AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇ INTERNATIONAL INC.,
RHB1 ACQUISITION CORP.
and
SOMATOGEN, INC.
Dated as of February 23, 1998
===============================================================================
2
TABLE OF CONTENTS
Page(s)
ARTICLE I THE MERGER.........................................................................................6
Section 1.1 The Merger.............................................................................6
Section 1.2 Effective Time of the Merger...........................................................6
Section 1.3 Closing................................................................................6
Section 1.4 Effects of the Merger..................................................................6
Section 1.5 Certificate of Incorporation and Bylaws................................................6
Section 1.6 Directors..............................................................................7
Section 1.7 Officers...............................................................................7
ARTICLE II CONVERSION OF SHARES..............................................................................7
Section 2.1 Merger Consideration...................................................................7
Section 2.2 Exchange Ratio for Company Stock Options...............................................8
Section 2.3 Dissenter's Rights.....................................................................9
Section 2.4 Exchange of Certificates Representing Shares...........................................9
Section 2.5 Dividends.............................................................................10
Section 2.6 No Fractional Shares..................................................................10
Section 2.7 Closing of Company Transfer Books.....................................................10
Section 2.8 Unclaimed Amounts.....................................................................10
Section 2.9 Lost Certificates.....................................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................................................11
Section 3.1 Organization and Qualification; Subsidiaries..........................................11
Section 3.2 Capitalization........................................................................12
Section 3.3 Authority.............................................................................13
Section 3.4 Consents and Approvals; No Violation..................................................13
Section 3.5 Company SEC Reports...................................................................14
Section 3.6 Financial Statements..................................................................15
Section 3.7 Absence of Undisclosed Liabilities....................................................15
Section 3.8 Absence of Certain Changes............................................................15
Section 3.9 Taxes.................................................................................16
Section 3.10 Litigation............................................................................16
Section 3.11 Employee Benefit Plans; ERISA.........................................................17
Section 3.12 Environmental Matters.................................................................19
Section 3.13 Compliance with Applicable Laws.......................................................20
Section 3.14 Material Contracts....................................................................20
Section 3.15 Intellectual Property Rights..........................................................20
Section 3.16 Insurance.............................................................................22
Section 3.17 Opinion of Financial Advisor..........................................................22
Section 3.18 Rights Agreement; Takeover Laws.......................................................22
Section 3.19 Company Disclosure....................................................................22
Section 3.20 Labor Matters.........................................................................23
Section 3.21 WARN Act..............................................................................23
Section 3.22 Transactions with Related Parties.....................................................23
Section 3.23 Absence of Certain Payments...........................................................24
Section 3.24 Title to Properties; Absence of Liens and
Encumbrances; Condition of Equipment.........................................24
Section 3.25 FDA Matters...........................................................................25
Section 3.26 Registration Statement and Proxy Statement/Prospectus.................................25
Section 3.27 Brokers...............................................................................25
3
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF BAXTER AND MERGER SUB.............................................................26
Section 4.1 Organization..........................................................................26
Section 4.2 No Ownership of Company Common Stock..................................................26
Section 4.3 Capitalization........................................................................26
Section 4.4 Authority.............................................................................26
Section 4.5 Baxter Stockholder Approval...........................................................27
Section 4.6 Consent and Approvals; No Violation...................................................27
Section 4.7 Merger Sub's Operations...............................................................28
Section 4.8 Baxter SEC Reports....................................................................28
Section 4.9 Baxter Disclosure.....................................................................28
Section 4.10 ▇▇▇▇▇▇ Financial Statements...........................................................28
Section 4.11 Registration Statement and Proxy Statement/Prospectus.................................29
Section 4.12 Brokers...............................................................................29
Section 4.13 Shares................................................................................29
ARTICLE V COVENANTS OF THE COMPANY..........................................................................29
Section 5.1 Ordinary Course.......................................................................29
Section 5.2 Rule 145 Affiliates...................................................................31
Section 5.3 No Solicitation.......................................................................31
Section 5.4 No WARN Act Activities................................................................32
Section 5.5 Stockholders' Meeting.................................................................33
Section 5.6 Rights Plan...........................................................................33
Section 5.7 Company Stock Option Plans............................................................33
ARTICLE VI COVENANTS OF BAXTER AND MERGER SUB.............................................................33
Section 6.1 Directors' and Officers' Indemnification and Insurance................................33
Section 6.2 Blue Sky..............................................................................34
Section 6.3 CPR Agreement.........................................................................34
Section 6.4 NYSE Listing..........................................................................35
Section 6.5 Employment Matters....................................................................35
4
ARTICLE VII MUTUAL COVENANTS................................................................................35
Section 7.1 Access to Information; Confidentiality................................................35
Section 7.2 HSR Act...............................................................................36
Section 7.3 Consents and Approvals................................................................36
Section 7.4 Publicity.............................................................................36
Section 7.5 Filings with the Commission...........................................................36
Section 7.6 Advice of Changes.....................................................................37
Section 7.7 Additional Agreements.................................................................37
Section 7.8 Tax Matters...........................................................................37
ARTICLE VIII CONDITIONS TO CONSUMMATION OF
THE MERGER........................................................................37
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger..............................................................37
Section 8.2 Conditions of Obligations of Baxter and Merger Sub....................................38
Section 8.3 Conditions of Obligations of the Company..............................................39
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................................................40
Section 9.1 Termination...........................................................................40
Section 9.2 Effect of Termination and Abandonment.................................................41
ARTICLE X GENERAL PROVISIONS................................................................................41
Section 10.1 Fees and Expenses.....................................................................41
Section 10.2 Amendment and Modification............................................................42
Section 10.3 Nonsurvival of Representations and Warranties.........................................42
Section 10.4 Notices...............................................................................42
Section 10.5 Definitions; Interpretation...........................................................43
Section 10.6 Specific Performance..................................................................43
Section 10.7 Counterparts..........................................................................43
Section 10.8 Entire Agreement; No Third-Party Beneficiaries........................................43
Section 10.9 Severability..........................................................................43
Section 10.10 Governing Law.........................................................................43
Section 10.11 Assignment............................................................................43
ANNEX A..Form of CPR Certificate
ANNEX B..Form of Affiliate Letter
ANNEX C..Form of Opinion of ▇▇▇▇▇▇ Godward LLP
ANNEX D..Form of Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., General Counsel of ▇▇▇▇▇▇
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 23, 1998
(this "Agreement"), by and among ▇▇▇▇▇▇ International Inc., a Delaware
corporation ("▇▇▇▇▇▇"), RHB1 Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Baxter ("Merger Sub"), and Somatogen, Inc., a
Delaware corporation (the "Company").
WHEREAS, it is the intention of the parties that the Company
merge with and into Merger Sub (the "Merger"), with Merger Sub surviving as a
wholly owned subsidiary of Baxter;
WHEREAS, the Board of Directors of each of Baxter, Merger Sub
and the Company has determined that the transactions contemplated by this
Agreement, including, without limitation, the Merger, are advisable and in the
best interest of their respective corporations and stockholders and have
approved this Agreement;
WHEREAS, as a condition to the willingness of Baxter and
Merger Sub to enter into this Agreement, ▇▇▇ Lilly and Company, an Indiana
corporation and a stockholder of the Company, and Merger Sub shall have entered
into a Voting Agreement, dated the date hereof, providing, among other things,
that such stockholder will vote all of the shares of capital stock of the
Company owned by it in favor of the Merger; and
WHEREAS, each of Baxter and the Company desires that the
merger qualify as a reorganization under 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, covenants and agreements set forth
herein, the parties hereto, intending to be legally bound, agree as follows:
6
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.2),
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), the Company shall be merged with and into Merger Sub in accordance with
this Agreement and the separate existence of the Company shall cease. Merger Sub
shall be the surviving corporation in the Merger (hereinafter sometimes referred
to as the "Surviving Corporation").
Section 1.1 Effective Time of the Merger. Upon the terms and
subject to the conditions hereof, a certificate of merger (the "Certificate of
Merger") shall be duly prepared, executed and acknowledged by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Delaware, for filing, on the Closing Date (as defined in Section 1.3). The
Merger shall become effective as of the date and at such time as the Certificate
of Merger, pursuant to Section 251 of the DGCL, and any other documents
necessary to effect the Merger in accordance with the DGCL are duly filed with
the Secretary of State of the State of Delaware or at such subsequent date or
time as shall be agreed by the Company and Merger Sub and specified in the
Certificate of Merger (the time the Merger becomes effective pursuant to the
DGCL being referred to herein as the "Effective Time").
Section 1.2 Section Closing. Subject to the satisfaction or
waiver of all of the conditions to closing contained in Article VIII hereof, the
closing of the Merger (the "Closing") will take place at 8:00 a.m., Chicago
time, on a date to be specified by the parties, which shall be no later than the
second Business Day (as defined below) after the satisfaction or waiver of the
conditions to Closing contained in Article VIII, at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, unless another date or place is agreed to in writing by the parties
hereto. The date and time at which the Closing occurs is referred to herein as
the "Closing Date." "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New York City, Chicago,
Illinois or Denver, Colorado are not required to be open.
Section 1.4 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 Certificate of Incorporation and Bylaws. (a)
Subject to Section 6.1, the certificate of incorporation of Merger Sub as in
effect immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with the
terms thereof and with applicable law.
(b) Subject to Section 6.1, the bylaws of
Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with the terms thereof and with
applicable law.
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Section 1.6 Directors. The directors of Merger Sub at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office from the Effective Time in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation and until his or her
successor is duly elected and qualified.
Section 1.7 Officers. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office from the Effective Time in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Merger Consideration. As of the Effective
Time, by virtue of the Merger and without any action on the part of Merger Sub,
the Company or the holder thereof:
(a) Each share of Common Stock, par value
$.001 per share, of the Company (the "Company Common Stock"), held by Baxter or
any subsidiary of Baxter shall be cancelled and retired and cease to exist and
no consideration shall be delivered in exchange therefor.
(b) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time, other than (x) shares of
Company Common Stock to be cancelled in accordance with Section 2.1(a) and (y)
Dissenting Shares (as defined in Section 2.3), shall be converted into the right
to receive, without withholding or deduction on account of any tax, levy, impost
or other governmental charge:
(i) the fraction of a share (calculated
and rounded to the nearest ten-thousandth of one share) of Common Stock, par
value $1 per share, of ▇▇▇▇▇▇ ("▇▇▇▇▇▇ Common Stock"), the numerator of which
fraction shall be (A) $9.00, and the denominator of which shall be (B) the
Baxter Stock Price (as defined in Section 2.1(c) below) (the "Share
Consideration").
(ii) a Contingent Payment Right (a "CPR")
(as defined in the certificate representing the CPR substantially in the form of
Annex A attached hereto (the "CPR Certificate")). The CPR Certificates will be
issued by Baxter pursuant to a Contingent Payment Rights Agreement (the "CPR
Agreement") to be entered into between Baxter and First Trust National
Association, a national association (the "Trustee"). The consideration referred
to in (subparagraphs (i) and (ii) of this Section 2.1(b) is hereinafter referred
to as the "Merger Consideration").
All such shares of Company Common Stock converted, in
accordance with Section 2.1, into the right to receive Merger Consideration (the
"Shares"), when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate formerly representing any such Shares (each, a "Certificate")
shall cease to have any rights with respect thereto, except to receive the
Merger Consideration, without interest thereon, upon surrender of such
Certificates.
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(c) For purposes of calculating the Share Considera-
tion, the "Baxter Stock Price" shall be an amount equal to the average closing
sale price of a share of a Baxter Common Stock on United States stock exchanges
as reported in The Wall Street Journal under the caption New York Stock Exchange
("NYSE") Composite Transactions or, if not available, such other authoritative
publication as may be reasonably selected by Baxter, for the ten consecutive
trading days ending on and including the fifth trading day prior to the Closing
Date. In the event Baxter changes (or establishes a record date for changing)
the number or kind of shares of Baxter Common Stock issued and outstanding prior
to the Effective Time as a result of a stock split, stock dividend,
distribution, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Baxter Common Stock and the record
date therefor shall be prior to the Effective Time, the Share Consideration
shall be proportionately adjusted in such manner as Baxter, Merger Sub and the
Company shall agree, which adjustment may include, as appropriate, the issuance
of securities, property or cash on the same basis as any of the foregoing shall
have been issued, distributed or paid to the holders of shares of Baxter Common
Stock generally.
(d) Each share of Common Stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
Section 2.2 Exchange Ratio for Company Stock Options. Each
employee, consultant and director or other option (individually, a "Company
Stock Option") not previously exercised, outstanding immediately prior to the
Effective Time and granted under the Company's (i) Amended and Restated Stock
Option Plan, (ii) Amended and Restated Nonemployee Director Stock Option Plan,
(iii) Amended and Restated Consultants Stock Option Plan and (iv) any other
stock option plan or arrangement of the Company (collectively, (other than the
Company's Employee Stock Purchase Plan (the "ESPP")) the "Company Stock Option
Plans"), whether vested or unvested, will be exchanged or cancelled as provided
in this Section 2.2. Each Company Stock Option having an exercise price of $11
or more that is outstanding immediately prior to the Effective Time shall be
cancelled immediately prior to the Effective Time for no consideration. Each
Company Stock Option (in the case of persons who are employed by or providing
services to the Company as of the Effective Time, whether vested or unvested and
in the case of persons who are no longer employed by or providing services to
the Company, as of the Effective Time, only to the extent such Company Stock
Option was vested on the date such person's employment or service with the
Company ceased) having an exercise price of less than $9 that is outstanding
immediately prior to the Effective Time shall be exchanged immediately prior to
the Effective Time for (x) payment by the Company to the holder of such Company
Stock Option, of an amount in cash equal to (1) the product of $9 and the number
of shares of Company Common Stock subject to such Common Stock Option, less (2)
the aggregate exercise price of such Common Stock Option and (y) the right to
receive one CPR per share of Company Common Stock covered by such Company Stock
Option. Each Company Stock Option (in the case of persons who are employed by or
providing services to the Company as of the Effective Time, whether vested or
unvested and in the case of persons who are no longer employed by or providing
services to the Company, as of the Effective Time, only to the extent such
Company Stock Option was vested on the date such person's employment or service
with the Company ceased) having an exercise price that is greater than or equal
to $9 and less than $11 that is outstanding immediately prior to the Effective
Time, shall be exchanged immediately prior to the Effective Time for the right
to receive one CPR per share of Company Common Stock covered by such Company
Stock Option. The purchase period (as defined in the ESPP) (the "Purchase
Period") in effect under ESPP shall terminate immediately prior to the Effective
Time, and the payroll deductions accumulated during such Purchase Period shall
then be applied to the purchase of shares of Company Common Stock in accordance
with the ESPP (subject to participants' right to withdraw from such plan at any
time). Any shares of Company Common Stock so issued under the ESPP shall be
converted into the right to receive Merger Consideration in accordance with
Section 2.1(b). The Company and Baxter shall take such action as shall be
required or necessary under the terms of the ESPP, and the Company Stock Option
Plans and any other agreements pursuant to which a Company Stock Option was
subject immediately prior to the Effective Time to effectuate the provisions of
this Section 2.2, including, but not limited to, the amendment of such plans or
agreements.
9
Section 2.3 Dissenter's Rights. Notwithstanding anything in
this Agreement to the contrary, shares of Company Common Stock outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has delivered a
written demand for appraisal of such shares in accordance with Section 262 of
the DGCL, if such Section 262 provides for appraisal rights for such shares in
the Merger ("Dissenting Shares"), shall not be converted into the right to
receive the Merger Consideration, as provided in Section 2.1(b) hereof, unless
and until such holder fails to perfect or effectively withdraws or otherwise
loses his right to appraisal and payment under Section 262 of the DGCL. If,
after the Effective Time, any such holder fails to perfect or effectively
withdraws or loses his right to appraisal, such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consolidation to which such holder is entitled,
without interest or dividends thereon. The Company shall give Baxter prompt
notice of any demands received by the Company for appraisal of shares of Company
Common Stock, and Baxter shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Baxter, make any
payment with respect to or offer to settle, any such demands.
Section 2.4 Exchange of Certificates Representing Shares. (a)
Baxter shall deposit, or shall cause to be deposited, with an exchange agent
selected by Baxter and reasonably satisfactory to the Company (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with this Article II, (i) on the date of the Effective Time, certificates
representing the number of shares of Baxter Common Stock and the CPR
Certificates issuable as part of the Merger Consideration, and (ii) from time to
time, cash to be paid in lieu of the issuance of fractional shares, as provided
in Section 2.6 and as requested by the Exchange Agent, and dividends and other
distributions payable in respect of the shares of Baxter Common Stock as
provided in Section 2.5 (such cash, CPR Certificates and certificates for shares
of Baxter Common Stock, if any, together with dividends or distributions with
respect thereto being hereinafter referred to collectively as the "Exchange
Fund").
(b) Promptly after the Effective Time, Baxter
shall cause the Exchange Agent to mail (or deliver at its principal office) to
each holder of record of Shares and to each holder of record of Dissenting
Shares (i) a letter of transmittal which shall (A) specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and (B) be in customary
form and (ii) instructions for use in effecting the surrender of the
Certificates. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with a letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder thereof shall be entitled
to receive in exchange therefor that portion of the Exchange Fund which such
holder has the right to receive pursuant to the provisions of this Article II,
after giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash or other consideration to be paid as part of the Merger Consideration.
In the event of any transfer of ownership of Shares which has not been
registered in the transfer records of the Company (an "Unregistered Transfer"),
a CPR Certificate and certificates representing the proper number of shares of
Baxter Common Stock, if any, together with a check in an amount equal to the
cash component, if any, of the Exchange Fund, will be issued to the transferee
of the Unregistered Transfer when the Certificate is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect the
Unregistered Transfer and to evidence that any applicable stock transfer taxes
associated with such Unregistered Transfer were paid.
10
Section 2.5 Dividends. No dividends or other distributions
with respect to shares of Baxter Common Stock constituting part of the Merger
Consideration shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered as provided in Section 2.4. Upon such
surrender, all dividends and other distributions payable in respect of the
shares of Baxter Common Stock to be issued in exchange therefor, on a date
subsequent to, and in respect of a record date after the Effective Time, shall
be paid, without interest, to the person in whose name the certificates
representing the shares of Baxter Common Stock into which such Shares were
converted are registered or as otherwise directed by that person. In no event
shall the person entitled to receive such dividends or distributions be entitled
to receive interest on any such dividends or distributions.
Section 2.6 No Fractional Shares. No certificates or scrip
representing fractional shares of ▇▇▇▇▇▇ Common Stock shall be issued upon the
surrender of Certificates pursuant to this Article II and no dividend, stock
split or other change in the capital structure of ▇▇▇▇▇▇ shall relate to any
fractional interest, and such fractional interests shall not entitle the owner
thereof to vote or to any rights of a security holder. In lieu of any such
fractional interest, each holder of a Certificate who would otherwise have been
entitled to a fraction of a share of ▇▇▇▇▇▇ Common Stock upon surrender of
Certificates pursuant to this Article II shall be paid cash upon such surrender
in an amount equal to the product of such fraction multiplied by the ▇▇▇▇▇▇
Stock Price.
Section 2.7 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of Shares shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Article II.
Section 2.8 Unclaimed Amounts. Any portion of the Exchange
Fund which remains unclaimed by the former stockholders of the Company six
months after the Effective Time shall be delivered by the Exchange Agent to
▇▇▇▇▇▇. Any former stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to ▇▇▇▇▇▇ for payment of the
Merger Consideration, cash in lieu of fractional shares, and unpaid dividends
and distributions in respect of shares of ▇▇▇▇▇▇ Common Stock deliverable as
part of the Merger Consideration, each as determined pursuant to this Agreement,
in all cases without any interest thereon. None of ▇▇▇▇▇▇, the Surviving
Corporation, the Exchange Agent or any other Person will be liable to any former
holder of Shares for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
Section 2.9 Lost Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making and delivery of an
affidavit of that fact by the person claiming such Certificate to have been
lost, stolen or destroyed and, if required by ▇▇▇▇▇▇, the posting by such person
of a bond in such reasonable amount as ▇▇▇▇▇▇ may direct as indemnity against
any claim that would be made against the Company, the Surviving Corporation or
▇▇▇▇▇▇ with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the portion of the
Exchange Fund deliverable in respect thereof pursuant to this Article II.
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to ▇▇▇▇▇▇ and Merger Sub in a
letter delivered to them prior to the execution hereof (which letter shall
contain appropriate references to identify the specific section herein to which
the information in such letter relates) (the "Company Disclosure Letter") or as
disclosed in the Company SEC Reports (as defined herein), the Company represents
and warrants to ▇▇▇▇▇▇ and Merger Sub as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a)
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, is duly qualified to do
business as a foreign corporation and is in good standing in the jurisdictions
listed on Section 3.1(a) of the Company Disclosure Letter, which includes each
jurisdiction in which the character of the Company's properties or the nature of
its business makes such qualification necessary, except in jurisdictions, if
any, where the failure to be so qualified would not result in a Material Adverse
Effect (as defined below). The Company has all requisite corporate or other
power and authority to own, use or lease its properties and to carry on its
business as it is now being conducted. The Company has delivered to ▇▇▇▇▇▇ a
complete and correct copy of its Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and its Bylaws (the
"Bylaws"), each as currently in effect. The Company is not in default in any
material respect in the performance, observation or fulfillment of any provision
of the Certificate of Incorporation or the Bylaws.
(b) No Person (as defined below) is a Subsidiary
(as defined below).
(c) For purposes of this Agreement, (i) a "Material
Adverse Effect" shall mean any event, circumstance, condition, development or
occurrence, individually or in the aggregate, causing, resulting in or
reasonably likely to have a material adverse effect on the business (as now
conducted or as now proposed by the Company to be conducted), results of
operations or financial condition of the Company other than any event,
circumstance, development or occurrence (A) arising from or relating to general
business or economic conditions, (B) relating to or affecting the biotechnology
industry generally, (C) relating to or affecting the hemoglobin-based oxygen
therapeutics industry generally, (D) arising from or relating to any
pre-clinical trials or studies conducted by the Company, and (E) arising from or
relating to the development, discovery or commercialization of any present or
proposed technology, processes or product that is (or that may reasonably be
expected to be) competitive with or superior to any of the technology, processes
or products of the Company, (ii) "Subsidiary" shall mean, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least 50 percent or more of the securities or
other interests having voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any subsidiary of such party do not have a majority of the voting interest in
such partnership), and (iii) "Person" shall mean any corporation, individual,
limited liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
12
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 10,000,000 shares of Preferred Stock, par value $.001
per share ("Company Preferred Stock"), and 35,000,000 shares of Company Common
Stock, of which (i) 4,525,960 shares are reserved for issuance upon exercise of
outstanding Company Stock Options under the Company's Amended and Restated Stock
Option Plan; (ii) 300,000 shares are reserved for issuance under the ESPP; (iii)
180,000 shares are reserved for issuance under the Company's Amended and
Restated Consultants Stock Option Plan; (iv) 470,000 shares are reserved for
issuance under the Company's Amended and Restated Nonemployee Director Stock
Option Plan and (v) 35,000 shares are reserved for issuance under other
non-employee stock option agreements. As of December 31, 1997, (A) 20,921,839
shares of Company Common Stock were issued and outstanding, of which no shares
of Company Common Stock were held in treasury, (B) no shares of Company
Preferred Stock were issued or outstanding, (C) 2,593,433 Company Stock Options
were issued and outstanding under the Company's Amended and Restated Stock
Option Plan; (D) 61,000 Company Stock Options were issued and outstanding under
the Company's Amended and Restated Consultants Stock Option Plan; (E) 201,250
Company Stock Options were issued and outstanding under the Company's Amended
and Restated Nonemployee Director Stock Option Plan and (F) 35,000 Company Stock
Options were issued and outstanding under other non-employee stock option
agreements. Other than rights issued under the Rights Agreement, dated as of
June 5, 1997 (the "Rights Agreement"), by and between the Company and ▇▇▇▇▇
▇▇▇▇▇▇ Shareholder Services, L.L.C., no agreement or other document grants or
imposes on any shares of the Company Common Stock any right, preference,
privilege or restriction with respect to the transaction contemplated hereby
(including, without limitation, any rights of first refusal) other than the
right to vote on the Merger. All of the issued and outstanding shares of the
Company Common Stock are, and all shares of Company Common Stock that may be
issued pursuant the ESPP or to the exercise of outstanding Company Stock Options
will be, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. There
are no bonds, debentures, notes or other indebtedness having general voting
rights (or convertible into securities having such rights) ("Voting Debt") of
the Company issued and outstanding. There are no stock appreciation rights with
respect to the Company Common Stock (each, a "SAR") issued and outstanding.
Except as otherwise permitted or contemplated by this Agreement or upon the
exercise or termination of an outstanding Company Stock Option in accordance
with its terms as set forth above, (x) there are no shares of the Company
authorized, issued or outstanding and (y) there are no existing options,
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character (including without limitation
"earn-out" arrangements) obligating the Company to issue, transfer or sell or
cause to be issued, transferred or sold any shares of or Voting Debt of, or
other equity interests in, or any interest relating to or whose value is
dependent on the value of the equity interests in, the Company or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of the Company or affiliate
of the Company or to provide funds to make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
(b) There are no voting trusts or other agreements
or understandings to which the Company is a party with respect to the voting of
the shares of the Company. Except as expressly contemplated by this Agreement,
the Company will not be required to redeem, repurchase or otherwise acquire
shares of capital stock of the Company, as a result of the transactions
contemplated by this Agreement.
13
Section 3.3 Authority. The Company has full corporate power
and authority to execute and deliver this Agreement and, subject to approval of
this Agreement by the holders of a majority of the shares of Company Common
Stock outstanding on the record date to be established for the special meeting
of the stockholders of the Company to vote on the Merger as contemplated by
Section 5.6 hereof (the "Special Meeting"). The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby on the
part of the Company have been duly and validly authorized by the Company's Board
of Directors, and no other corporate proceedings on the part of the Company are
necessary, as a matter of law or otherwise, for the consummation of the
transactions contemplated hereby, other than the adoption of this Agreement by
the Company's stockholders at the Special Meeting. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by each of ▇▇▇▇▇▇ and
Merger Sub, is a valid and binding agreement of the Company, enforceable against
it in accordance with its terms, except to the extent that the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditor's rights generally, (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding at
law or in equity and (iii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the discretion of the court
before which any enforcement proceeding therefor may be brought.
Section 3.4 Consents and Approvals; No Violation. The
execution and delivery of this Agreement by the Company, the consummation by the
Company of the transactions contemplated hereby and the performance by the
Company of its obligations hereunder will not:
(a) conflict with or result in any breach of
any provision of the Certificate of Incorporation or the Bylaws;
(b) require any consent, approval, order,
authorization or permit of, or registration, filing with or notification to, any
court, governmental or regulatory authority or agency (a "Governmental Entity")
or any private third party, except for (i) the filing of a pre-merger
notification and report form by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
with the Securities and Exchange Commission (the "Commission") of (A) a proxy
statement relating to the Special Meeting to be held in connection with the
transactions contemplated by this Agreement (together with any amendments
thereof or supplements thereto, the "Proxy Statement/Prospectus"), if such
approval is required by law and (B) such reports under Section 13(a) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions contemplated
hereby and (iii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (iv) the delivery of a prospectus supplement to
holders of Company Stock Options pursuant to the applicable securities laws and
(v) such other consents, approvals, orders, authorizations, registrations,
declarations and filings which if not obtained or made would have a Material
Adverse Effect or a material adverse effect on the Company's ability to
consummate the transactions contemplated by this Agreement;
14
(c) result in any violation of or the breach
of or constitute a default (with notice or lapse of time or both) under (or give
rise to any right of termination, cancellation or acceleration or guaranteed
payments under or to, a loss of a material benefit or result in the creation or
imposition of a lien under) any of the terms, conditions or provisions of any
note, lease, mortgage, indenture, license, agreement or other instrument or
obligation to which the Company is a party or by which the Company or any of its
properties or assets may be bound, except for such violations, breaches,
defaults, or rights of termination, cancellation or acceleration, losses or the
imposition of liens as to which requisite waivers or consents have been obtained
or will be obtained prior to the Effective Time or which, individually or in the
aggregate, would not (i) result in a Material Adverse Effect, (ii) materially
impair the ability of the Company to perform its obligations under this
Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement;
(d) violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to the
Company, in such a manner as to (i) result in a Material Adverse Effect, (ii)
materially impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement; or
(e) result in the creation of any lien, charge
or encumbrance upon any shares of capital stock, properties or assets of the
Company under any agreement or instrument to which the Company is a party or by
which the Company is bound, in such a manner as to (i) result in a Material
Adverse Effect, (ii) materially impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement.
Section 3.5 Company SEC Reports. The Company has filed with
the Commission, and has heretofore made available to ▇▇▇▇▇▇ true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document, as amended (including exhibits
thereto), including, without limitation, its Annual Reports to Stockholders
incorporated by reference in certain of such reports, but excluding any
preliminary proxy materials and pre-effective amendments to registration
statements, required to be filed with the Commission since June 30, 1995 under
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act (collectively, the "Company SEC Reports"). As of the respective dates such
Company SEC Reports were filed or, if any such Company SEC Reports were amended,
as of the date such amendment was filed, each of the Company SEC Reports,
including, without limitation, any financial statements or schedules included
therein, (a) complied, in all material respects, with all applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
the applicable rules and regulations promulgated thereunder, and (b) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
15
Section 3.6 Financial Statements. Each of the audited
financial statements and unaudited consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended June 30, 1995, 1996 and 1997 and its Quarterly Reports
on Form 10-Q for all interim periods during each such annual period and
subsequent thereto (collectively, the "Financial Statements") have been prepared
from, and are in accordance with, the books and records of the Company,
complied, as of their date, in all material respects, with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated in the notes thereto and subject, in the case of quarterly
financial statements, to normal and recurring year-end adjustments) and fairly
present, in all material respects, in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto), the
financial position of the Company as of the dates thereof and the results of
operations and cash flows (and changes in financial position, if any) of the
Company for the periods presented therein (subject to normal year-end
adjustments and the absence of financial footnotes in the case of any unaudited
interim financial statements).
Section 3.7 Absence of Undisclosed Liabilities. Except for
liabilities and obligations incurred in the ordinary course of business, since
June 30, 1997 the Company has not incurred any liabilities or obligations of any
nature (contingent or otherwise) which, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect.
Section 3.8 Absence of Certain Changes. Except as expressly
contemplated by this Agreement, since June 30, 1997 the Company has conducted
its business in all material respects only in, and has not engaged in any
material transaction other than according to, the ordinary and usual course, and
there has not been, nor has the Company agreed, whether in writing or otherwise,
to take any action that would result in, (a) any Material Adverse Effect; (b)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the capital stock of the
Company or any redemption, repurchase or other acquisition of any shares of
capital stock of the Company; (c) any change by the Company in tax or financial
accounting principles, practices or methods; (d) any material asset damaged,
sold, disposed of (except inventory sold in the ordinary course of business),
mortgaged, pledged or subjected to any lien, charge or other encumbrance; (e)
any increase in the compensation payable or which could become payable by the
Company to its directors, officers, employees, agents or consultants; (f) any
adoption or amendment of any Plan (as defined herein)); (g) any material
indebtedness incurred by the Company, except such as may have been incurred in
the ordinary course of business; (h) any material loan made or agreed to be made
by the Company, nor has the Company become liable or agreed to become liable as
a guarantor with respect to any material indebtedness; (i) any waiver by the
Company of any right or rights of material value or any payment, direct or
indirect, of any material debt, liability or other obligation, except in
accordance with its terms; (j) any change in or amendment to the Certificate of
Incorporation or the Bylaws; (k) any payment, loan or advance of any amount to
or in respect of, or the sale, transfer or lease of any properties or assets
(whether real, personal or mixed, tangible or intangible) to, or entering into
of any agreement arrangement or transaction with, any officer or director of the
Company or any affiliate thereof, or any business or entity in which the Company
or any affiliate thereof, or relative of any such person, has any material
direct or indirect interest (collectively, "Related Parties"), except for (1)
directors' fees, (2) compensation to the officers and employees of the Company
in the ordinary course of business and (3) advancement or reimbursement of
expenses in the ordinary course of business; (l) any material modification or
change that would result in a diminishment of coverage under any insurance
policies; (m) any write-offs as uncollectible of any notes or accounts
receivable of the Company or write-downs of the value of any assets or inventory
by the Company other than in immaterial amounts or in the ordinary course of
business; or (n) any material adverse change to a Material Contract (as defined
herein).
16
Section 3.9 Taxes. (a) The Company has timely filed (or has
had timely filed on its behalf) or will file or cause to be timely filed, all
material Tax Returns (as defined below) required by applicable law to be filed
by it prior to, or as of, the Closing Date. All such Tax Returns are or will be
true, complete and correct in all material respects.
(b) The Company has paid (or has had paid on its
behalf) or has established (or has had established on its behalf and for its
sole benefit and recourse), or will establish or cause to be established on or
before the Closing Date, an adequate accrual on the books and records of the
Company for the payment of all material Taxes (as defined below) due with
respect to any fiscal quarter ending prior to or as of the Closing Date.
(c) Since January 1, 1995, the Company has not
received notification of any Audit (as defined below) by a Tax Authority with
respect to any Tax Returns filed by, or Taxes due from, the Company. No issue
has been raised by any Tax Authority in any Audit of the Company that if raised
with respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against the Company. There are no liens for Taxes upon the assets of
the Company, except liens for current Taxes not yet due for which adequate
reserves have been established in accordance with GAAP.
(d) Since January 1, 1995, the Company has not given
or been requested to give any waiver of statutes of limitations relating to the
payment of any material Taxes and has not executed powers of attorney with
respect to any material Tax matters, which will be outstanding as of the Closing
Date.
(e) Prior to the date hereof, the Company has
disclosed all material Tax sharing, Tax indemnity, or similar agreements to
which the Company is a party to, is bound by, or has any obligation or liability
for Taxes, and any changes in accounting methods or any rulings from any Tax
Authority.
(f) As used in this Agreement, (i) "Audit" shall mean
any audit, assessment of Taxes, other examination by any Tax Authority,
proceeding or appeal of such proceeding relating to Taxes; (ii) "Taxes" shall
mean all federal, state, local and foreign taxes, including, without limitation,
sales and use taxes, value added taxes, property taxes, payroll and employment
taxes and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or penalties
applicable thereto; (iii) "Tax Authority" shall mean the Internal Revenue
Service (the "Service") and any other domestic or foreign governmental authority
responsible for the administration of any Taxes; and (iv) "Tax Returns" shall
mean all federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax Return relating to Taxes.
Section 3.10 Litigation. There is no suit, claim, action,
proceeding or, to the Company's knowledge, investigation pending or, to the
Company's knowledge, threatened in writing against or affecting the Company or
any of the directors or officers of the Company in their capacity as such which
would be reasonably likely to have a Material Adverse Effect. Neither the
Company nor any officer, director or employee of the Company has been
permanently or temporarily enjoined by any order, judgment or decree of any
court or any other Governmental Entity from engaging in or continuing any
conduct or practice in connection with the business, assets or properties of the
Company nor, to the Company's knowledge, is the Company or any officer, director
or employee of the Company under investigation by any Governmental Entity
related to the conduct of the Company's business. There is not in existence any
order, judgment or decree of any court or other tribunal or other agency that is
specifically applicable to the Company enjoining or requiring the Company to
take any action of any kind with respect to its business, assets or properties.
17
Section 3.11 Employee Benefit Plans; ERISA. (a) Section
3.11(a) of the Company Disclosure Letter contains a true and complete list of
each employment, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, SAR or stock-based incentive, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b)(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA") within the last six years, for the
benefit of any current or former employee or director of the Company, whether
formal or informal and whether legally binding or not (collectively, the
"Plans"). Section 3.11(a) of the Company Disclosure Letter identifies each of
the Plans that is an "employee welfare benefit plan," or "employee pension
benefit plan" as such terms are defined in sections 3(1) and 3(2) of ERISA (such
plans being hereinafter referred to collectively as the "ERISA Plans"). Neither
the Company nor any ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Plan or modify or change any
existing Plan that would affect any current or former employee or director of
the Company, except as contemplated by this Agreement. Section 3.11(a) of the
Company Disclosure Letter contains a true and complete list of all Company Stock
Options issued and outstanding as of the date hereof.
(b) With respect to each of the Plans, the
Company has heretofore delivered to ▇▇▇▇▇▇ true and complete copies of each of
the following documents: (i) copies of the Plans (including all amendments
thereto) or a written description of any Plan that is not otherwise in writing;
(ii) a copy of the annual report, if required under ERISA, with respect to each
ERISA Plan for the last three years; (iii) a copy of the actuarial report, if
required under ERISA, with respect to each ERISA Plan for the last three years;
(iv) a copy of the most recent Summary Plan Description ("SPD"), together with
all Summaries of Material Modification issued with respect to such SPD, if
required under ERISA, with respect to each ERISA Plan; (v) if the Plan is funded
through a trust or any other funding vehicle, a copy of the trust or other
funding agreement (including all amendments thereto) and the latest financial
statements thereof; (vi) all contracts relating to the Plans with respect to
which the Company or any ERISA Affiliate may have any liability, including,
without limitation, insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the Service with
respect to each Plan that is intended to be qualified under section 401(a) of
the Code.
(c) Neither the Company nor any current or former
ERISA Affiliate is currently or has ever been the sponsor of or required to make
contributions to any "employee benefit plan" (as defined in Section 3(3) of
ERISA) subject to Title IV of ERISA (including without limitation any
"multiemployer plan" (as defined in Section 3(37) of ERISA and a multiple
employer plan within the meaning Section 413(c) of the Code)), and neither the
Company nor any ERISA Affiliate has at any time incurred any liability, directly
or indirectly (including, without limitation, any material contingent
liability), with respect to any such employee benefit plan.
(d) Neither the Company, any ERISA Affiliate,
any of the ERISA Plans, any trust created thereunder nor any trustee or
administrator thereof has engaged in a transaction or has taken or failed to
take any action in connection with which the Company, any ERISA Affiliate, any
of the ERISA Plans, any such trust, any trustee or administrator thereof, or any
party dealing with the ERISA Plans or any such trust could be subject to either
a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax
imposed pursuant to section 4975, 4976 or 4980B of the Code.
18
(e) Full payment has been made, or will be
made in accordance with section 404(a)(6) of the Code, of all amounts which the
Company or any ERISA Affiliate is required to pay under the terms of each of the
ERISA Plans, and all such amounts properly accrued through the Closing with
respect to the current plan year thereof will be paid by the Company on or prior
to the Closing or will be properly recorded on the Company's balance sheet.
(f) Each of the Plans has been operated and
administered in all material respects in accordance with its terms and
applicable laws, including, but not limited to, ERISA and the Code.
(g) Each of the ERISA Plans that is intended to
be "qualified" within the meaning of section 401(a) of the Code is so qualified.
The Company has timely applied for and received a currently effective
determination letter from the Service with respect to each such plan.
(h) Each of the ERISA Plans that is intended
to satisfy the requirements of section 501(c)(9) of the Code has so satisfied
such requirements.
(i) No amounts payable under any of the
Plans or any other agreement or arrangement with respect to which the Company
has or may have any liability could give rise to the payment of any amount that
would fail to be deductible for federal income tax purposes by virtue of Section
162(m) or Section 280G of the Code.
(j) No "leased employee" (as defined in
section 414(n) of the Code) performs services for the Company or any ERISA
Affiliate.
(k) No Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees after retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii) death benefits
or retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued
as liabilities on the books of the Company or the ERISA Affiliates, or (iv)
benefits, the full cost of which is borne by the current or former employee (or
his beneficiary).
(l) With respect to each Plan that is funded
wholly or partially through an insurance policy, there will be no liability of
the Company or any ERISA Affiliate, as of the Closing Date, under any such
insurance policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date.
(m) Except as provided by this Agreement, the
consummation of the transactions contemplated hereunder will not result in the
payment, vesting, acceleration or enhancement of any benefit under any Plan.
(n) Except as set forth in Section 3.11(n) of
the Company Disclosure Letter, the Company has no severance and termination
policy and the Company's employees are not entitled to severance pay under any
current Company arrangement.
19
(o) There are rights to purchase an aggregate
of 8,675 shares of Company Common Stock, outstanding, on the date hereof, under
the ESPP assuming (i) a purchase price of $4.0375 per share of Company Common
Stock and (ii) no changes in the amount of employees' withholding.
Section 3.12 Environmental Matters. (a) The business of the
Company and its former Subsidiaries has been, and the business of the Company is
in, material compliance with all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment, including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata and natural resources (together,
"Environmental Laws" and including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances or wastes,
petroleum and petroleum products, polychlorinated biphenyls ("PCBs"), or
asbestos or asbestos-containing materials (collectively, "Materials of
Environmental Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern); such material compliance includes, but is
not limited to, the possession by the Company of all Governmental Entity permits
and other authorizations required for the operation of its business under all
applicable Environmental Laws, and material compliance with the terms and
conditions thereof. All Governmental Entity permits and other authorizations
held by the Company as of the date hereof pursuant to the Environmental Laws are
identified on Schedule 3.12(a) of the Company Disclosure Letter.
(b) Since July 1, 1995, the Company has not
received any communication (written or oral), whether from a Governmental
Entity, citizens group, employee or otherwise, that alleges that the Company is
not in compliance with any Environmental Laws. The Company has provided to
▇▇▇▇▇▇ all information that is in the possession of the Company regarding
environmental matters pertaining to or the environmental condition of the
business or real property of the Company, or the Company's compliance (or
noncompliance) with any Environmental Laws.
(c) There is no claim, action, cause of action,
investigation or notice (written or oral) (together, "Environmental Claim") by
any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (i)
the presence, or release into the environment, of any Material of Environmental
Concern at any location, whether or not owned or operated by the Company or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending against the Company or against
any person or entity whose liability for any Environmental Claim the Company has
retained or assumed either contractually or by operation of law.
(d) There are no past or present actions,
activities, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that, to the best knowledge of the Company after due inquiry, is
reasonably likely to form the basis of any Environmental Claim against the
Company or against any person or entity whose liability for any Environmental
Claim the Company has retained or assumed either contractually or by operation
of law.
(e) Without in any way limiting the generality
of the foregoing, (i) all on-site and off-site locations where the Company has
(previously or currently) stored, disposed or arranged for the disposal of
Materials of Environmental Concern are identified in Section 3.12(e) of the
Company Disclosure Letter, (ii) all underground storage tanks, and the capacity
and contents of such tanks, located on any property owned, leased, operated or
controlled by the Company are identified in Section 3.12(e) of the Company
Disclosure Letter, (iii) there is no asbestos contained in or forming part of
any building, building component, structure or office space owned, leased,
operated or controlled by the Company and (iv) no PCBs or PCB-containing items
are used or stored at any property owned, leased, operated or controlled by the
Company.
20
Section 3.13 Compliance with Applicable Laws. The Company
holds all material licenses, permits and authorizations necessary for the lawful
conduct of its business, as now conducted, and such business is not being, and
the Company has not received any notice since July 1, 1996 from any authority or
person that such business has been or is being, conducted in violation of any
law, ordinance or regulation, including, without limitation, any law, ordinance
or regulation relating to (a) the conduct of medical research or (b)
occupational health and safety, except for possible violations which, either
singly or in the aggregate, have not resulted and are not reasonably expected to
result in a Material Adverse Effect.
Section 3.14 Material Contracts. (a) Section 3.14 of the
Company Disclosure Letter sets forth a true and correct list of any and all
executory agreements, contracts, purchase or installment agreements, indentures,
leases, mortgages, licenses, plans, arrangements, commitments (whether written
or oral) and instruments (collectively, "contracts") in existence as of the date
hereof, that are, as of the date hereof, material to the Company (each a
"Material Contract"), including without limitation, the following types of
contracts to which the Company is a party:
(i) any contract which is not terminable
by the Company upon 30 days' or less notice and which involves annual payments
of more than $100,000;
(ii) any oral contract which involves annual
payments in excess of $50,000 or an aggregate payment in excess of $200,000 or
any written contract, in either case for the employment of any director,
officer, consultant or other person or entity who is not an employee on a
full-time, part-time, consulting or other basis, including any severance or
other termination provisions with respect to such employment;
(iii) any noncompetition agreement, other
than customary agreements with employees who are not officers, directors or key
employees, or any other contract that in any way restricts the Company from
carrying on its business any place in the world; and
(iv) any contract between the Company and
any of its affiliates or any of its officers, directors or key employees.
True and complete copies of each written Material Contract, or form thereof, and
true and complete written summaries of each oral Material Contract have been
made available to ▇▇▇▇▇▇ by the Company prior to the date hereof.
(b) Each Material Contract is a valid, binding
and enforceable agreement of the Company and, to the Company's knowledge, the
other parties thereto and will, subject to the satisfaction of the conditions in
Article VIII, continue to be valid, binding and enforceable immediately after
the Closing, except (i) as such enforcement may be subject to bankruptcy,
insolvency or similar laws now or hereafter in effect relating to creditors'
rights, (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) and (iii) as the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and
(c) There has not occurred, (i) since June 30,
1997, any material default (or event which upon provision of notice or lapse of
time or both would become such a default) or, (ii) prior to June 30, 1997, any
uncured default (or event which upon provision of notice or lapse of time or
both would become such a default) under any Material Contract on the part of the
Company, except for violations or defaults that individually or in the aggregate
would not be reasonably expected to have a Material Adverse Effect.
Section 3.15 Intellectual Property Rights. (a) The Company
owns or possesses adequate rights to use all intellectual and similar property
of every kind and nature relating to or used or necessary in the operation of
the Company's business, including, without limitation, (i) patents and
trademarks associated with the Company's business (including all Governmental
Entity trademarks, service marks, logos and designs, all registrations and
recordings thereof, and all applications in the United States or with any other
Governmental Entity, all goodwill symbolized thereby or associated therewith and
all extensions or renewals thereof) which are set forth on Schedule 3.15 of the
Company Disclosure Letter, (ii) copyrights associated solely with the Company's
business, including all copyrights, United States and foreign copyright
registrations, and applications to register copyrights, which are set forth on
Schedule 3.15 of the Company Disclosure Letter, (iii) inventions, formulae,
processes, designs, know-how, show-how or other data or information, (iv)
confidential or proprietary technical and business information, processes and
trade secrets, (v) computer software, (vi) technical manuals and documentation
made or used in connection with any of the foregoing and (vii) licenses and
rights with respect to the foregoing or property of like nature (collectively,
"Company Intellectual Property").
21
(b) (i) Schedule 3.15 of the Company Disclosure
Letter sets forth a complete and accurate list of all registered copyrights,
patents and trademarks owned by or under obligation of assignment to the
Company, or otherwise licensed to and currently used in the conduct of the
Company's business and related to the Company's recombinant hemoglobin
technology;
(ii) each owner, as of the date hereof,
listed on Schedule 3.15 of the Company Disclosure Letter, is listed in the
records of the appropriate Governmental Entity as the sole owner of record;
(iii) Schedule 3.15 of the Company
Disclosure Letter sets forth a complete and accurate list of all agreements
between the Company, on the one hand, and any person, on the other hand, in
existence on the date hereof granting any right to use or practice any rights
under any Company Intellectual Property, including, without limitation,
marketing rights, royalty rights or distribution rights;
(iv) there is no material encumbrance on the
right of the Company to transfer any of the Company Intellectual Property;
(v) no trade secret, formula, process,
invention, design, know-how or any other confidential information of the Company
has been disclosed or authorized to be disclosed to any Person, except in the
ordinary course of business or pursuant to an obligation of confidentiality
binding upon said Person;
(vi) there are no pending proceedings by or
before Governmental Entities, including oppositions, interferences, proceedings
or suits involving the Company, relating to the Company Intellectual Property,
and, to the Company's knowledge, no such proceedings are threatened against the
Company;
(vii) to the Company's knowledge, the
conduct of the Company's business does not infringe upon or otherwise violate in
a material respect intellectual property rights of any Person;
(viii) to the Company's knowledge, no Person
is infringing upon or otherwise violating any patents comprising a portion of
Company Intellectual Property;
(ix) since July 1, 1995, the Company has not
received written notice of any claims and there are no pending claims of any
Persons involving the Company relating to the scope, ownership or use of any of
the Company Intellectual Property; and
(x) each copyright registration, patent
and registered trademark and application therefor, is listed on Schedule 3.15 of
the Company Disclosure Letter, and is in proper form, not disclaimed and has
been duly maintained, including the submission of all necessary filings in
accordance with the legal and administrative requirements of the appropriate
jurisdictions except with respect to use requirements as to trademarks.
Notwithstanding the foregoing, no representation is made by
the Company with respect to any intellectual property of ▇▇▇▇▇▇.
22
Section 3.16 Insurance. Section 3.16 of the Company Disclosure
Letter lists each of the insurance policies relating to the Company which are in
effect as of the date hereof. The Company has provided ▇▇▇▇▇▇ with a true,
complete and correct copy of each such policy or the binder therefor. With
respect to each such insurance policy or binder neither the Company nor any
other party to the policy is in breach or default thereunder (including, without
limitation, with respect to the payment of premiums or the giving of notices),
and the Company does not know of any occurrence or any event which (with notice
or the lapse of time or both) would constitute such a breach or default or
permit termination, modification or acceleration under the policy, except for
such breaches or defaults which, individually or in the aggregate, would not
result in a Material Adverse Effect. Section 3.16 of the Company Disclosure
Letter describes any self-insurance arrangements affecting the Company. The
insurance policies listed on Section 3.16 of the Company Disclosure Letter
include all policies which are required in connection with the operation of the
business of the Company, as currently conducted, by applicable laws and all
agreements relating to the Company. All such policies, in the Company's
judgment, provide coverage in reasonably sufficient amounts to insure against
all risks customarily insured against for the business currently conducted by
the Company. All such policies are, as of the date hereof, in full force and
effect, all premiums due with respect thereto covering all periods up to and
including the Closing Date will have been paid as of such date and no notice of
cancellation or termination has been received prior to the date hereof with
respect to any such policy. All policies of insurance or replacements thereof
will remain in full force and effect through and after the Closing Date.
Section 3.17 Opinion of Financial Advisor. The Company has
received the opinion of ▇▇▇▇▇▇ Brothers Inc. ("▇▇▇▇▇▇ Brothers"), the Company's
financial advisor, to the effect that, as of February 23, 1998, the Merger
Consideration to be received by the Company's stockholders in the Merger is fair
to the Company's stockholders from a financial point of view. A draft of the
written confirmation of such opinion has been provided to ▇▇▇▇▇▇ for
informational purposes only.
Section 3.18 Rights Agreement; Takeover Laws. The execution
and delivery of this Agreement will not (i) cause any rights issued pursuant to
the Rights Agreement (each, a "Right") to become exercisable or to separate from
the stock certificates to which they are attached, (ii) cause ▇▇▇▇▇▇ or any of
its affiliates to be an Acquiring Person (as such term is defined in the Rights
Agreement) or (iii) trigger any other provisions of the Rights Agreement,
including giving rise to a Distribution Date (as such term is defined in the
Rights Agreement). The Company and the Board of Directors of the Company have
each taken all action required to be taken by it in order to exempt this
Agreement, and the transactions contemplated hereby from, and this Agreement and
the transactions contemplated hereby are exempt from, the requirements of any
"moratorium," "control share," "fair price," "affiliate transaction," "business
combination" or other antitakeover laws and regulations of any state, including,
without limitation, the State of Delaware, and including, without limitation,
Section 203 of the DGCL.
Section 3.19 Company Disclosure. No representation or warranty
by the Company in this Agreement (including, without limitation, the
representation concerning Company SEC Reports), the Company Disclosure Letter,
any schedule or certificate furnished or to be furnished by the Company or any
of its representatives pursuant to the provisions hereof or in connection with
the transactions contemplated hereby, contains as of the date hereof any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
23
Section 3.20 Labor Matters. Except as would not be reasonably
likely to have a Material Adverse Effect, (i) there is no labor strike, dispute,
slowdown, work stoppage or lockout actually pending or, to the Company's
knowledge, threatened against or affecting the Company and, during the past five
years, there has not been any such action; (ii) no union or other labor
organization represents or claims to represent the employees of the Company and,
to the Company's knowledge, no union or other labor organizing activity
currently is occurring among and no question of representation exists concerning
such employees; the Company is neither a party to nor bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company; (iii) there are no written personnel
policies, rules or procedures applicable to employees of the Company other than
such policies, rules and procedures, copies of which have been delivered to
▇▇▇▇▇▇; (iv) the Company is in material compliance with all applicable laws
concerning employment and employment practices, terms and conditions of
employment, immigration, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices (as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation);
(v) there is no grievance or arbitration proceeding arising out of any
collective bargaining or similar agreement or other grievance procedure relating
to the Company; (vi) to the Company's knowledge, no charges or complaints
relating to the Company are pending before the Equal Employment Opportunity
Commission or any other corresponding state agency; and (vii) to the Company's
knowledge, no federal, state or local agency responsible for the enforcement of
labor or employment laws, immigration laws, occupational health and safety laws
or any other law affecting the employees of the Company intends to conduct or
currently is conducting an investigation with respect to or relating to the
Company, and no such agencies have threatened to or have filed any claims,
charges, complaints or citations against the Company.
Section 3.21 WARN Act. Since the enactment of the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN Act"), the Company has
not effectuated (i) a plant closing as defined in the WARN Act (a "Plant
Closing") affecting any site of employment or one or more operating units within
any site of employment of the Company, or (ii) a mass layoff as defined in the
WARN Act (a "Mass Layoff") affecting the Company; nor has the Company been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state or local law.
None of the employees of the Company has suffered an employment loss as defined
in the WARN Act (an "Employment Loss") during the ninety-day period prior to the
Closing Date.
Section 3.22 Transactions with Related Parties. No Related
Party (i) has borrowed money or loaned money to the Company; (ii) has made or
threatened any contractual or other claim of any kind whatsoever against the
Company; (iii) has any interest in any property or assets used by the Company in
its business; or (iv) has been engaged in any other transaction with the
Company, except for transactions which are not required to be disclosed in the
Company SEC Reports.
24
Section 3.23 Absence of Certain Payments. None of the Company
nor its officers, directors nor, to the Company's knowledge, any of its other
affiliates nor any of the Company's employees or agents or others acting on
behalf of any of them have (i) engaged in any activity prohibited by the United
States Foreign Corrupt Practices Act of 1977 or any other similar law,
regulation, decree, directive or order of any other country and (ii) without
limiting the generality of the preceding clause (i), used any corporate or other
funds for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government officials or
others. None of the Company nor its officers, directors nor, to the Company's
knowledge, any of its other affiliates nor any of the Company's employees or
agents or others acting on behalf of any of them, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 3.24 Title to Properties; Absence of Liens and
Encumbrances; Condition of Equipment. (a) The Company has good and valid title
to, or in the case of leased properties and assets, valid leasehold interests
in, all of its tangible properties and assets, real, personal and mixed, used in
its business, free and clear of any liens, charges, pledges, security interests
or other encumbrances, except as reflected in the Company's audited financial
statements or except for such imperfections of title and encumbrances, if any,
which are not substantial in character, amount or extent, and which do not
materially detract from the value as reflected in the Company's December 31,
1997 balance sheet, or materially interfere with the present use, of the
property subject thereto or affected thereby.
(b) The equipment owned or leased by the Company
is, taken as a whole, (i) adequate, in all material respects, for the conduct of
the Company's business, (ii) suitable, in all material respects, for the uses to
which it is currently employed, (iii) in good operating condition (ordinary wear
and tear excepted), (iv) regularly and properly maintained, (v) not obsolete,
dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business and (vi) free from any defects,
except, with respect to clauses (i) through (vi) above, as would not have a
Material Adverse Effect.
25
Section 3.25 FDA Matters. The Company is in compliance with
all statutes, rules and regulations of the U.S. Food and Drug Administration or
similar domestic state authority ("FDA") with respect to the manufacturing of
all of its products, to the extent that the same are applicable to the Company's
business as it is currently conducted, except for such violations as would not
be reasonably expected to have a Material Adverse Effect. The Company adheres to
"Good Laboratory Practices" and "Good Clinical Practices," as required by the
FDA, except for such deviations as would not be reasonably expected to have a
Material Adverse Effect. The Company has all requisite FDA permits, approvals or
the like to conduct the Company's business as it is currently conducted. The
Company has previously delivered to ▇▇▇▇▇▇ an index of all information
concerning all Investigational New Drug Applications obtained by the Company
from the FDA or required in connection with the conduct of the Company's
business as it is currently conducted and has made all such information
available to ▇▇▇▇▇▇. There are no pending or threatened actions, proceedings or
complaints by the FDA, which would prohibit or impede the conduct of the
Company's business as it is currently conducted. Section 3.25 of the Company
Disclosure Letter contains a list of all communication between the Company and
the FDA from January 17, 1990 through the date hereof.
Section 3.26 Registration Statement and Proxy
Statement/Prospectus. The information supplied or to be supplied by the Company,
for inclusion in (a) a registration statement on Form S-4 (together with all
amendments thereto, the "Registration Statement") in which the Proxy
Statement/Prospectus shall be included as a prospectus, in connection with the
registration under the Securities Act of the shares of ▇▇▇▇▇▇ Common Stock and
the CPRs to be issued pursuant to the Merger will not, either at the time the
Registration Statement is filed with the Commission, at the time any amendment
thereof or supplement thereto is filed with the Commission, or 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 (b) the Proxy
Statement/Prospectus will not, either at the date mailed to the Company's
stockholders or at the time of the Special Meeting, 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, in the light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus, as to information supplied by the Company, will comply in
all material respects with all applicable provisions of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
Section 3.27 Brokers. Other than ▇▇▇▇▇▇ Brothers, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of the Company.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇ AND MERGER SUB
Except as otherwise disclosed to the Company in a letter
delivered to it prior to the execution hereof (which letter shall contain
appropriate references to identify the specific section herein to which the
information in such letter relates) (the "▇▇▇▇▇▇ Disclosure Letter") or as set
forth in the ▇▇▇▇▇▇ SEC Reports (as defined herein), ▇▇▇▇▇▇ and Merger Sub
represent and warrant to the Company as follows:
Section 4.1 Organization. Each of ▇▇▇▇▇▇ and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, use or lease properties and to carry on its business as it is now being
conducted and as it is now proposed to be conducted. Merger Sub has delivered to
the Company a complete and correct copy of its certificate of incorporation and
bylaws, each as currently in effect. Neither ▇▇▇▇▇▇ nor Merger Sub is in default
in any respect in the performance, observation or fulfillment of any provision
of its certificate of incorporation or bylaws.
Section 4.2 No Ownership of Company Common Stock. Neither
▇▇▇▇▇▇ nor Merger Sub owns any shares of Company Common Stock as of the date
hereof.
Section 4.3 Capitalization. The authorized capital stock of
▇▇▇▇▇▇ consists of 350,000,000 shares of ▇▇▇▇▇▇ Common Stock and 100,000,000
shares of preferred stock, no par value per share ("▇▇▇▇▇▇ Preferred Stock"),
including, 3,500,000 shares of Series A Junior Participating Stock, no par value
per share ("Series A Preferred"). As of December 31, 1997, (i) 287,701,247
shares of ▇▇▇▇▇▇ Common Stock were issued and outstanding, of which 7,662,187
shares of ▇▇▇▇▇▇ Common Stock were held in treasury, (ii) no shares of Series A
Preferred were outstanding, (iii) no shares of ▇▇▇▇▇▇ Preferred Stock were
issued and outstanding and (iv) 27,070,672 shares of ▇▇▇▇▇▇ Common Stock were
reserved under all employee benefit plans of ▇▇▇▇▇▇. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, par value $.01 per
share, all of which are validly issued and outstanding, fully paid and
nonassessable and are owned by ▇▇▇▇▇▇.
Section 4.4 Authority. Each of ▇▇▇▇▇▇ and Merger Sub has all
requisite corporate power and authority to execute and deliver each of this
Agreement, the CPR Agreement and the CPRs and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of each of this
Agreement, the CPR Agreement and the CPRs and the consummation of the
transactions contemplated hereby or thereby on the part of ▇▇▇▇▇▇ and Merger Sub
have been duly and validly authorized by the respective Board of Directors of
▇▇▇▇▇▇ and of Merger Sub and by ▇▇▇▇▇▇ as the sole stockholder of Merger Sub and
no other corporate proceedings on the part of ▇▇▇▇▇▇ or Merger Sub as a matter
of law or otherwise are necessary to authorize this Agreement, the CPR Agreement
and the CPRs or to consummate the transactions contemplated hereby or thereby.
This Agreement has been duly and validly executed and delivered by ▇▇▇▇▇▇ and
Merger Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes a valid and binding agreement of each of
▇▇▇▇▇▇ and Merger Sub, enforceable against each of them in accordance with its
terms, except to the extent that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) and (iii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the discretion of the court before which any
enforcement proceeding therefor may be brought.
27
Section 4.5 ▇▇▇▇▇▇ Stockholder Approval. Neither the
execution of this Agreement nor the consummation of the Merger requires approval
by the stockholders of ▇▇▇▇▇▇.
Section 4.6 Consent and Approvals; No Violation. The execution
and delivery of each of this Agreement the CPR Agreement and the CPRs, the
consummation of the transactions contemplated hereby or thereby, and each of the
performance by ▇▇▇▇▇▇ and Merger Sub of their obligations hereunder or
thereunder will not:
(a) conflict with or result in a breach of any
provision of the certificate of incorporation or bylaws of ▇▇▇▇▇▇ or the
certificate of incorporation or bylaws of Merger Sub;
(b) require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity, except
(i) the filing of a pre-merger notification and report form by ▇▇▇▇▇▇ and Merger
Sub, as applicable, under the HSR Act, (ii) the filing with the Commission of
(x) the Proxy Statement/Prospectus as contemplated by this Agreement, if such
approval is required by law, and (y) the Registration Statement relating to the
offer and sale of the CPRs and shares of ▇▇▇▇▇▇ Common Stock as contemplated by
this Agreement, if such filing is required by law, (iii) the qualification under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") of the
CPR Agreement, if such filing is required by law, and (iv) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(c) result in any violation of or the breach
of or constitute a default (with notice or lapse of time or both) under (or give
rise to any right of termination, cancellation or acceleration or guaranteed
payments under or to, a loss of a material benefit or result in the creation or
imposition of a lien under) any of the terms, conditions or provisions of any
note, lease, mortgage, indenture, license, agreement or other instrument or
obligation to which ▇▇▇▇▇▇ or Merger Sub is a party or by which ▇▇▇▇▇▇ or Merger
Sub or any of their respective properties or assets may be bound, except for
such violations, breaches, defaults, or rights of termination, cancellation or
acceleration, or losses as to which requisite waivers or consents have been
obtained or will be obtained prior to the Effective Time or which, individually
or in the aggregate, would not (i) have a material adverse effect on the
business, results of operations or financial condition of ▇▇▇▇▇▇ and its
subsidiaries, taken as a whole, other than as a result of general economic
conditions or conditions affecting the health care products supply industry
generally (a "▇▇▇▇▇▇ Material Adverse Effect"), (ii) materially impair the
ability of either ▇▇▇▇▇▇ or Merger Sub to perform its obligations under the CPR
Agreement or this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by the CPR Agreement or this Agreement;
(d) violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to ▇▇▇▇▇▇
or Merger Sub, in such a manner as to (i) have a ▇▇▇▇▇▇ Material Adverse Effect,
(ii) materially impair the ability of either ▇▇▇▇▇▇ or Merger Sub to perform its
obligations under the CPR Agreement or this Agreement or (iii) prevent the
consummation of any of the transactions contemplated by the CPR Agreement or
this Agreement; or
28
(e) result in the creation of any lien, charge
or encumbrance upon any shares of capital stock, properties or assets of ▇▇▇▇▇▇
or Merger Sub under any agreement or instrument to which ▇▇▇▇▇▇ or Merger Sub is
a party or by which ▇▇▇▇▇▇ or Merger Sub is bound.
Section 4.7 Merger Sub's Operations. The Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby and
has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated hereby.
Section 4.8 ▇▇▇▇▇▇ SEC Reports. ▇▇▇▇▇▇ has filed with the
Commission, and has heretofore made available to the Company true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Stockholders
incorporated by reference in certain of such reports, required to be filed with
the Commission since December 31, 1995 under the Securities Act, or the Exchange
Act (collectively, the "▇▇▇▇▇▇ SEC Reports"). As of the respective dates such
▇▇▇▇▇▇ SEC Reports were filed or, if any such ▇▇▇▇▇▇ SEC Reports were amended,
as of the date such amendment was filed, each of the ▇▇▇▇▇▇ SEC Reports,
including without limitation any financial statements or schedules included
therein, (a) complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and (b) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.9 ▇▇▇▇▇▇ Disclosure. No representation or warranty
by ▇▇▇▇▇▇ or Merger Sub in this Agreement and no statement contained in any
document (including, without limitation, the ▇▇▇▇▇▇ SEC Reports), schedule or
certificate furnished or to be furnished by ▇▇▇▇▇▇ or Merger Sub to the Company
or any of its representatives pursuant to the provisions hereof or in connection
with the transactions contemplated hereby, contains as of the date hereof any
untrue statement of material fact or omits to state any material fact necessary
in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.10 ▇▇▇▇▇▇ Financial Statements. Each of the audited
consolidated financial statements and unaudited consolidated interim financial
statements of ▇▇▇▇▇▇ (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended December 31, 1994, 1995 and 1996 and its Quarterly
Reports on Form 10-Q for all interim periods during such period and subsequent
thereto (collectively, the "Financial Statements") have been prepared from, and
are in accordance with, the books and records of ▇▇▇▇▇▇ and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto and subject,
in the case of quarterly financial statements, to normal and recurring year-end
adjustments) and fairly present, in all material respects, in conformity with
GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of ▇▇▇▇▇▇ and its subsidiaries as
of the date thereof and the consolidated results of operations and cash flows
(and changes in financial position, if any) of ▇▇▇▇▇▇ and its subsidiaries for
the periods presented therein (subject to normal year-end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
29
Section 4.11 Registration Statement and Proxy
Statement/Prospectus. The information supplied or to be supplied by ▇▇▇▇▇▇ or
Merger Sub for inclusion in (a) the Registration Statement will not, either at
the time the Registration Statement is filed with the Commission, at the time
any amendment thereof or supplement thereto is filed with the Commission, at the
time the Registration Statement becomes effective under the Securities Act or at
the Effective Time, 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 (b) the Proxy Statement/Prospectus will
not, either at the date mailed to the Company's stockholders or at the time of
the Company Meeting, 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, in the light of the circumstances under which they were
made, not misleading. The Proxy Statement/Prospectus, as to information supplied
by ▇▇▇▇▇▇ or Merger Sub, will comply as to form in all material respects with
all applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, and the Registration Statement,
other than as to information supplied by the Company or its representatives,
will comply in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated thereunder.
Section 4.12 Brokers. Other than Credit Suisse First Boston
Corporation, no broker, finder, investment banker or other person is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the CPR Agreement or the issuance
of the CPRs, based upon arrangements made by or on behalf of ▇▇▇▇▇▇ or Merger
Sub.
Section 4.13 Shares. The shares of ▇▇▇▇▇▇ Common Stock, when
issued in accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and not issued in violation of any
preemptive rights.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 Ordinary Course. Except as (i) otherwise
specifically provided in this Agreement, (ii) as set forth in Section 5.1 of the
Company Disclosure Letter or (iii) otherwise consented to in writing by ▇▇▇▇▇▇
and Merger Sub, from the date of this Agreement to the Effective Time, the
Company will conduct its operations only in the ordinary and usual course of
business and will preserve intact its present business organization, take
reasonable efforts to keep available the services of its present officers,
employees and consultants and to preserve its present relationships with
licensors, licensees, suppliers, and others with whom the Company has
significant business relationships. Without limiting the generality of the
foregoing, and except (x) as otherwise specifically provided in this Agreement
or (y) as set forth in Section 5.1 of the Company Disclosure Letter, the Company
will not directly or indirectly, from the date of this Agreement to the
Effective Time, without the prior written consent of ▇▇▇▇▇▇ and Merger Sub:
30
(a) propose or adopt any amendment to or
otherwise change the Certificate of Incorporation or the Bylaws;
(b) authorize for issuance, sale, pledge,
disposition or encumbrance, or issue, sell, pledge, dispose of or encumber
(except (x) pursuant to the exercise of Company Stock Options, outstanding on
the date hereof, under the Company Stock Option Plans and (y) the issuance of
shares pursuant to the ESPP in accordance with past practice or as contemplated
by Section 2.2) any of its shares or any of its other securities or any interest
relating to or whose value is dependent on the value of any equity interest in
the Company or issue any securities convertible into or exchangeable for,
options, warrants to purchase, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or enter into any contract,
understanding or arrangement with respect to the issuance of, any of its shares
or any of its other securities, or enter into any arrangement or contract with
respect to the purchase or voting of shares of its shares, or adjust, split,
reacquire, redeem, combine or reclassify any of its securities, or make any
other changes in its capital structure;
(c) (i) except in the ordinary course of
business, incur (contingently or otherwise) any material liability or other
material obligation including, without limitation, any indebtedness for borrowed
money, enter into any guarantee of any such obligation of another person or
mortgage, pledge or subject to any lien, charge or other encumbrance of their
assets, properties or business, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person other than advances to
employees, for reasonable expenses, related to Company business, in the ordinary
course of business;
(d) enter into any transaction, commitment,
contract, agreement, license or lease, amend or affirmatively renew any such
contracts, commitments, licenses or leases other than those that are (i) not
material or (ii) in the ordinary course of business and do not involve
affiliates of the Company;
(e) sell or otherwise dispose of or lease any
material part of its properties or assets, including but not limited to the sale
or license of any real estate or Intellectual Property, or purchase or otherwise
acquire or lease material properties or assets (including real estate), except
purchases, sales and other dispositions in the ordinary course of business
(excluding sales or other dispositions of assets held for sale in excess of
$100,000 per item), or acquire or agree to acquire by merging or consolidating
with, or by purchasing all, or substantially all, of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(f) declare, set aside or pay any dividends
on, or make any distributions in respect of, its outstanding shares;
(g) (i) (A) make any change, other than in the
ordinary course of business, in the compensation payable or to become payable to
any of its employees, agents or consultants or (B) make any change in the
compensation payable or to become payable to any of its officers or directors,
(ii) enter into or amend any employment, consulting, severance, termination or
similar agreement; (iii) adopt any new Plan or amend any existing Plan; (iv)
make any loans to any of its officers, directors, employees, agents or
consultants or any changes in its existing borrowing or lending arrangements for
or on behalf of any of such persons, whether contingent on the Closing or
otherwise; or (v) except to the extent permitted by Section 2.2 hereof, take any
action to cause to be exercisable any otherwise unexercisable Company Stock
Option under the Company Stock Option Plans;
31
(h) make any material changes in the type or
amount of its insurance coverages;
(i) make any material tax election (unless
required by law) or settle or compromise any material income tax liability of
the Company, except if such action is taken in the ordinary course of business
and ▇▇▇▇▇▇ shall have been provided reasonable prior notice thereof. The Company
shall consult with ▇▇▇▇▇▇ before filing or causing to be filed any material Tax
Return of the Company or before executing or causing to be executed any
agreement or waiver extending the period for assessment or collection of any
material Taxes of the Company;
(j) cancel any debts or waive, release or
relinquish any material contract rights or other material rights other than in
the ordinary course of business;
(k) knowingly take or agree or commit to take any
action that would result in any of the Company's representations or warranties
hereunder qualified as to materiality being untrue and any such representations
and warranties that are not so qualified being untrue in any material respect;
or
(l) make, or commit to make, any capital
expenditure in excess of $100,000 including, without limitation, for the
purchase of real estate.
Section 5.2 Rule 145 Affiliates. At least 30 days prior to the
Effective Time, the Company shall cause to be delivered to ▇▇▇▇▇▇ a letter
identifying all Persons who, at the time of the Special Meeting, may be deemed
to be "affiliates" of the Company for purposes of Rule 145 under the Securities
Act (each such Person, a "Securities Act Affiliate"). The Company shall use its
reasonable efforts to cause each person who is identified as a Securities Act
Affiliate to deliver, to ▇▇▇▇▇▇, at least 15 days prior to the Effective Time,
an agreement substantially in the form of Annex B to this Agreement.
Section 5.3 No Solicitation. (a) Prior to the Effective Time,
the Company agrees (x) that neither the Company, nor any of its directors,
officers, legal counsel, or financial advisors, will, and that the Company shall
make reasonable efforts to cause its other affiliates, employees and agents not
to, directly or indirectly, (i) solicit or initiate (including by way of
furnishing or disclosing non-public information) any inquiries or the making of
any proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of all or a substantial
part of the assets or capital stock of the Company (an "Acquisition Proposal")
or (ii) negotiate, knowingly encourage or otherwise engage in discussions with
any person (other than ▇▇▇▇▇▇ and its representatives) with respect to any
Acquisition Proposal and (y) that the Company will not enter into any agreement,
arrangement or understanding with respect to any such Acquisition Proposal which
would require it to abandon, terminate or fail to consummate the Merger or any
other transaction contemplated by this Agreement; provided, however, that (1)
the Company may, in response to an unsolicited written proposal from a third
party regarding a Superior Proposal (as defined in Section 5.3(b)), furnish
information to (and enter into a confidentiality or similar agreement with) and
negotiate or otherwise engage in discussions with, such third party, if the
Board of Directors of the Company determines in good faith, after consultation
with its outside counsel that such action is required for the Board of Directors
of the Company to comply with its fiduciary duties under applicable law and (2)
concurrently with compliance with Section 9.1(c)(i), the Company, upon three
days prior written notice to ▇▇▇▇▇▇, may accept and may enter into any
definitive agreement relating to such Superior Proposal.
32
(b) The Company agrees that neither the
Company, nor any of its directors, officers, legal counsel, or financial
advisors shall, and the Company shall make reasonable efforts to cause its other
affiliates, employees and agents to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any person
(other than ▇▇▇▇▇▇ and its representatives) conducted heretofore with respect to
any Acquisition Proposal. The Company agrees to promptly advise ▇▇▇▇▇▇ of (i)
any inquiries or proposals received by, any non-public information requested
from, or any negotiations or discussions sought to be initiated or continued
with, the Company and (ii) any inquiries or proposals known by the Company to
have been received by, any non-public information known by the Company to have
been requested from, or any negotiation or discussions known by the Company to
have been sought to be initiated or continued with, its affiliates or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a person (other than ▇▇▇▇▇▇ and its
representatives) with respect to an Acquisition Proposal, and (iii) the terms
thereof, including the identity of such third party and the general terms of any
financing arrangement or commitment in connection with such Acquisition
Proposal, and the Company agrees to promptly update ▇▇▇▇▇▇ on an ongoing basis
of the status thereof. As used herein, "Superior Proposal" means a bona fide,
written and unsolicited proposal or offer made by any person (or group) (other
than ▇▇▇▇▇▇ or any of its representatives) with respect to an Acquisition
Proposal on terms which the Board of Directors of the Company determines in good
faith (based on the written advice of independent financial advisors), to be
more favorable to the Company and its stockholders than the transactions
contemplated hereby; provided, however, that such a proposal or offer shall not
be deemed to be a "Superior Proposal" unless the Board of Directors of the
Company reasonably determines that any financing required to consummate the
transaction contemplated by such proposal or offer is capable of being obtained.
(c) Nothing contained in this Section 5.3 shall
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under any applicable law, rule or regulation or any duty of the
Company's Board of Directors.
Section 5.4 No WARN Act Activities. From the date hereof
through the Closing Date, the Company shall not effectuate (i) a Plant Closing
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company's business, or (ii) a
Mass Layoff affecting any site of employment or facility of the Company's
business without giving all notices required by the WARN Act, or any similar
state law or regulation, and the Company shall assume all liability for any
alleged failure to give such notice and indemnify and hold harmless ▇▇▇▇▇▇ for
any and all claims asserted under the WARN Act or any similar state law or
regulation because of a Plant Closing or a Mass Layoff occurring on or before
the Closing Date. For purposes of this Agreement, the Closing Date is the
"effective date" for purposes of the WARN Act.
33
Section 5.5 Stockholders' Meeting. The Company shall call the
Special Meeting to be held as promptly as practicable for the purpose of
considering and voting upon this Agreement and the Merger. The Board of
Directors of the Company shall recommend that the stockholders of the Company
approve and adopt this Agreement and the Merger. Notwithstanding anything
contrary contained in this Section 5.5 or elsewhere in this Agreement, at any
time prior to the obtaining such approval of the Company's stockholders, the
Board of Directors of the Company, to the extent that it determines in good
faith, after consultation with outside counsel, that failure to do so would
create a risk of liability for breach its fiduciary duties to the Company's
stockholders under applicable law, may withdraw or modify its approval or
recommendation of this Agreement or the Merger.
Section 5.6 Rights Plan. The Company shall, prior to the
Effective Time, cause the Rights to be redeemed pursuant to the terms of the
Rights Agreement, as in effect on the date hereof.
Section 5.7 Company Stock Option Plans. The Company shall,
prior to the Effective Time, cause the ESPP, and the Company Stock Option Plans
and the agreements governing the Company Stock Options to be amended in order to
effectuate the transactions contemplated by this Agreement. The Company shall
not open a new Purchase Period under the ESPP after June 30, 1998.
ARTICLE VI
COVENANTS OF ▇▇▇▇▇▇ AND MERGER SUB
Section 6.1 Directors' and Officers' Indemnification and
Insurance. (a) ▇▇▇▇▇▇ and Merger Sub acknowledge that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company as provided in the Certificate of
Incorporation, the Bylaws or written indemnity agreements or otherwise in
effect, as of the date hereof, with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect. The certificate of incorporation and bylaws of the Surviving Corporation
shall contain provisions with respect to indemnification and exculpation from
liability as set forth in the Certificate of Incorporation and Bylaws, as of the
date of this Agreement, which provisions will not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of any Indemnified
Party (as defined below). After the Effective Time, ▇▇▇▇▇▇ shall indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of the Company (each an "Indemnified Party") against all losses,
claims, damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided, that any such settlement is effected with
the prior written consent of ▇▇▇▇▇▇)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent permitted under
the laws of the State of Delaware, the Certificate of Incorporation or the
Bylaws, in each case, as in effect at the date of this Agreement, including
provisions therein relating to the advancement of expenses incurred in the
defense of any action or suit.
34
(b) ▇▇▇▇▇▇ shall maintain in effect for not
fewer than six years from and after the Effective Time the policies of
directors' and officers' liability insurance most recently maintained by the
Company (provided, that (i) ▇▇▇▇▇▇ may, consistent with ▇▇▇▇▇▇'▇ existing
policies, substitute therefor its self insurance program and/or policies with
reputable and financially sound carriers, in either case providing at least the
same coverage and containing terms and conditions no less advantageous as long
as such substitution does not result in gaps or lapses in coverage with respect
to claims arising from or related to matters occurring prior to the Effective
Time) and (ii) with respect to any insurance (including self insurance) that is
substituted for the policies of directors' and officers' liability insurance
most recently maintained by the Company, ▇▇▇▇▇▇ shall ensure that such insurance
does not contain limitations of the type contained in Rule 145(b) of the DGCL,
public policy limitations or any other limitations in excess of the limitations
contained in such directors' and officers' liability insurance maintained by the
Company); provided, that in no event shall ▇▇▇▇▇▇ be required to expend more
than an amount per year (the "Premium Amount") equal to 200% of the current
annual premiums paid by the Company to maintain or procure insurance coverage
pursuant to this Section 6.1(b); provided, further, that if ▇▇▇▇▇▇ is unable to
obtain the insurance called for this Section 6.1(b), ▇▇▇▇▇▇ shall obtain as much
comparable insurance as is available for the Premium Amount per year.
(c) ▇▇▇▇▇▇ and Merger Sub jointly and
severally agree to pay all expenses, including attorneys' fees, that may be
incurred by the Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 6.1.
(d) In the event ▇▇▇▇▇▇ or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provisions shall be made so
that the successors and assigns of ▇▇▇▇▇▇ shall assume ▇▇▇▇▇▇'▇ obligations set
forth in this Section 6.1.
(e) The provisions of this Section 6.1 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her personal representatives.
Section 6.2 Blue Sky. ▇▇▇▇▇▇ shall use its commercially
reasonably efforts to obtain prior to the Effective Time all approvals or
permits required to carry out the transactions contemplated hereby under
applicable blue sky laws in connection with the issuance of the CPRs and shares
of ▇▇▇▇▇▇ Common Stock in the Merger and as contemplated by this Agreement;
provided, however, that with respect to such qualifications neither ▇▇▇▇▇▇ nor
the Company shall be required to register or qualify as a foreign corporation or
to take any action which would subject it to general service of process or
taxation in any jurisdiction where any such entity is not now so subject. The
Company shall cooperate with ▇▇▇▇▇▇ in the making of all required filings under
applicable blue sky laws in connection with the issuance of the CPRs and shares
of ▇▇▇▇▇▇ Common Stock in the Merger in accordance with this Agreement.
Section 6.3 CPR Agreement. ▇▇▇▇▇▇ shall, at or prior to the
Effective Time, cause the CPR Agreement to be duly authorized, executed and
delivered by ▇▇▇▇▇▇ and, assuming due authorization and delivery thereof by the
Trustee, the CPR Agreement shall be a valid and binding agreement of ▇▇▇▇▇▇,
enforceable in accordance with its terms except the enforceability thereof may
be limited by (a) applicable bankruptcy, insolvency, moratorium, fraudulent
transfer or similar laws affecting creditors' rights generally, (b) the general
principles of equity (whether enforcement is considered at law or in equity) and
(c) the discretion of a court considering enforcement thereof.
35
Section 6.4 NYSE Listing. ▇▇▇▇▇▇ shall use its reasonable
efforts to cause the shares of ▇▇▇▇▇▇ Common Stock to be issued in the Merger in
accordance with this Agreement to be listed on the NYSE and on each national
securities exchange on which shares of ▇▇▇▇▇▇ Common Stock may at such time to
be admitted for trading or listed, subject to official notice of issuance, prior
to the Effective Time.
Section 6.5 Employment Matters. (a) ▇▇▇▇▇▇ shall cause the
Surviving Corporation to offer employment to persons specified in Schedule
6.5 ("Key Existing Employees") of the Company Disclosure Letter on terms
specified therein.
(b) Following the Closing, ▇▇▇▇▇▇ intends to
provide employees of the Company who become and continue to be employed by
▇▇▇▇▇▇ or its subsidiaries with total compensation benefits comparable to
similarly situated ▇▇▇▇▇▇ employees. Each employee of the Company who becomes an
employee of ▇▇▇▇▇▇ or its subsidiaries shall receive full credit (A) under the
applicable welfare benefit plans of ▇▇▇▇▇▇ in which such employee is eligible to
participate for his or her time of service to the Company, (B) for eligibility
and vesting (but not for benefit accrual) under ▇▇▇▇▇▇'▇ qualified retirement
plans for his or her time of service to the Company and (C) under the vacation,
sick leave and paid-time off policies of ▇▇▇▇▇▇ applicable to such employee, for
all accrued and unused vacation, sick leave and paid-time off to which such
employee is entitled as of the Closing Date. Notwithstanding the foregoing,
employees will begin to receive service credit for retiree medical benefits as
of the Closing Date. ▇▇▇▇▇▇ shall waive any pre-existing condition limitations
or waiting periods under such employee benefit plans.
ARTICLE VII
MUTUAL COVENANTS
Section 7.1 Access to Information; Confidentiality. Subject to
the existing confidentiality agreement, executed as of August 20, 1997, between
the Company and ▇▇▇▇▇▇ Healthcare Corporation (the "Confidentiality Agreement"),
between the date of this Agreement and the Effective Time, upon reasonable
notice the Company shall (i) give ▇▇▇▇▇▇, its affiliates and their respective
officers, employees, accountants, counsel, financing sources and other agents
and representatives reasonable access, during normal business hours, to all
plants, offices, warehouses and other facilities and to all contracts, internal
reports, data processing files and records, federal, state, local and foreign
tax returns and records, commitments, books, records and affairs of the Company,
whether located on the premises of the Company or at another location, during
normal business hours; (ii) furnish promptly to ▇▇▇▇▇▇ or its affiliates a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws or regulations; (iii) permit ▇▇▇▇▇▇ or its affiliates to make,
during normal business hours, such inspections as they may reasonably require;
(iv) cause its officers to furnish ▇▇▇▇▇▇ and its affiliates such existing
financial, operating, technical and product data and other information with
respect to the business and properties of the Company as ▇▇▇▇▇▇ or its
affiliates from time to time may reasonably request, including without
limitation financial statements and schedules; (v) allow ▇▇▇▇▇▇ and its
affiliates the opportunity to interview such employees and other personnel of
the Company with the Company's prior written consent, which consent shall not be
unreasonably withheld; and (vi) assist and cooperate with ▇▇▇▇▇▇ and its
affiliates in the development of integration plans for implementation by ▇▇▇▇▇▇
and its affiliates and the Surviving Corporation following the Effective Time;
provided, however, that no investigation pursuant to this Section 7.1 or notice
pursuant to Section 7.6 shall affect or be deemed to modify any representation
or warranty made by the Company herein. Until the Effective Time, materials
furnished to ▇▇▇▇▇▇ or its affiliates pursuant to this Section 7.1 may be used
by ▇▇▇▇▇▇ or its affiliates solely for continued evaluation of the Company and
integration planning purposes relating to accomplishing the transactions
contemplated hereby and for compliance with the applicable securities laws, and
shall be kept in confidence by ▇▇▇▇▇▇ pursuant to the terms of the
Confidentiality Agreement.
36
Section 7.2 HSR Act. The Company, ▇▇▇▇▇▇ and Merger Sub shall
take all reasonable actions necessary to file as soon as practicable
notifications under the HSR Act and to respond as promptly as practicable to any
inquiries received from the Federal Trade Commission and the Antitrust Division
of the Department of Justice for additional information or documentation and to
respond as promptly as practicable to all inquiries and requests received from
any state attorney general or other Governmental Entity in connection with
antitrust matters.
Section 7.3 Consents and Approvals. Each of the Company,
▇▇▇▇▇▇ and Merger Sub will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which actions shall
include without limitation furnishing all information required under the HSR Act
and in connection with approvals of or filings with any other Governmental
Entity) and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed on it or any of its
subsidiaries, if any, in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, ▇▇▇▇▇▇ and Merger Sub will, and will
cause its respective subsidiaries, if any, to, take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by ▇▇▇▇▇▇, Merger Sub, the Company or any of their respective
subsidiaries, if any, in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 7.4 Publicity. So long as this Agreement is in effect,
neither the Company, ▇▇▇▇▇▇ nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without the prior consultation with the other party, except as may be required
by law or by any listing agreement with a national securities exchange.
Section 7.5 Filings with the Commission. (a) As promptly as
practicable after the execution of this Agreement, the Company shall prepare and
file with the Commission the Proxy Statement/Prospectus, and ▇▇▇▇▇▇ shall
prepare and file with the Commission the Registration Statement. Each of ▇▇▇▇▇▇
and the Company (i) shall cause the Proxy Statement/Prospectus and the
Registration Statement to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder, (ii) shall use commercially reasonable efforts to have
or cause the Registration Statement to become effective and the CPR Agreement to
become qualified under the Trust Indenture Act, as promptly as practicable and
(iii) shall take all or any action required under any applicable federal or
state securities laws in connection with the issuance of shares of ▇▇▇▇▇▇ Common
Stock and the CPRs pursuant to the Merger. The Company and ▇▇▇▇▇▇ shall furnish
to the other all information concerning the Company and ▇▇▇▇▇▇ as the other may
reasonably request in connection with the preparation of the documents referred
to herein. As promptly as practicable after the Registration Statement shall
have become effective and the CPR Agreement has been qualified under the Trust
Indenture Act, the Company shall mail the Proxy Statement/Prospectus to its
stockholders.
37
(b) The information supplied by each of the
Company and ▇▇▇▇▇▇ for inclusion in the Registration Statement and the Proxy
Statement/Prospectus shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to the stockholders of
the Company, (iii) the time of the Special Meeting, or (iv) the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. If, at any time prior to the Effective Time, any event
or circumstance relating to the Company, ▇▇▇▇▇▇, any subsidiary of ▇▇▇▇▇▇, or
their respective officers or directors, should be discovered by such party which
should be set forth in an amendment or a supplement to the Registration
Statement or the Proxy Statement/Prospectus, such party shall promptly inform
the other thereof and take appropriate action in respect thereof.
Section 7.6 Advice of Changes. The Company and ▇▇▇▇▇▇ shall
each promptly give notice to the other party upon becoming aware of any
representation or warranty of the Company or ▇▇▇▇▇▇ contained in this Agreement
becoming untrue or inaccurate in any material respect or the failure by the
Company or ▇▇▇▇▇▇ to timely comply with or satisfy any material covenant or
agreement to be complied with or satisfied by it under this Agreement and shall
use its reasonable best efforts to prevent or promptly remedy same. No notice
given hereunder shall affect or be deemed to modify any representation or
warranty made by the Company or ▇▇▇▇▇▇ herein.
Section 7.7 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all 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 using all reasonable efforts to obtain all necessary
waivers, consents and approvals in connection with any governmental requirements
set forth in Section 3.4 and 4.6 of the Agreement, to effect all necessary
registrations and filings. 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/or directors of ▇▇▇▇▇▇ and the Surviving
Corporation and the former officers and/or directors of the Company shall take
all such necessary action.
Section 7.8 Tax Matters. Concurrently with the execution of
this Agreement, and again on the Closing Date, ▇▇▇▇▇▇ and Merger Sub shall
execute and deliver to the Company and the Company shall execute and deliver to
▇▇▇▇▇▇ and Merger Sub, a certificate in the form heretofor agreed upon by the
parties (the "Tax Matters Certificate"). Neither ▇▇▇▇▇▇, Merger Sub nor the
Company shall take any action which would cause its respective representations,
warranties and covenants in the Tax Matters Certificate to become untrue or
breached in any material respect.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction or waiver, on or prior to the Closing Date, of
the following conditions:
(a) Governmental Approvals. All authorizations,
consents, orders or approvals of, or declarations or filings with, or expiration
of waiting periods imposed by, and federal, state, local or foreign Governmental
Entity necessary for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained
and shall be in effect at the Effective Time.
38
(b) Legal Action. No temporary restraining
order, preliminary injunction or permanent injunction or other order precluding,
restraining, enjoining, preventing or prohibiting the consummation of the Merger
shall have been issued by a federal, state or foreign court or other
Governmental Entity and remain in effect.
(c) Statutes. No federal, state, local or foreign
statute, rule or regulation shall have been enacted which prohibits the
consummation of the Merger or would make the consummation of the Merger illegal.
(d) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the stockholders of the Company in accordance with and subject
to applicable law.
(e) Registration Statement. The Registration
Statement shall have been declared effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order.
(f) CPR Agreement. The CPR Agreement shall have been
duly qualified under the Trust Indenture Act.
(g) Change in Tax Law. There shall have occurred
no amendment to the Code or promulgation of a Treasury Regulation thereunder or
a judicial interpretation thereof published, after the date of the Agreement, by
a Federal Court (a "Change in Tax Law") that would cause the Merger, if
consummated after the effective date of such Change in Tax Law, to fail to
qualify as a reorganization under Section 368 of the Code.
(h) Listing. The shares of ▇▇▇▇▇▇ Common Stock to be
issued pursuant to this Agreement shall have been listed on the NYSE, subject to
official notice of issuance.
Section 8.2 Conditions of Obligations of ▇▇▇▇▇▇ and Merger
Sub. The obligation of ▇▇▇▇▇▇ and Merger Sub to effect the Merger is further
subject to the satisfaction at or prior to the Closing Date of the following
conditions, unless waived by ▇▇▇▇▇▇ and Merger Sub:
(a) The representations and warranties of the
Company set forth in this Agreement (i) shall, when made, be true and correct in
all material respects and (ii) shall be true and correct as if made as of the
Closing Date (unless such representation or warranty is, by its terms, made only
as of a specific other date and time), except, in the case of (ii), for such
inaccuracies as would not be reasonably expected to have a Material Adverse
Effect.
(b) The Company shall have performed, in all
material respects, and complied, in all material respects, with all obligations
and covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing Date.
(c) The Company shall have obtained all
consents, approvals, authorizations and permits referred to in Section 8.2(c) of
the Company Disclosure Letter.
39
(d) ▇▇▇▇▇▇ and Merger Sub shall have received from
the Company an officer's certificate, executed on behalf of the Company by an
authorized officer confirming, to such officers' knowledge, that the conditions
set forth in Sections 8.2(a) and (b) have been complied with.
(e) From the date of this Agreement through the
Effective Time, no event shall have occurred which shall be reasonably likely to
result or shall have resulted in a Material Adverse Effect.
(f) ▇▇▇▇▇▇ and Merger Sub shall have received an
opinion from ▇▇▇▇▇▇ Godward LLP, special counsel to the Company, substantially
in the form of Annex C attached hereto, subject to such exceptions and
qualifications as are customary for such counsel and opinions of such type.
(g) Such Key Existing Employees designated in
paragraphs (A) and (B) on Schedule 6.5 of the Company Disclosure Letter shall
have entered into employment or other agreements for the periods and on such
other terms substantially as set forth in the Company Disclosure Letter.
(h) The aggregate number of shares of Company Common
Stock constituting Dissenting Shares shall be less than seven percent of the
outstanding shares of Company Common Stock immediately prior to the Effective
Time.
Section 8.3 Conditions of Obligations of the Company. The
obligations of the Company to effect the Merger are further subject to the
satisfaction at or prior to the Closing Date of the following conditions, unless
waived by the Company:
(a) The representations and warranties of ▇▇▇▇▇▇
and Merger Sub set forth in this Agreement (i) shall, when made, be true and
correct in all material respects and (ii) shall be true and correct as if made
as of the Closing Date (unless such representation or warranty is, by its terms,
made only as of a specific other date and time), except, in the case of (ii),
for such inaccuracies which would not be reasonably expected to have a ▇▇▇▇▇▇
Material Adverse Effect.
(b) ▇▇▇▇▇▇ and Merger Sub shall have performed
and complied, in all material respects, with all obligations and covenants
required to be performed or complied with by them under this Agreement at or
prior to the Closing Date.
(c) ▇▇▇▇▇▇ and Merger Sub shall have obtained
all consents, approvals, authorizations and permits referred to in Section 4.6.
(d) The Company shall have received from ▇▇▇▇▇▇ and
Merger Sub an officer's certificate executed on behalf of each of ▇▇▇▇▇▇ and the
Merger Sub by an authorized officer confirming, to such officer's knowledge,
that the conditions set forth in Sections 8.3(a) and 8.3(b) have been complied
with.
(e) The Company shall have received an opinion
from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Corporate Vice President and General Counsel of
▇▇▇▇▇▇, substantially in the form of Annex D attached hereto, subject to such
exceptions and qualifications as are customary for such counsel and opinions of
such type.
(f) From the date of this Agreement through the
Effective Time, no event shall have occurred which shall be reasonably likely to
result or shall have resulted in a ▇▇▇▇▇▇ Material Adverse Effect.
40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) By Mutual Consent. By mutual consent of the
Board of Directors of ▇▇▇▇▇▇ and the Board of Directors of the Company.
(b) By ▇▇▇▇▇▇ and Merger Sub or the Company. By
the Board of Directors of Merger Sub, ▇▇▇▇▇▇ or the Company:
(i) if the Merger shall not have been
consummated on or prior to July 31, 1998; provided, however, that the right to
terminate this Agreement under this Section 9.1(b)(i) shall not be available to
any party whose failure to fulfill any material obligation under this Agreement
has been the cause of or resulted in, the failure of the Merger to be
consummated on or prior to such date; or
(ii) if a court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and non-appealable.
(iii) if (a) the Special Meeting (including
any adjournments thereof) shall have been held and completed and the Company's
stockholders shall have taken a final vote on a proposal to approve and adopt
this Agreement and to approve the Merger, and (b) the adoption and approval of
this Agreement and the approval of the Merger by the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Special Meeting shall not have been obtained.
(c) By the Company. By the Board of Directors of the
Company:
(i) if, prior to the Effective Time,
the Company shall have (A) accepted a Superior Proposal in compliance with the
terms of Section 5.3 hereof and (B) paid or caused to be paid the fee provided
for in Section 10.1(b) hereof; or
(ii) if, prior to the Effective Time, (A)
the Company is not in material breach of this agreement, (B) ▇▇▇▇▇▇ or Merger
Sub breaches or fails in any material respect to perform or comply with any of
its covenants and agreements contained herein or breaches its representations
and warranties in a manner which would cause any of the conditions contained in
Sections 8.3(a) or 8.3(b) not to be satisfied, and (C) such breach or failure,
if curable, shall not have been cured in all material respects by ▇▇▇▇▇▇ or
Merger Sub within thirty days following receipt by ▇▇▇▇▇▇ of written notice from
the Company describing such breach or failure.
(d) By ▇▇▇▇▇▇. By the Board of Directors of
▇▇▇▇▇▇:
41
(i) if (A) neither ▇▇▇▇▇▇ nor Merger
Sub is in material breach of this Agreement and (B) prior to the Effective Time,
the Board of Directors of the Company shall have withdrawn, or modified or
changed (including by amendment to the Proxy Statement/Prospectus) in a manner
adverse to ▇▇▇▇▇▇ or Merger Sub its approval or recommendation of the Merger or
this Agreement, or shall have recommended a Superior Proposal; or
(ii) if prior to the Effective Time, (A)
neither ▇▇▇▇▇▇ nor Merger Sub is in material breach of this Agreement, (B) the
Company breaches or fails in any material respect to perform or comply with any
of its covenants and agreements contained herein or breaches its representations
and warranties in a manner which would result in any of the conditions in
Section 8.2(a) or 8.2(b) not being satisfied, and (C) such breach or failure, if
curable, shall not have been cured in all material respects by the Company
within thirty days following receipt by the Company of written notice from the
▇▇▇▇▇▇ or Merger Sub describing such breach or failure.
Section 9.2 Effect of Termination and Abandonment. In the
event of termination of this Agreement as provided in Section 9.1 above, written
notice thereof shall forthwith be given to the other party or parties specifying
the provision hereof pursuant to which such termination is made, and this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of ▇▇▇▇▇▇ and Merger Sub, or any of them, or the
Company, or their respective officers, directors or employees, except (a) for
fraud or for material willful breach of this Agreement and (b) as set forth in
this Section 9.2, in Section 10.1 hereof and in the Confidentiality Agreement.
No termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Fees and Expenses. (a) Except as contemplated by
this Agreement, including Section 10.1(b) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) If (A) this Agreement is validly terminated
by the Company pursuant to Section 9.1(c)(i) and (B) at the time of such
termination, neither ▇▇▇▇▇▇ nor Merger Sub shall be in breach of this Agreement
in any material respect and there shall not have occurred and continue to exist
a ▇▇▇▇▇▇ Material Adverse Effect, then, concurrently with such termination, the
Company shall pay or cause to be paid to ▇▇▇▇▇▇ (by wire transfer) an amount
equal to $5.0 million.
(c) If (A) this Agreement is validly terminated by
▇▇▇▇▇▇ pursuant to Section 9.1(d)(i), and (B) at the time of such termination,
neither ▇▇▇▇▇▇ nor Merger Sub shall be in breach in any material respect of this
Agreement and there shall not have occurred and continue to exist a ▇▇▇▇▇▇
Material Adverse Effect, then, within three business days after such
termination, the Company shall pay or cause to be paid to ▇▇▇▇▇▇ (by wire
transfer) an amount equal to $5.0 million.
(d) If (A) this Agreement is validly terminated
by the Company or by ▇▇▇▇▇▇ pursuant to Section 9.1(b)(iii), (B) an Acquisition
Proposal shall have been made and publicly announced at or prior to the Special
Meeting (or any adjournment or postponement thereof), (C) an Acquisition
Proposal shall have been consummated within six months of the date of such
termination and (D) at the time of termination of this Agreement pursuant to
Section 9.1(b)(iii), neither ▇▇▇▇▇▇ nor Merger Sub shall be in breach in any
material respect of this Agreement and there shall not have occurred and
continue to exist a ▇▇▇▇▇▇ Material Adverse Effect, then, upon consummation of
such Acquisition Proposal, the Company shall pay or cause to be paid to ▇▇▇▇▇▇
(by wire transfer) an amount equal to $5.0 million.
42
Section 10.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, based upon
action taken by their respective Boards of Directors, at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
Section 10.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement shall survive the
Effective Time.
Section 10.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery,
facsimile transmission (which is confirmed), telex or delivery by an overnight
express courier service (delivery, postage or freight charges prepaid), or on
the fourth day following deposit in the United States mail (if sent by
registered or certified mail, return receipt requested, delivery, postage or
freight charges prepaid), addressed to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) If to Baxter or Merger Sub, to:
c/o Baxter International Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy (which shall not constitute
notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(b) if to the Company, to:
Somatogen, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President and Chief Executive
Officer
with a copy (which shall not constitute
notice) to:
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ C.T. Linfield
43
Section 10.5 Definitions; Interpretation. As used in this
Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
12b-2 of the Exchange Act. When a reference is made in this Agreement to an
Article, Section or Schedule, such reference shall be to an Article, Section or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.6 Specific Performance. In addition to any other
remedies available at law, or in equity, it is agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in Delaware state
court. In addition, each of the parties hereto (a) consents to commit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any court and (c) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than federal or state court sitting in the
State of Delaware.
Section 10.7 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
Section 10.8 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and the instruments referred to herein)
and the Confidentiality Agreement (a) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b), except as
provided in Section 6.1(d) hereof, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
Section 10.9 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or to
another authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 10.10 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware (without
giving effect to the conflicts of laws principles thereof).
Section 10.11 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Baxter or to any, direct or indirect, wholly owned subsidiary of Baxter.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
44
IN WITNESS WHEREOF, each of Baxter, Merger Sub and the Company has caused this
Agreement to be executed on its behalf by its duly authorized officers hereunder
all as of the date first above written.
▇▇▇▇▇▇ INTERNATIONAL INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
Title: President
RHB1 ACQUISITION CORP.
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
SOMATOGEN, INC.
By: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Title: President and CEO
45
▇▇▇▇▇▇ International Inc.
No. Certificate for ____ Contingent Payment Rights
This certifies that, or registered assigns (the "Holder"), is
the registered holder of the number of Contingent Payment Rights ("CPRs") set
forth above. Each CPR entitles the Holder, subject to the provisions contained
herein and in the Agreement referred to on the reverse hereof, to payments from
▇▇▇▇▇▇ International Inc., a Delaware corporation (the "Company"), in an amount
and in the form determined pursuant to the provisions set forth on the reverse
hereof and as more fully described in the Agreement referred to on the reverse
hereof. Such payment shall be made on each Payment Date or, if earlier, the
Redemption Date or the Default Payment Date, each as defined in the Agreement
referred to on the reverse hereof.
Payment of any amounts pursuant to this CPR Certificate shall
be made only to the registered Holder (as defined in the Agreement) of this CPR
Certificate. Such payment shall be made in the Borough of Manhattan, The City of
New York, or at any other office or agency maintained by the Company for such
purpose, in such coin or currency of the United States of America as at the time
is legal tender for the payment of public and private debts; provided, however,
the Company may pay such amounts by wire transfer or check payable in such
money. First Trust National Association has been initially appointed as Paying
Agent in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this CPR
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this CPR Certificate shall not be entitled to any benefit under the Agreement,
or be valid or obligatory for any purpose.
46
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: ▇▇▇▇▇▇ International Inc.
By______________________________
Attest:
___________________________
Authorized Signature
47
[Form of Reverse of CPR Certificate]
This CPR Certificate is issued under and in accordance with
the Contingent Payment Rights Agreement, dated as of [insert date], 1998 (the
"Agreement"), between the Company and First Trust National Association, a
national association, as trustee (the "Trustee," which term includes any
successor Trustee under the Agreement), and is subject to the terms and
provisions contained in the Agreement, to all of which terms and provisions the
Holder of this CPR Certificate consents by acceptance hereof. The Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Trustee and the holders of the CPRs. All capitalized terms used in
this CPR Certificate without definition shall have the respective meanings
ascribed to them in the Agreement. Copies of the Agreement can be obtained by
contacting the Trustee.
Subject to extension or earlier redemption as hereinafter
provided, until March 15, 2008, the Company shall pay to the Holder hereof on
March 15 and September 15 of each year (or if such day is not a Business Day,
without accruing any interest, on the next succeeding Business Day), beginning
March 15, 1999, or if such day is not a Business Day, without accruing any
interest, on the next Business Day (as the same may be extended, each a "Payment
Date"), for each CPR represented hereby, a pro rata portion of the Contingent
Payment with respect to the Payment Measuring Period ended immediately prior to
such Payment Date, unless the CPR(s) represented by this CPR Certificate shall
have been redeemed as provided for herein; provided, that in no event shall the
aggregate of all Contingent Payments with respect to each CPR exceed two dollars
($2.00) and, provided, further, that in no event shall the Company be required
to a make a payment on any Payment Date in an amount less than $0.05 per CPR and
such amounts which would otherwise be payable on such Payment Date shall (x) be
aggregated with the amount payable with respect to the next Payment Measuring
Period and (y) not bear interest except on a Default Payment Date.
The "Contingent Payment," with respect to any Payment
Measuring Period, equals five percent of the Net Sales that are attributable to
the commercial sale of Products.
"Net Sales" means the actual gross amount invoiced by the
Company, its Affiliates, licensees or distributors for the sale of Products to
any third parties during a Payment Measuring Period less: (a) direct
transportation charges, including insurance; (b) trade, quantity and other
discounts and rebates actually allowed and taken to the extent customary in the
trade; and (c) allowances or credits, including but not limited to, allowances
or credits to customers on account of rejection or return of the Products;
provided that (i) a sale or transfer to an Affiliate of the Company for resale
by such Affiliate shall not be considered a sale for the purpose of this
provision, but the resale by such Affiliate shall be a sale for such purposes,
and the term "sale" shall include a transfer or other disposition to a customer;
(ii) Net Sales shall not include reserves for bad debts or allowances, credits
or rebates not covered above; and (iii) a sale of Products shall occur at the
earlier of (a) the transfer of title in such Products to a third party or (b)
the shipment of such Products from the manufacturing or warehouse facilities of
the manufacturer of such Products to a third party.
48
Net Sales shall not include license fees or other advance
payments received by the Company from a licensee or distributor of the Products
which is not derived from sales of Products, but shall include the Net Sales of
such licensee or distributor.
"Payment Measuring Period" means (i) the period from the
Effective Date to December 31, 1998 and (ii) each six month period ended June 30
and December 31 thereafter, through and including the Final Payment Date.
"Products" shall mean all products in which the primary active
ingredient is human hemoglobin, or derivatives, mutants or modifications
thereof, which have been produced in culture of microbial cells (including yeast
cells) which have been modified using Somatogen Recombinant Hemoglobin
Technology (other than clinical indications for any such Products that are in
clinical trials as of the date of the Merger Agreement).
"Somatogen Recombinant Hemoglobin Technology" shall mean all
technology owned by or licensed to Somatogen on or prior to the Effective Date,
which involves the use of recombinant DNA techniques.
If for any reason the Contingent Payment has not been finally
determined as of the Payment Date, then the Payment Date will be automatically
extended until the date that is the seventh Business Day after the date of which
the Contingent Payment has been finally determined.
The CPRs will be redeemable, in whole or in part, at any time
and from time to time, at the option of the Company at a redemption price for
each CPR represented hereby equal to $2 less all Contingent Payments made or
provided for, through the Redemption Date. The Agreement does not prohibit the
Company from otherwise acquiring CPRs.
The Contingent Payment, if any, and interest thereon, if any,
shall be payable by the Company in such coin or currency of the United States of
America as at the time is legal tender for the payment of public and private
debts; provided, however, the Company may pay such amounts by its check or wire
transfer payable in such money. First Trust National Association has been
initially appointed as Paying Agent in the Borough of Manhattan, The City of New
York.
If an Event of Default occurs and is continuing, either the
Trustee may or if the Holders holding an aggregate of at least fifty percent of
the Outstanding CPRs, by notice to the Company and to the Trustee shall bring
suit to recover all amounts then due and payable, with interest at the Default
Interest Rate from the Default Payment Date through the date payment is made or
duly provided for.
49
In the event that, it is finally determined that no amount is
payable on the CPRs to the Holder on any Payment Date, the Company shall give
the Trustee notice of such determination. The failure to give such notice or any
defect therein shall not affect the validity of such determination.
The Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the holders of CPRs under the
Agreement at any time by the Company and the Trustee with the consent of the
holders of a majority of the CPRs at the time outstanding.
No reference herein to the Agreement and no provision of this
CPR Certificate or of the Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay any amounts determined
pursuant to the terms hereof and of the Agreement at the times, place and
amount, and in the manner, herein prescribed. The Holder of this CPR
Certificate, by acceptance hereof, agrees that the Company has no obligation to
initiate or continue research, development or commercialization activities with
respect to Products or any of the Somatogen Recombinant Hemoglobin Technology
and, in its sole subjective discretion, the Company may abandon efforts to
research, develop or commercialize such technology or Products.
The Agreement provides that the Trustee shall receive an
Officers' Certificate, on or before each Payment Date, certifying the
Consolidated Revenues from sales of Products. The Agreement also provides that
The Company shall not transfer (other than transfers to Subsidiaries and
Affiliates) the Somatogen Recombinant Hemoglobin Technology unless the
transferor agrees to be bound by the Agreement to the same extent as the Company
is then bound thereby, whereupon the Company shall be released from any
obligation under the Agreement.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of the CPRs represented by this CPR
Certificate is registrable on the Security Register, upon surrender of this CPR
Certificate for registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan, The City of New York,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to The Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new CPR Certificates, for the same amount of CPRs, will be issued to the
designated transferee or transferees. The Company hereby initially designates
the office of First Trust National Association [insert address of trustee] as
the office for registration of transfer of this CPR Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, this CPR Certificate is exchangeable for one or
more CPR Certificates representing the same number of CPRs as represented by
this CPR Certificate as requested by the Holder surrendering the same.
No service charge will be made for any registration of
transfer or exchange of CPRs, but the Company may require payment of a sum
sufficient to cover all documentary, stamp or similar issue or transfer taxes or
other governmental charges payable in connection with any registration of
transfer or exchange.
50
Prior to the time of due presentment of this CPR Certificate
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this CPR Certificate
is registered as the owner hereof for all purposes, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
Neither the Company nor the Trustee has any duty or obligation
to the holder of this CPR Certificate, except as expressly set forth herein or
in the Agreement.
51
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
this is one of the CPR Certificates referred to in the within-mentioned
Agreement.
FIRST TRUST NATIONAL
ASSOCIATION,
Trustee and Transfer
Agent and Registrar
Dated: ____________________
By _____________________________
Authorized Signatory
52
ANNEX B
FORM OF AFFILIATE LETTER
[Date]
▇▇▇▇▇▇ International Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Ladies and Gentlemen:
I have been advised that as of the date of this letter
agreement I may be deemed to be an "affiliate" of Somatogen, Inc., a Delaware
corporation (the "Company"), as such term is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), or (ii) used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of February 23, 1998 (the "Merger Agreement"), by and among ▇▇▇▇▇▇ International
Inc., a Delaware corporation ("Baxter"), RHB1 Acquisition Corp., a Delaware
corporation ("Merger Sub"), and the Company, Merger Sub will be merged with and
into the Company (the "Merger").
Pursuant to the Merger all of the shares of capital stock of
the Company owned by the undersigned will be converted into the right to receive
a certain number of shares of Common Stock, par value $1.00 per share, of Baxter
("Baxter Shares"), and the right to receive a Contingent Payment Right (as
described in the Merger Agreement) pursuant to the terms of the Merger
Agreement.
I represent, warrant and covenant to Baxter that, with respect
to all Baxter Shares received as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition
of the Baxter Shares or the Contingent Payment Rights in violation of the
Securities Act or the Rules and Regulations.
(b) I have carefully read this letter and the Merger Agreement
and the Contingent Payment Rights Agreement and have had an opportunity to
discuss the requirements of such documents and any other applicable limitations
upon my ability to sell, transfer or otherwise dispose of Baxter Shares or the
Contingent Payment Rights with my counsel or counsel for the Company.
(c) I have been advised that the issuance of Baxter Shares to
me pursuant to the Merger has been registered with the Commission under the
Securities Act. However, I have also been advised that, since at the time the
Merger was submitted for a vote of the stockholders of the Company, I may be
deemed to have been an affiliate of the Company and the distribution by me of
the Baxter Shares or the Contingent Payment Rights has not been registered under
the Securities Act, therefore I may not sell, transfer or otherwise dispose of
Baxter Shares or the Contingent Payment Rights issued to me in the Merger unless
(i) such sale, transfer or other disposition has been registered under the Act
or is made in conformity with Rule 145 under the Securities Act, or (ii) in the
opinion of counsel reasonably acceptable to Baxter or pursuant to a "no action"
letter obtained by the undersigned from the staff of the Commission, such sale,
transfer or other disposition is otherwise exempt from registration under the
Securities Act.
53
(d) I understand that, except as provided for under the Merger
Agreement, Baxter is under no obligation to register under the Act the sale,
transfer or other disposition of Baxter Shares or the Contingent Payment Rights
by me or on my behalf or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(e) I understand that Baxter will give stop transfer
instructions to Baxter transfer agents with respect to the Baxter Shares and
Contingent Payment Rights received by me pursuant to the terms of the Merger
Agreement and that the certificates for such Baxter Shares and Contingent
Payment Right issued to me, or any substitutions therefor, will bear a legend
substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED [ ], 1998, BETWEEN
THE REGISTERED HOLDER HEREOF AND ▇▇▇▇▇▇ INTERNATIONAL INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF ▇▇▇▇▇▇
INTERNATIONAL INC."
(f) I also understand that unless the transfer by me of Baxter
Shares or Contingent Payment Rights received pursuant to the terms of the Merger
Agreement has been registered under the Securities Act or is a sale made in
conformity with the provisions of Rule 145, Baxter reserves the right to place a
legend substantially to the following effect on the certificates issued to any
transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute certificates
without such legend if such legend is not required for purposes of the
Securities Act. It is understood and agreed that such legends and the stop
orders referred to above will be removed if (i) a sale is effected in compliance
with the provisions of Rule 145(d)(1), (ii) one year shall have elapsed from the
date the undersigned acquired the Baxter Shares and the Contingent Payment
Rights received in the Merger and the provisions of Rule 145(d)(2) are then
available to the undersigned, (iii) two years shall have elapsed from the date
the undersigned acquired the Baxter Shares and the Contingent Payment Rights
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned or (iv) Baxter has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Baxter or a "no
action" letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Securities Act no
longer apply to the undersigned.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter.
Baxter agrees that, for a period of at least three years after
the effective date of the Merger, it will make publicly available the
information required by, and in the manner specified by, Rule 144(c), or any
successor rule thereto, under the Securities Act.
Sincerely,
_____________________________
Name:
Accepted this __ day of __________ , 1998:
▇▇▇▇▇▇ INTERNATIONAL INC.
By:________________________________
Name:
Title:
54
ANNEX C
FORM OF OPINION OF
▇▇▇▇▇▇ GODWARD LLP
1. The Company has been duly organized and is validly existing
and in good standing under the laws of the State of Delaware. The Company has
the requisite corporate power to own its property and assets and to conduct its
business as it is currently being conducted and, to the best of our knowledge,
is qualified to do business and is in good standing as a foreign corporation
under the laws of each jurisdiction in which the conduct of its business
requires such qualification, other than jurisdictions in which the failure to be
so qualified would not be reasonably expected to have a Material Adverse Effect.
2. The Company has the corporate power and corporate authority
to execute, deliver and perform all of its obligations under the Agreement. The
execution and delivery of the Agreement and the consummation by the Company of
the Merger have been duly authorized by all requisite corporate action on the
part of the Company.
3. Assuming the due authorization, execution and delivery of
the Agreement by each of Merger Sub and Baxter, the Agreement is a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except (a) to the extent that the enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity (regardless
of whether such enforcement is considered in a proceeding at law or in equity).
4. The execution and delivery by the Company of the Agreement
and the performance by the Company of its obligations under the Agreement, in
accordance with its terms, does not (i) conflict with the Certificate of
Incorporation or the Bylaws, (ii) constitute a violation of or a default under
or require any consent or waiver under any Applicable Contracts (as hereinafter
defined), (iii) conflict with or result in a violation of an order, writ,
judgment or decree known to us which the Company is a party or is subject.
"Applicable Contracts" means those agreements or instruments identified in
Sections 3.14 of the Company Disclosure Letter.
5. Neither the execution, delivery or performance by the
Company of the Agreement nor the compliance by the Company with the terms and
provisions thereof contravene any provision of any Applicable Law (as
hereinafter defined). "Applicable Laws" shall mean the DGCL and those laws,
rules and regulations of the State of Colorado and of the United States of
America which, in such counsel's experience, are normally applicable to
transactions of the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which
has not been obtained or taken and is not in full force and effect, is required
to authorize or is required in connection with the execution or delivery or
performance of the Agreement by the Company. "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any regulatory or governmental authority (other than the
FDA, as to which such counsel need express no opinion) pursuant to Applicable
Laws.
55
7. The Proxy Statement/ Prospectus, as of its date and the
date of the Special Meeting insofar as they describe the Company, appeared on
its face to be appropriately responsive in all material respects to the
requirements of the Securities Act and the General Rules and Regulations (the
"Rules and Regulations") of the Commission under the Securities Act, except that
such counsel need not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Proxy Statement/Prospectus.
8. Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Company SEC Reports required to
described therein which were not so filed or described as required, and such
contracts and documents as are required by the Act to be so described in the
Company SEC Reports were fairly described in all material respects.
9. The authorized capital stock of the Company is as set forth
in Section 3.2 of the Agreement, and to the best of such counsel's knowledge,
except as set forth in the Agreement and the Company Disclosure Letter, there
are no options, warrants, conversion privileges, preemptive rights or other
rights presently outstanding to purchase any of the authorized but unissued
capital stock of the Company.
10. To such counsel's knowledge, there is no action,
proceeding or investigation pending or threatened against the Company before any
court or administrative agency that questions the validity of the Agreement.
56
ANNEX D
FORM OF OPINION
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
CORPORATE VICE PRESIDENT AND GENERAL COUNSEL OF ▇▇▇▇▇▇
1. Each of ▇▇▇▇▇▇ and Merger Sub have been duly organized and
are validly existing and in good standing under the laws of the State of
Delaware.
2. Each of ▇▇▇▇▇▇ and Merger Sub have the corporate power and
corporate authority to enter into the Agreement, the CPRs and the CPR Agreement
and to consummate the transactions contemplated thereby.
3. All requisite corporate action on the part of ▇▇▇▇▇▇ or
Merger Sub, as applicable, to authorize the execution and delivery of each of
the Agreement, the CPRs and the CPR Agreement and the consummation by ▇▇▇▇▇▇ and
Merger Sub, as applicable, of the transactions contemplated thereby have been
duly and validly taken.
4. The Agreement has been duly and validly executed and
delivered by ▇▇▇▇▇▇ and Merger Sub, and assuming the due authorization,
execution and delivery of the Agreement by the Company, the Agreement is a valid
and binding obligation of each of ▇▇▇▇▇▇ and Merger Sub, enforceable against
each of ▇▇▇▇▇▇ and Merger Sub in accordance with its terms, except to the extent
that the enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding at law or in equity).
5. The CPR Agreement has been duly and validly executed and
delivered by ▇▇▇▇▇▇, and assuming the due authorization, execution and delivery
of the CPR Agreement by the Trustee, the CPR Agreement is a valid and binding
obligation of ▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇ in accordance with its terms,
except to the extent that the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity); and the CPRs,
when authenticated in accordance with the terms of CPR Agreement, will be
entitled to the benefit of the CPR Agreement and enforceable against ▇▇▇▇▇▇ in
accordance with their terms, except to the extent that the enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally, and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
in equity).
6. Upon issuance of shares of ▇▇▇▇▇▇ Common Stock pursuant to
the Agreement, such shares of ▇▇▇▇▇▇ Common Stock will be duly authorized,
validly issued, fully paid and nonassessable and not subject to any preemptive
rights.