective Time the Surviving Corporation and the
Parent, will periodically advance expenses as incurred with respect to the
foregoing, to the fullest extent permitted by applicable law; provided the
person to whom the expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification. In addition, the Certificate of Incorporation and the By-laws
of the Surviving Corporation with respect to indemnification, shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, agents or
employees of the Company or otherwise entitled to indemnification pursuant to
the Company's Certificate of Incorporation. In the event that the Surviving
Corporation transfers all or substantially all of its operations to another
corporation or other entity, proper provision shall be made so that the
successor or transferee thereof shall assume any remaining obligations of the
Surviving Corporation set forth in this Section 4.9.
Section 4.10 Further Action; Reasonable Best Efforts. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to (i)
cooperating in the preparation and filing of the Proxy Statement/Prospectus
and Form S-4, and any amendments to any thereof and (ii) using its reasonable
best efforts to make all required regulatory filings and applications and to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts as
are necessary for the consummation of the transaction contemplated by this
Agreement and to fulfill the conditions to the Merger. To the extent
practicable in the circumstances and subject to applicable laws, each party
shall provide the other with the opportunity to review all information
relating to the other party, or any of its subsidiaries, which appears in any
filing made with, or written materials submitted to, any Governmental Entity
in connection with obtaining the necessary regulatory approvals for the
consummation of the transactions contemplated by this Agreement. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall use their reasonable best efforts to
take all such necessary action.
Section 4.11 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i)
the occurrence or non-occurrence of any event which would likely cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, and (ii) any failure of the Company,
Parent or Merger Sub, as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.11 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 4.12 Public Announcements. Each party shall consult with the other
before issuing any press release or otherwise making any public statements
with respect to the Merger and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be
required by law or any listing agreement with its securities exchange or
quotation system, provided, however, that each party may talk to their
shareholders without the consent of the other in accordance with applicable
law.
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Section 4.13 Tax Free Reorganization Treatment. None of Parent, Merger Sub,
the Company or any of their respective affiliates shall take or cause to be
taken any action, whether before or after the Effective Time, which would
disqualify the Merger as a tax-free reorganization within the meaning of
Section 368 of the Code.
Section 4.14 Rule 144 Information. Parent hereby agrees that from the
Effective Time until the third anniversary of the Effective Time, if Parent is
not subject to Section 13 or 15(d) of the Exchange Act, it will ensure that
there is publicly available the information specified in Rule 144(c)(2) under
the Securities Act.
Section 4.15 Loan to Company. On January 15, 1997, Parent will make a loan
(the "Additional Loan") in the amount of $250,000 to the Company to be used by
the Company exclusively for operating expenses in the ordinary course. The
Company shall use such funds in consultation with Parent. The Additional Loan
will be evidenced by a promissory note in substantially the form of the
Convertible Note and will be secured by that certain License Agreement dated
of even date herewith between the Company and Parent (the "License
Agreement").
ARTICLE V
Conditions of Merger
Section 5.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon.
(b) Other Approvals. Other than the filing contemplated by Section 1.3,
all consents, approvals, authorizations or permits of, actions by, or
filings with or notifications to, and all expirations of waiting periods
imposed by, any Governmental Entity or any third party (all the foregoing,
"Consents") which are necessary for the consummation of the Merger, other
than immaterial Consents the failure to obtain which would have no material
adverse effect on the consummation of the Merger or the business of the
Surviving Corporation, shall have been filed, occurred or been obtained
(all such permits, approvals, filings and consents and the lapse of all
such waiting periods being referred to as the "Requisite Regulatory
Approvals"), all conditions, if any, to such Requisite Regulatory Approvals
shall have been satisfied and all such Requisite Regulatory Approvals shall
be in full force and effect.
(c) No Injunctions or Restrains; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing be
pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any "blue sky" and other state
securities laws applicable to the issuance of Parent Common Shares in the
Merger shall have been complied with.
Section 5.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived by Parent and Merger
Sub:
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct as of the
date of this Agreement except to the extent such
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representations and warranties speak as of an earlier date, with such
exceptions as, either individually or in the aggregate, do not have, and
would not reasonably be expected to have, a Material Adverse Effect on the
Company, and Parent shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date with such exceptions as, either
individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Material Adverse Effect on the Company, and Parent
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer of the Company to such effect.
Section 5.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction of the following
unless waived by the Company:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent such representations
and warranties speak as of an earlier date, with such exceptions as, either
individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Material Adverse Effect on Parent, and the Company
shall have received a certificate signed on behalf of the Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, with such
exceptions as, either individually or in the aggregate, do not have, and
would not reasonably be expected to have, a Material Adverse Effect on
Parent, and the Company shall have received a certificate signed on behalf
of Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to such effect.
(c) Tax Opinion. The opinion, based on appropriate representations of the
Company, Parent and others, of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel to
the Company, to the effect that the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, dated on or about the date of and referred to in the
Proxy Statement/Prospectus as first mailed to stockholders of the Company,
shall not have been withdrawn or modified in any material respect.
ARTICLE VI
Termination, Amendment and Waiver
Section 6.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent, upon any breach of any representation, warranty, covenant
or agreement of the Company set forth in this Agreement that, either
individually or in the aggregate, would constitute grounds for Parent to
elect not to consummate the Merger pursuant to Section 5.2(a) or (b), if
either (A) such breach cannot be cured prior to the Closing Date, or (B)
has not been cured within 45 days after the date on which written notice of
such breach is given by Parent to the Company, specifying in reasonable
detail the nature of such breach;
(c) by the Company, upon any breach of any representation, warranty,
covenant or agreement of Parent set forth in this Agreement that, either
individually or in the aggregate, would constitute grounds for the Company
to elect not to consummate the Merger pursuant to Section 5.3(a) or (b), if
either (A) such breach cannot be cured prior to the Closing Date, or (B)
has not been cured within 45 days after the date on which
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written notice of such breach is given by the Company to Parent, specifying
in reasonable detail the nature of such breach;
(d) by either Parent or the Company, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the Merger
shall have become final and nonappealable; provided that such right of
termination shall not be available to any party if such party shall have
failed to make reasonable efforts to prevent or contest the imposition of
such injunction or action and such failure materially contributed to such
imposition;
(e) by either Parent or the Company if (other than due to the willful
failure of the party seeking to terminate this Agreement to perform its
obligations hereunder which are required to be performed at or prior to the
Effective Time) the Merger shall not have been consummated on or prior to
June 30, 1997.
(f) by either Parent or the Company, if the approval of the stockholders
of the Company of this Agreement and the Merger required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders
or at any adjournment thereof;
(g) by either Parent or the Company, if (i) the Board of Directors of the
Company shall have approved or have recommended to the stockholders of the
Company a Transaction Proposal or shall have resolved to do the foregoing;
or (ii) a Takeover Proposal (as defined herein) is commenced (other than by
Parent or any of its subsidiaries or affiliates), and the Board of
Directors of the Company recommends that the stockholders of the Company
tender their shares in such Takeover Proposal or otherwise fails to
recommend that such stockholders reject such Takeover Proposal within ten
business days of the commencement thereof; provided, however, that in each
case this Agreement may only be terminated by the Company if, and only to
the extent that, the Board of Directors of the Company, after advice of
independent legal counsel, determines in good faith that failure to take
such action could reasonably be deemed to constitute a breach of the
Board's fiduciary duties under applicable law; or
(h) by Parent in the event of a material adverse change in the business,
prospects or financial condition of the Company caused by an event,
occurrence or circumstance (a "Material Adverse Change"), unanticipated and
unknown by the Company as of the date of this Agreement and arising after
the date hereof solely from facts and circumstances not in existence as of
the date hereof. Without limiting the generality of the foregoing, a
Material Adverse Change shall not include any matter which Parent knows or
should have known of or discovered or should have discovered in its due
diligence review of the Company.
Notwithstanding the foregoing, a Material Adverse Change shall include a
determination made in good faith by Medarex prior to the earlier of the date
that the Proxy Statement/Prospectus is first mailed to the stockholders of the
Company or January 31, 1997 that both (A) a license related to the patent
referred to in Section 3.1(n)(iii) of the Disclosure Schedule is required in
order to continue development of the Company's secondary cataract product, and
(B) such license is not available, and will not be available, on commercially
reasonable terms.
Section 6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto except as set
forth in Section 4.5(b), Section 6.3, if applicable, and Section 7.1;
provided, however, that nothing herein shall relieve any party from liability
for any willful and material breach hereof; provided further, however, that
the recommendation of another transaction by the Company's Board of Directors
in accordance with Section 4.7 shall not constitute a willful and material
breach of this Agreement by the Company.
Section 6.3 Fees and Expenses. (a) The Company agrees that if this Agreement
shall be terminated pursuant to:
(i) Section 6.1(f) because the Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at a meeting of stockholders of the Company called to vote
thereon and at the time of such meeting there shall exist a tender offer or
exchange offer for not less than a majority of the outstanding Voting Stock
(as defined herein) of the Company (a "Takeover Proposal"); or
A-23
(ii) Section 6.1(g);
then in any such case, the Company shall pay to Parent $750,000.
(b) Any cash payment required to be made pursuant to Section 6.3(a) shall be
made upon the date which is 60 days after the date the Company enters into a
definitive agreement with respect to such Transaction Proposal or the
completion of any such Takeover Proposal, by wire transfer of immediately
available funds to an account designated by Parent, and termination of the
Company's obligations under Section 6.3(a) shall not occur until such payment
shall have been made pursuant hereto. The Company covenants and agrees that it
will not enter into a definitive agreement relating to a Transaction Proposal
that would, if consummated, require the payment of any amounts by the Company
pursuant to Section 6.3(a) unless the other party or parties thereto agree
unconditionally in writing (a copy of which shall be furnished to Parent as
soon as practicable after the public announcement of such proposed Transaction
Proposal) to assume, undertake and perform all of the Company's payment
obligations under this Section 6.3, and to pay any legal expenses incurred by
Parent in connection with the enforcement thereof.
(c) For purposes of this Section 6.3:
(i) the term "Business Combination" shall mean (A) the acquisition by any
person (other than Parent or any of its subsidiaries) of beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of, or the right to acquire beneficial ownership of, or the
formation of any group (as such term is defined for purposes of Rule 13d-5
under the Exchange Act) which beneficially owns or has the right to acquire
beneficial ownership of, 50% or more of the total voting power of all then
outstanding Voting Stock of the Company; (B) the consolidation or merger of
the Company with or into any person (other that Parent or any of its
subsidiaries) in a transaction in which the Company shall not be the
surviving or continuing corporation; (C) the merger or consolidation of any
person (other than Parent or any of its subsidiaries) with or into the
Company in a transaction in which the Company is the surviving or
continuing corporation but in which the shares of Voting Stock outstanding
immediately prior to such transaction shall represent less than 50% of the
total voting power of all Voting Stock of the surviving or continuing
corporation outstanding immediately after such merger or consolidation; (D)
any sale or other transfer (including by way of dividend or distribution of
assets to the Company's stockholders), in one transaction or in a series of
related transactions, of all or substantial portion of the Company's
consolidated assets or business to any person (other than Parent or any of
its subsidiaries) or group; or (E) any licensing or other arrangement
entered into by the Company regarding the right to use, further develop,
manufacture, sell or otherwise commercialize the Company's 4197X-RA
immunotoxin product in North America; and
(ii) the term "Voting Stock" means all outstanding stock and other
securities of the Company entitled (without regard to the occurrence of any
contingency) to vote in the election of directors of the Company.
(d) In the event this Agreement shall be terminated pursuant to Section 6.1
(h), then within fifteen (15) days of such termination Parent shall be
obligated to purchase a number of shares of Company Common Stock having a
value equal to $750,000 (or $1,000,000 if the Additional Loan has not been
made), at a price per share of $.9375 (the "Purchase Price") for, at the sole
option of Parent, cash or registered and freely tradeable Parent Common Shares
having a market value, calculated as the average closing price of Parent
Common Shares for the twenty (20) trading days prior to the date such payment
is made, of $750,000 or $1,000,000, as applicable. In the event Parent shall
pay the Purchase Price in Parent Common Shares, the Company hereby agrees that
it shall not transfer, convey, hypothecate, sell or otherwise dispose of more
than 10,000 shares in any five (5) consecutive trading days.
(e) Except as specifically provided in Section 6.2 and this Section 6.3,
each party shall bear its own expenses in connection with this Agreement and
the transactions contemplated hereby.
Section 6.4 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of Parent and the respective Boards of
Directors of Merger Sub and the Company at any time prior to
A-24
the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of the Company, no amendment may be made which would reduce
the amount or change the type of consideration into which each share of the
Company Stock shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 6.5 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 parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid and
set forth in an instrument in writing signed by the party or parties to be
bound thereby.
ARTICLE VII
General Provisions
Section 7.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 6.1, except that those set forth in Sections 2.2, 2.3, Section 4.5(b),
Section 4.8, Section 4.9, Section 4.10, Section 4.14, Section 6.3 and this
Article VII shall survive termination indefinitely (or to such earlier date as
shall be specified by the terms of such provisions).
Section 7.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent or Merger Sub:
Medarex, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇--President
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ or 9607
if to the Company:
Houston Biotechnology Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇--President
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
A-25
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 7.3 Certain Definitions. For purpose of this Agreement, the term:
(a) "affiliate" of a person 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) "beneficial owner" with respect to any shares of Company Common Stock
means a person who shall be deemed to be the beneficial owner of such
shares of Company Common Stock (i) which such person or any of its
affiliates or associates beneficially owns, directly or indirectly, (ii)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding or (iii) which
are beneficially owned, directly or indirectly, by any other persons with
whom such person or any of its affiliates or person with whom such person
or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any shares;
(c) "business day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are required or
permitted to be closed;
(d) "control" (including the terms "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 policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "knowledge" means knowledge after reasonable inquiry of, in the case
of the Company, any Vice President or more senior officer, and in the case
of Parent, any Senior Vice President or more senior officer;
(f) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder
of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
Section 7.4 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 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 the transactions contemplated hereby are fulfilled to
the fullest extent possible.
A-26
Section 7.5 Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
other than the Notes, the Escrow Agreement dated the date hereof among the
Company, Parent and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, the License
Agreement and the Confidentiality Agreement, which shall remain in full force
and effect. This Agreement shall not be assigned by operation of law or
otherwise, except that Parent and Merger Sub may assign all or any of their
respective rights and obligations hereunder to any other direct subsidiary or
subsidiaries of Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
Section 7.6 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 implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 7.7 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 laws thereof.
Section 7.8 Consent to Jurisdiction. Each of the parties hereto by execution
hereof (i) hereby irrevocably submits to the jurisdiction of the federal and
state courts of the State of Delaware for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its
property is exempt or immune from attachment or execution, that any such
action, suit or proceeding may not be brought or maintained in one of the
above-named courts, that any such action, suit or proceeding brought or
maintained in one of the above-named courts should be dismissed on grounds of
forum non conveniens, should be transferred to any court other than one of the
above-named courts should be stayed by virtue of the pendency of any other
action, suit or proceeding in any court other than one of the above-named
courts, or that this agreement or the subject matter hereof may not be
enforced in or by any of the above-named courts. Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding
in any manner permitted by the laws of the State of Delaware, agrees that
service of process by registered or certified mail, return receipt requested,
is reasonably calculated to give actual notice and waives and agrees not to
assert by way of motion, as a defense or otherwise, in any such action, suit
or proceeding, any claim that service of process made in accordance with this
Section 7.8 does not constitute good and sufficient service of process. The
provisions of this Section 7.8 shall not restrict the ability of any party to
enforce in any court any judgment obtained in a federal or state court of the
State of Delaware.
Section 7.9 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 7.10 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, Parent, Merger Sub and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date written above.
Medarex, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Medarex Acquisition Corp.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Houston Biotechnology Incorporated
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
A-28
EXHIBIT 1.3
CERTIFICATE OF MERGER
OF
MEDAREX ACQUISITION CORP.
WITH AND INTO
HOUSTON BIOTECHNOLOGY INCORPORATED
Pursuant to Section 251(c) of the Delaware General Corporate Law, Houston
Biotechnology Incorporated, the surviving corporation in a merger with Medarex
Acquisition Corp. certifies as follows:
1. Houston Biotechnology Incorporated and Medarex Acquisition Corp. are
both Delaware corporations.
2. An Agreement and Plan of Merger dated as of December 18, 1996 (the
"Merger Agreement"), providing for the merger of Medarex Acquisition Corp.
with and into Houston Biotechnology Incorporated (the "Merger") has been
approved, adopted, certified, executed and acknowledged by Houston
Biotechnology Incorporated and Medarex Acquisition Corp. in accordance with
Section 251 of the Delaware General Corporation Law.
The stockholders of Houston Biotechnology Incorporated approved the
Merger of the corporations in a meeting duly called and convened, a quorum
being present in person and by proxy, and acting throughout. The sole
stockholder of Medarex Acquisition Corp. approved the Merger of the
corporations by written consent in lieu of meeting pursuant to Section 228
of the Delaware General Corporation Law.
3. The surviving corporation in the Merger is Houston Biotechnology
Incorporated.
4. Pursuant to the Merger, the Certificate of Incorporation of Houston
Biotechnology Incorporated is amended and restated in the form attached
hereto as Exhibit A.
5. The executed Merger Agreement is on file at the principal place of
business of the surviving corporation, the address of which is
Houston Biotechnology Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
6. A copy of the Merger Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of Houston
Biotechnology Incorporated or Medarex Acquisition Corp.
IN WITNESS WHEREOF, the surviving corporation has caused this certificate of
merger to be signed and attested by its duly authorized officers.
Dated: , 1996
By: _________________________________
President
Attested:
By: _________________________________
, Secretary
EXHIBIT A
TO CERTIFICATE OF MERGER
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HOUSTON BIOTECHNOLOGY INCORPORATED
First: The name of the Corporation is:
HOUSTON BIOTECHNOLOGY INCORPORATED
Second: The address of the Corporation's registered office in the State of
Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, in the City of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇. The name of its registered agent at such address is The
Corporation Trust Company.
Third: The nature of the business and the purposes for which the Corporation
is organized are:
To engage in any business and in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware
and to possess and employ all powers and privileges now or hereafter
granted or available under the laws of the State of Delaware to such
corporations.
Fourth: The total number of shares of stock which the Corporation shall have
authority to issue is Three Thousand (3,000) shares all of which are to be
Common Stock with a par value of one cent ($.01) per share.
Fifth: The board of directors of the Corporation is authorized to make,
alter or repeal by-laws of the Corporation, but the stockholders may make
additional by-laws and may alter or repeal any by-law whether adopted by them
or otherwise.
Sixth: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
an improper personal benefit. If the Delaware General Corporation Law
hereafter is amended to eliminate or limit further the liability of a
director, then, in addition to the elimination of liability provided by the
preceding sentence, the liability of each director shall be eliminated or
limited to the fullest extent provided or permitted by the Delaware General
Corporation Law. Any repeal or modification of this Article SIXTH shall not
adversely affect any right or protection of a director under this Article
SIXTH, as in effect immediately prior to such repeal or modification, with
respect to any liability that would have accrued, but for this Article SIXTH,
prior to such repeal or modification.
EXHIBIT 4.6
FORM OF COMPANY AFFILIATE LETTER
Gentlemen:
The undersigned, a holder of shares of common stock, par value $.01 per
share ("Company Stock"), of Houston Biotechnology Incorporated, Inc., a
Delaware corporation (the "Company"), may be entitled to receive in connection
with the merger (the "Merger") of the Company with Medarex Acquisition Corp.,
a Delaware corporation, securities (the "Parent Securities") of Medarex, Inc.,
a Delaware corporation ("Parent"). The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of the Company within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933, as amended
(the "Act"), although nothing contained herein should be construed as an
admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer any Parent Securities
received by the undersigned in exchange for any shares of Company Stock
pursuant to the Merger may be restricted unless such transaction is registered
under the Act or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the undersigned
has obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the
sale of such securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company that the
undersigned will not sell, assign or transfer any of the Parent Securities
that the undersigned receives in exchange for shares of Company Stock pursuant
to the Merger except (i) pursuant to an effective registration statement under
the Act, (ii) in conformity with the volume and other limitations of Rule 145
or (ii) in a transaction which, in the opinion of independent counsel
reasonably satisfactory to Parent or as described in a "no-action" or
interpretive letter from the Staff of the Securities and Exchange Commission
(the "SEC"), is not required to be registered under the Act.
In the event of a sale or other disposition by the undersigned of Parent
Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Securities disposed of
by the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of Parent Securities sold as
indicated in the letter.
The undersigned acknowledges and agrees that appropriate legends will be
placed on certificates representing Parent Securities received by the
undersigned in the Merger or held by a transferee thereof, which legends will
be removed by delivery of substitute certificates upon receipt of an opinion
in form and substance reasonably satisfactory to Parent from independent
counsel reasonably satisfactory to Parent to the effect that such legends are
no longer required for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement to
Parent's obligations to consummate the Merger.
Very truly yours,
ANNEX 1
TO EXHIBIT 4.6
[Name] [Date]
On the undersigned sold the securities ("Securities") of Medarex, Inc.,
a Delaware corporation (the "Company"), described below in the space provided
for that purpose (the "Securities"). The Securities were received by the
undersigned in connection with the merger of Medarex Acquisition Corp., a
Delaware corporation, with and into Houston Biotechnology Incorporated.
Based upon the most recent report or statement filed by the Company with the
Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in "brokers'
transactions" within the meaning of Section 4(4) of the Act or in transactions
directly with a "market maker" as that term is defined in Section 3(a)(38) of
the Securities Exchange Act of 1934, as amended. The undersigned further
represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such
sale.
Very truly yours,
[SPACE TO BE PROVIDED FOR DESCRIPTION OF SECURITIES]