Exhibit 2.1
EXECUTION VERSION
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AGREEMENT AND PLAN OF MERGER
dated as of November 3, 2003
by and between
CEPHALON, INC.,
CIMA LABS INC.,
and
C MERGERCO, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS; INTERPRETATION
1.01 Definitions......................................................... 1
1.02 Interpretation...................................................... 9
ARTICLE II
THE MERGER
2.01 The Merger.......................................................... 9
2.02 Closing............................................................. 10
2.03 Effective Time...................................................... 10
2.04 Effects of the Merger............................................... 10
2.05 Certificates of Incorporation and By-laws........................... 10
2.06 Board of Directors and Officers..................................... 10
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Consideration; Effect on Capital Stock of CIMA and MergerCo......... 11
3.02 Certain Adjustments................................................. 11
3.03 Exchange Procedures................................................. 11
3.04 Further Ownership Rights............................................ 12
3.05 Termination of Exchange Fund........................................ 12
3.06 No Liability........................................................ 13
3.07 Investment of the Exchange Fund..................................... 13
3.08 Lost Certificates................................................... 13
3.09 Withholding Rights.................................................. 13
3.10 Further Assurances.................................................. 13
3.11 Stock Transfer Books................................................ 14
3.12 CIMA Stock Options.................................................. 14
3.13 Dissenting Shares................................................... 14
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01 CIMA Forbearances................................................... 15
4.02 CIMA and Cephalon Forbearances...................................... 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Letters.................................................. 18
5.02 Standard............................................................ 18
5.03 Representations and Warranties of CIMA.............................. 19
5.04 Representations and Warranties With Respect to Cephalon............. 32
5.05 Representations and Warranties With Respect to MergerCo............. 33
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts............................................. 34
6.02 Proxy Statement; Stockholder Approval............................... 34
6.03 Acquisition Proposals............................................... 36
6.04 [Intentionally Omitted]............................................. 38
6.05 Press Releases; Public Announcements................................ 38
6.06 Access; Information................................................. 39
6.07 Takeover Laws and Rights Plans...................................... 39
6.08 [Intentionally Omitted]............................................. 40
6.09 Regulatory and Third Party Approvals................................ 40
6.10 Indemnification..................................................... 42
6.11 Benefit Plans....................................................... 43
6.12 Notification of Certain Matters..................................... 44
6.13 Exemption from Liability Under Section 16(b)........................ 44
6.14 Control of Other Party's Business................................... 45
6.15 Treasury Regulation Statement....................................... 45
ARTICLE VII
CONDITIONS TO THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.......... 45
7.02 Conditions to CIMA's Obligation..................................... 45
7.03 Conditions to Cephalon's Obligation................................. 46
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ARTICLE VIII
TERMINATION
8.01 Termination......................................................... 46
8.02 Effect of Termination and Abandonment............................... 48
ARTICLE IX
MISCELLANEOUS
9.01 Survival............................................................ 50
9.02 Waiver; Amendment................................................... 50
9.03 Counterparts........................................................ 50
9.04 Governing Law....................................................... 50
9.05 Expenses............................................................ 50
9.06 Notices............................................................. 51
9.07 Entire Understanding; No Third Party Beneficiaries.................. 52
9.08 Severability........................................................ 52
9.09 Submission to Jurisdiction; Waivers................................. 52
9.10 Enforcement......................................................... 52
9.11 Acknowledgment...................................................... 53
9.12 Assignment.......................................................... 53
Exhibits
Annex 1 Form of Surviving Corporation Certificate of Incorporation
Annex 2 Form of Surviving Corporation By-Laws
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 3, 2003, is
entered into by and between CEPHALON, INC., a Delaware corporation ("Cephalon"),
CIMA LABS INC., a Delaware corporation ("CIMA"), and C MERGERCO, INC., a
Delaware corporation and a direct, wholly owned subsidiary of Cephalon
("MergerCo").
BACKGROUND STATEMENT
A. The Proposed Transaction. The parties intend for Cephalon to acquire
CIMA upon the terms and subject to the conditions of this Agreement.
Specifically, upon the terms and subject to the conditions of this Agreement,
MergerCo will be merged with and into CIMA (the "Merger"), with CIMA as the
surviving corporation. As a result of the Merger, each share of CIMA Common
Stock will be converted into the right to receive $34.00 in cash.
B. Board Determinations. The respective Boards of Directors of CIMA,
Cephalon and MergerCo have each approved the Merger in accordance with
applicable law, upon the terms and subject to the conditions set forth herein.
The respective Boards of Directors of CIMA, Cephalon and MergerCo have each
determined that the Merger and the other transactions contemplated hereby are
advisable and in the best interests of their respective stockholders and,
therefore, have approved the Merger and this Agreement.
STATEMENT OF AGREEMENT
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.01 Definitions. This Agreement uses the following definitions:
"aaiPharma Merger Agreement," has the meaning assigned in Section
5.03(bb).
"Acquisition Proposal," means any offer or proposal with respect to an
Acquisition Transaction.
"Acquisition Transaction," with respect to CIMA, means any (i) merger,
consolidation, business combination or similar transaction involving CIMA or any
of its Significant Subsidiaries, (ii) sale, lease or other disposition directly
or indirectly by merger, consolidation, business combination, share exchange,
joint venture or otherwise of assets of CIMA or its Subsidiaries representing
15% or more of the consolidated assets of CIMA and its Subsidiaries, (iii)
issuance, sale or other disposition of (including by way of merger,
consolidation, business combination, share exchange, joint venture or any
similar transaction) securities (or Rights with respect to such securities)
representing 15% or more of the voting power of CIMA (other than a public
offering of common stock not in connection with a merger, consolidation,
business combination, share exchange, joint venture or similar transaction),
(iv) transaction (including a
tender or exchange offer) in which any Person shall acquire beneficial
ownership, or the right to acquire beneficial ownership, or any "group" (as
defined in Rule 13d-5(b)(1) under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15% or
more of the outstanding voting capital stock of CIMA (other than one or more
bona fide underwriters in connection with a public offering of common stock not
in connection with a merger, consolidation, business combination, share
exchange, joint venture or similar transaction) or (v) any combination of the
foregoing (other than the Merger).
"Affiliate" means an "affiliate" within the meaning of Rule 12b-2 of the
Exchange Act.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with its terms.
"Benefit Arrangement" means with respect to CIMA, each:
(i) "employee benefit plan" (within the meaning of Section
3(3) of ERISA);
(ii) stock purchase, stock option or other form of incentive
compensation plan;
(iii) severance, parachute, change-in-control, fringe benefit,
bonus, incentive, worker's compensation, disability benefit, supplemental
unemployment benefit, vacation benefit, retirement benefit, life, health, or
accident benefit, or deferred compensation plan;
(iv) paid time off benefits arrangement; and
(v) other employee benefit plan, agreement, program, policy,
commitment or other arrangement (whether written or oral), whether or not
subject to ERISA, both:
(A) under which any of its current or former employees,
the current or former employees of its Subsidiaries, or any of their respective
ERISA Affiliates, or any of its current or former officers or directors or those
of its Subsidiaries, or their respective ERISA Affiliates has any present or
future right to benefits; and
(B) which is sponsored, maintained by or contributed to
by it, any of its Subsidiaries, or any of their respective ERISA Affiliates, or
under which it, any of its Subsidiaries, or any of their respective ERISA
Affiliates has had or has any present or future liability or obligation to
contribute.
"Benefit Plan" and "Benefit Plans" have the meanings assigned in Section
5.03(u)(1).
"Business Day" means any day on which banks are not required or authorized
to close in the City of New York, New York.
"Cephalon" has the meaning assigned in the preamble.
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"Certificate of Merger" has the meaning assigned in Section 2.03.
"Change" has the meaning assigned in Section 6.02(e).
"Change in the CIMA Recommendation" has the meaning assigned in Section
6.02(e).
"CIMA" has the meaning assigned in the preamble.
"CIMA Board" means the Board of Directors of CIMA.
"CIMA Certificates" has the meaning assigned in Section 3.01(c).
"CIMA Common Stock" means the common stock, par value $0.01 per share, of
CIMA.
"CIMA Insiders" means those officers and directors of CIMA who are subject
to the reporting requirements of Section 16(a) of the Exchange Act.
"CIMA Meeting" has the meaning assigned in Section 6.02(e).
"CIMA Preferred Stock" means the preferred stock, $0.01 par value per
share, of CIMA.
"CIMA Recommendation" has the meaning assigned in Section 6.02(e).
"CIMA Rights" means rights to purchase shares of CIMA Stock issued under
the CIMA Rights Agreement.
"CIMA Rights Agreement" means the Amended and Restated Rights Agreement,
dated as of June 26, 2001, between CIMA and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as
Rights Agent.
"CIMA Stock" means the CIMA Common Stock and the CIMA Preferred Stock.
"CIMA Stockholder Approval" has the meaning assigned in Section 5.03(f).
"CIMA Stock Option" has the meaning assigned in Section 3.12.
"CIMA Stock Plans" means the CIMA LABS INC. 2001 Stock Incentive Plan, as
amended, the CIMA LABS INC. Equity Incentive Plan, as amended and restated, the
CIMA LABS INC. 1994 Directors' Stock Option Plan, as amended, the CIMA LABS INC.
Non-Employee Directors' Fee Option Grant Program as amended, and the CIMA Stock
Purchase Plan.
"CIMA Stock Purchase Plan" means the CIMA LABS INC. Employee Stock
Purchase Plan.
"Closing" has the meaning assigned in Section 2.02.
"Closing Date" has the meaning assigned in Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Competing Transaction," with respect to CIMA, means any (i) merger,
consolidation, business combination or similar transaction involving such party
or any of its Significant Subsidiaries pursuant to which the stockholders of
such party immediately prior to such transaction would own less than 70% of the
voting power of the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof), (ii) sale, lease or other disposition directly
or indirectly by merger, consolidation, business combination, share exchange,
joint venture or otherwise of assets of such party or its Subsidiaries
representing 30% or more of the consolidated assets of such party and its
Subsidiaries, (iii) issuance, sale or other disposition of (including by way of
merger, consolidation, business combination, share exchange, joint venture or
any similar transaction) securities (or Rights with respect to such securities)
representing 30% or more of the voting power of such party (other than a public
offering of common stock not in connection with a merger, consolidation,
business combination, share exchange, joint venture or similar transaction),
(iv) transaction (including a tender or exchange offer) in which any Person
shall acquire beneficial ownership, or the right to acquire beneficial
ownership, or any "group" (as defined in Rule 13d-5(b)(1) under the Exchange
Act) shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 30% or more of the outstanding voting capital stock of
such party (other than one or more bona fide underwriters in connection with a
public offering of common stock not in connection with a merger, consolidation,
business combination, share exchange, joint venture or similar transaction) or
(v) any combination of the foregoing (other than the Merger).
"Confidentiality Agreement" has the meaning assigned in Section 6.06(b).
"Constituent Documents" means the articles or certificate of incorporation
and by-laws of a corporation, the certificate of partnership and partnership
agreement of a general or limited partnership, the certificate of formation and
limited liability company agreement of a limited liability company, the trust
agreement of a trust and the comparable documents of other entities.
"Continued Employee" means each individual employed by CIMA or any of its
Subsidiaries immediately before the Effective Time who continues to be employed
by Surviving Corporation or any of its Subsidiaries immediately after the
Effective Time.
"Costs" has the meaning assigned in Section 6.10(a).
"DGCL" means the General Corporation Law of the State of Delaware.
"Disclosure Letter" has the meaning assigned in Section 5.01.
"Dissenting Stockholders" means those holders of CIMA Common Stock that
exercise appraisal rights pursuant to Section 262 of the DGCL, in accordance
with Section 3.13.
"DOJ" has the meaning assigned in Section 5.03(o)(6).
"Effective Time" has the meaning assigned in Section 2.03.
"Employee" and "Employees" have the meanings assigned in Section
5.03(u)(1).
"Environmental Law" has the meaning assigned in Section 5.03(p)(3).
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which is or at any relevant time was a
member of a "controlled group of corporations" with, under "common control"
with, or a member of an "affiliates service group" with, any Person, as defined
in Section 414(b), (c), (m) or (o) of the Code, or under "common control" with
it, within the meaning of Section 4001(b)(1) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning assigned in Section 3.03(a).
"Exchange Fund" has the meaning assigned in Section 3.03(a).
"Expenses" means all reasonable, documented, out-of-pocket fees and
expenses (including fees and expenses payable to all investment banking firms
and other Persons, and their respective agents and counsel, for financial
advice, fairness opinions or other advice with respect to the structuring of the
transactions contemplated hereby, and all fees of counsel, accountants, experts
and consultants to CIMA or Cephalon, as the case may be, all printing and
advertising expenses, and all fees payable to Governmental Authorities or to
third parties in connection with obtaining Requisite Regulatory Approvals or
consents necessary or advisable in connection with the Merger) actually incurred
by Cephalon or CIMA, as the case may be, or on their behalf, in connection with
the negotiation, preparation, execution and performance of this Agreement and
the transactions contemplated hereby.
"Former Superior Proposal" has the meaning assigned in Section 6.03(d).
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any national, federal, regional, state,
provincial, local, foreign or other governmental authority or instrumentality,
legislative body, court, administrative agency, regulatory body, commission or
instrumentality, including any multinational authority having governmental or
quasi-governmental powers, or any industry self-regulatory authority.
"Hazardous Substances" has the meaning assigned in Section 5.03(p)(4).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"Indemnified Party" has the meaning assigned in Section 6.10(a).
"Intellectual Property Rights" shall mean intellectual property rights
arising from or in respect to the following: (i) fictional business names, trade
names, trademarks and service marks, logos, Internet domain names, and general
intangibles of a like nature (collectively, "Marks"); (ii) patents and
applications therefor, including continuation, divisional, continuation-in-part,
or reissue patent applications and patents issuing thereon (collectively,
"Patents"); (iii) copyrights and registrations and applications therefor
(collectively, "Copyrights") and mask work rights; (iv) know-how, inventions,
discoveries, concepts, methods, processes, designs, formulae,
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technical data, drawings, specifications, data bases and other proprietary and
confidential information, including customer lists (collectively, "Trade
Secrets"); and (v) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, databases and compilations, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing (collectively,
"Software").
"Law" means any foreign or domestic law, statute, code, ordinance, rule,
regulation, order, judgment, writ, stipulation, award, injunction, decree or
arbitration award or finding.
"Lease" has the meaning assigned in Section 5.03(l)(1).
"Leased Real Property" has the meaning assigned in Section 5.03(l)(1).
"Liability" has the meaning assigned in Section 5.03(p)(2).
"Lien" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Cephalon or CIMA, any
change, event or effect that:
(a) is, or would reasonably be expected to be, material and adverse
to the financial condition, results of operations or business of such party and
its Subsidiaries, taken as a whole, except, in each case, for any such change,
event or effect resulting from or arising out of (i) changes or developments in
(x) the specialty pharmaceutical industry generally, (y) the financial, banking,
currency or capital markets or the economy in general, or (z) Laws of general
applicability (or interpretations thereof by Governmental Authorities), which
changes or developments in each case do not disproportionately affect such party
in any material respect; (ii) the execution or public announcement of this
Agreement and the transactions contemplated hereby; (iii) any reduction in such
party's stock price or trading volume, in and of itself, (iv) a stockholder
class action litigation arising from allegations of a breach of fiduciary duty
relating to this Agreement; (v) changes in GAAP or regulatory accounting
requirements applicable to specialty pharmaceutical companies generally; (vi)
actions or omissions of a party to this Agreement, taken with the prior written
consent of the other party to this Agreement, in contemplation of the
transactions contemplated hereby; or (vii) to the extent consistent with GAAP,
any modifications or changes to valuation policies or practices, or
restructuring charges, in each case taken with the prior written consent of the
other party to this Agreement; or
(b) would be reasonably likely to prevent the Merger.
"Material Contracts" has the meaning assigned in Section 5.03(r)(1).
"Merger" has the meaning assigned in the Background Statement.
"MergerCo" has the meaning assigned in the preamble.
"Merger Consideration" has the meaning assigned in Section 3.01(a).
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"Nasdaq" shall mean the Nasdaq National Market tier of The Nasdaq Stock
Market.
"OIG" has the meaning assigned in Section 5.03(o)(6).
"other party" means, with respect to Cephalon, CIMA; and with respect to
CIMA, Cephalon.
"Owned Intellectual Property" has the meaning assigned in Section 5.03(m).
"Owned Real Property" has the meaning assigned in Section 5.03(k).
"Pension Plan" has the meaning assigned in Section 5.03(u)(2).
"Permits" has the meaning assigned in Section 5.03(q)(1).
"Person" is to be interpreted broadly to include any individual,
corporation, limited liability company, partnership, association, joint-stock
company, business trust or unincorporated organization.
"Previously Disclosed" means information or exceptions set forth by a
party in its Disclosure Letter, provided that (i) such information or exceptions
are set forth by specific subsection references, and (ii) any matter disclosed
in any section of a party's Disclosure Letter shall be considered disclosed for
other sections of such Disclosure Letter, but only to the extent such matter on
its face would reasonably be expected to be pertinent to a particular section of
a party's Disclosure Letter in light of the disclosure made in such section.
"Proxy Statement" has the meaning assigned in Section 6.02(a).
"Qualifying Amendment" has the meaning assigned in Section 6.02(d).
"Regulatory Filings" has the meaning assigned in Section 5.03(h)(1).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal, accounting or financial advisors, agents
or any representatives of such legal, accounting or financial advisors.
"Requisite Regulatory Approvals" has the meaning assigned in Section
6.09(a)(2).
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any other Person
any right to subscribe for or acquire, or any options, warrants, calls or
commitments relating to, or any stock appreciation right or other instrument the
value of which is determined in whole or in part by reference to the market
price or value of, shares of capital stock of such first Person.
"SEC" means the United States Securities and Exchange Commission.
"Secretary of State" means the Secretary of State of the State of
Delaware.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Subsidiary" and "Significant Subsidiary" have the meanings assigned to
those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
"Superior Proposal," with respect to CIMA, means an unsolicited, bona fide
written offer or proposal (on its most recently amended or modified terms, if
amended or modified) made by a Person (other than Cephalon and its Affiliates):
(i) to acquire, directly or indirectly, pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, asset acquisition, stock
issuance or other similar transaction, all or substantially all of the assets of
such party or a majority of the total outstanding voting securities of such
party, (ii) on terms that the Board of Directors of such party concludes in good
faith to be more favorable to its stockholders than the Merger and the other
transactions contemplated by this Agreement (including any revisions hereto), in
each case (A) after receiving the advice of its financial advisors (who shall be
a nationally recognized investment banking firm), (B) after taking into account
the likelihood of consummation of such transaction on the terms set forth
therein (as compared to, and with due regard for, the terms herein) and (C)
after taking into account all legal (after receiving the advice of outside
counsel), financial (including the financing terms of any such proposal),
regulatory and other aspects of such proposal and any other relevant factors
permitted under applicable law, and (iii) that is, in the good faith judgment of
the Board of Directors of such party, reasonably likely to be completed and
financed.
"Superior Proposal Notice" has the meaning assigned in Section 6.03(c)(4).
"Surviving Corporation" has the meaning assigned in Section 2.01.
"Takeover Laws" has the meaning assigned in Section 5.03(z).
"Takeover Provisions" has the meaning assigned in Section 5.03(z).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including all
net income, gross income, gains, gross receipts, sales, use, ad valorem, goods
and services, capital, production, transfer, franchise, windfall profits,
license, withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental, unemployment
or other taxes, custom duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority whether disputed or not or
arising before, on or after the Effective Time.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"Termination Date" has the meaning assigned in Section 8.01(f).
"Treasury Regulations" means the regulations promulgated under the Code.
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1.02 Interpretation.
(a) In this Agreement, except as the context may otherwise require,
references:
(1) to the Preamble, Background Statement, Sections, Exhibits,
Annexes or Schedules are to the Preamble to, the Background Statement or Section
of, or Exhibit, Annex or Schedule to, this Agreement;
(2) to this Agreement are to this Agreement, and the Exhibits,
Annexes and Schedules to it, taken as a whole;
(3) to any agreement (including this Agreement), contract,
statute or regulation are to the agreement, contract, statute or regulation as
amended, modified, supplemented or replaced from time to time (in the case of an
agreement or contract, to the extent permitted by the terms hereof); and to any
section of any statute or regulation are to any successor to the section;
(4) to the "transactions contemplated hereby" includes the
transactions provided for in this Agreement (including the Annexes to it); and
(5) to any Governmental Authority includes any successor to
that Governmental Authority.
(b) The table of contents and article and section headings are for
reference purposes only and do not limit or otherwise affect any of the
substance of this Agreement.
(c) The words "include," "includes" or "including" are to be deemed
followed by the words "without limitation."
(d) The words "herein," "hereof" or "hereunder," and similar terms
are to be deemed to refer to this Agreement as a whole and not to any specific
Section.
(e) This Agreement is the product of negotiation by the parties,
having the assistance of counsel and other advisers. The parties intend that
this Agreement not be construed more strictly against either Cephalon or CIMA.
ARTICLE II
THE MERGER
2.01 The Merger. Upon the terms and subject to satisfaction or waiver of
the conditions set forth in this Agreement, and in accordance with the DGCL, at
the Effective Time, MergerCo shall be merged with and into CIMA; and following
the Merger, the separate corporate existence of MergerCo shall cease and CIMA
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation") and as a wholly owned Subsidiary of Cephalon.
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2.02 Closing. The closing of the Merger (the "Closing") shall take place
in the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the third Business Day after satisfaction or
waiver (subject to applicable Law) of the conditions set forth in Article VII,
other than those conditions that by their nature cannot be satisfied until the
Closing, but subject to the fulfillment or waiver of those conditions, unless
this Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the actual
date of the Closing, the "Closing Date").
2.03 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on the Closing Date, the parties shall cause the Merger to be
consummated by filing with the Secretary of State a certificate of merger with
respect to the Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL. The parties shall make all other filings
required under the DGCL, and the Merger shall become effective at the time of
filing of the Certificate of Merger, or such later date and time as Cephalon and
CIMA shall agree and shall specify in the Certificate of Merger (the time the
Merger becomes effective being referred to herein as the "Effective Time").
2.04 Effects of the Merger. The Merger shall have the effects prescribed
in the applicable provisions of the DGCL and this Agreement. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, (a)
all the property, rights, privileges, powers and franchises of CIMA and MergerCo
shall be vested in Surviving Corporation, and (b) all debts, liabilities and
duties of CIMA and MergerCo shall become the debts, liabilities and duties of
Surviving Corporation.
2.05 Certificates of Incorporation and By-laws.
(a) The certificate of incorporation of CIMA, as in effect
immediately before the Effective Time, shall be amended in the Merger to read in
its entirety as specified in Annex 1 and, as so amended, shall be the
certificate of incorporation of Surviving Corporation as of the Effective Time
until thereafter changed or amended as provided therein or by applicable Law.
(b) The by-laws of CIMA, as in effect immediately before the
Effective Time, shall be amended in the Merger to read in their entirety as set
forth in Annex 2 until thereafter changed or amended as provided therein or by
applicable Law. Such bylaws shall not be inconsistent with Section 6.10(b).
2.06 Board of Directors and Officers. The Board of Directors of Surviving
Corporation shall be the Board of Directors of MergerCo immediately prior to the
Effective Time and the officers of Surviving Corporation shall be the officers
of MergerCo immediately prior to the Effective Time, in each case, until the
earlier of their respective resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Consideration; Effect on Capital Stock of CIMA and MergerCo. At the
Effective Time, by virtue of the Merger and without any action on the part of
CIMA, MergerCo or any holder of CIMA Common Stock or MergerCo Common Stock:
(a) Each share of CIMA Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of CIMA Common Stock
held by CIMA or owned by Cephalon or MergerCo, all of which shall be canceled as
provided in Section 3.01(b), and shares of CIMA Common Stock held by Dissenting
Stockholders) shall be converted into the right to receive $34.00, without
interest, in cash (the "Merger Consideration").
(b) Each share of CIMA Common Stock held by CIMA or owned by
Cephalon or MergerCo immediately prior to the Effective Time shall, by virtue of
the Merger, cease to be outstanding and shall be canceled, and no Merger
Consideration or other consideration shall be delivered in exchange therefor.
(c) All shares of CIMA Common Stock outstanding immediately prior to
the Effective Time shall cease to be outstanding and shall be canceled and shall
cease to exist, and each holder of a certificate or certificates which
immediately prior to the Effective Time represented any such shares of CIMA
Common Stock ("CIMA Certificates") shall thereafter cease to have any rights
with respect to such shares of CIMA Common Stock, except as provided herein or
by Law, and each CIMA Certificate previously representing such shares shall
thereafter represent the right to receive the Merger Consideration payable in
respect of such shares of CIMA Common Stock.
(d) Each share of MergerCo Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and non-assessable share of common stock, par value $0.01 per
share, of Surviving Corporation.
3.02 Certain Adjustments. If, between the date of this Agreement and the
Effective Time, the outstanding shares of CIMA Common Stock shall have been
changed into, or exchanged for, a different number of shares or a different
class, by reason of any reclassification, recapitalization, stock split,
split-up, combination or exchange of shares or a stock dividend or dividend
payable in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred, the Merger Consideration shall
be correspondingly adjusted to provide to the holders of CIMA Common Stock and
CIMA Stock Options the same economic effect as contemplated by this Agreement
prior to such event.
3.03 Exchange Procedures.
(a) As of the Effective Time, Cephalon shall deposit, or cause to be
deposited, with U.S. Bank National Association or, in the event U.S. Bank
National Association is unwilling or unable to serve as the exchange agent, such
other commercial bank or trust company of recognized standing reasonably
acceptable to CIMA and Cephalon (in such capacity, the "Exchange Agent"), for
the benefit of the holders of the CIMA Certificates, for
11
exchange, in accordance with this Article III, through the Exchange Agent, cash
representing the Merger Consideration payable to the holders of CIMA
Certificates pursuant to Section 3.01. Cash deposited with the Exchange Agent
shall hereinafter be referred to as the "Exchange Fund." The Exchange Agent
shall, pursuant to irrevocable instructions, deliver out of the Exchange Fund
the Merger Consideration contemplated to be paid for shares of CIMA Common Stock
pursuant to this Agreement. The Exchange Fund shall not be used for any other
purpose.
(b) Promptly after the Effective Time, Cephalon shall cause the
Exchange Agent to mail to each holder of record of a CIMA Certificate:
(1) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the CIMA Certificates shall
pass, only upon proper delivery of the CIMA Certificates to the Exchange Agent,
and which letter shall be in customary form and have such other provisions as
Cephalon may reasonably specify (such letter to be reasonably acceptable to CIMA
prior to the Effective Time); and
(2) instructions for effecting the surrender of the CIMA
Certificates in exchange for the Merger Consideration. Upon surrender of a CIMA
Certificate to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may reasonably be required by the Exchange Agent, the holder
of such CIMA Certificate shall be entitled to receive in exchange therefor a
check in the amount equal to the cash that such holder has the right to receive
pursuant to the provisions of this Article III. No interest will be paid or will
accrue on any cash deliverable pursuant to this Article III. In the event of a
transfer of ownership of CIMA Common Stock which is not registered in the
transfer records of CIMA, a check in the proper amount of cash representing the
Merger Consideration may be issued with respect to such CIMA Common Stock to
such a transferee if the CIMA Certificates formerly representing such shares of
CIMA Common Stock are presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 3.03(b), each CIMA Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration payable in respect of the shares of CIMA
Common Stock formerly represented by such CIMA Certificate or the right, if any,
to receive payment from the Surviving Corporation of the "fair value" of such
shares of CIMA Common Stock as determined in accordance with Section 262 of the
DGCL.
3.04 Further Ownership Rights. All cash paid upon conversion of shares of
CIMA Common Stock in accordance with the terms of Article II and this Article
III shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of CIMA Common Stock.
3.05 Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of CIMA Certificates for six months after
the Effective Time shall be delivered to Surviving Corporation or otherwise on
the instruction of Surviving Corporation, and any holders of the Certificates
who have not theretofore complied with this Article III shall thereafter look
only to Cephalon for the Merger Consideration payable with respect to the shares
of CIMA Common Stock formerly represented thereby to which such
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holders are entitled pursuant to this Article III without any interest thereon.
Any such portion of the Exchange Fund remaining unclaimed by holders of
Certificates five years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any Governmental Authority) shall, to the extent permitted by
Law, become the property of Cephalon free and clear of any claims or interest of
any Person previously entitled thereto.
3.06 No Liability. None of Cephalon, CIMA, MergerCo, Surviving Corporation
or the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar laws.
3.07 Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Cephalon on a daily basis;
provided that no such gain or loss thereon shall affect the amounts payable to
the CIMA stockholders pursuant to Article II and the other provisions of this
Article III. Any interest and other income resulting from such investments shall
promptly be paid to Cephalon. In the event the cash in the Exchange Fund shall
be insufficient to fully satisfy all of the payment obligations to be made by
the Exchange Agent hereunder, Cephalon shall promptly deposit cash into the
Exchange Fund in an amount which is equal to the deficiency in the amount of
cash required to fully satisfy such payment obligations.
3.08 Lost Certificates. If any CIMA Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such CIMA Certificate to be lost, stolen or destroyed and, if required
by Cephalon, the posting by such Person of a bond, in such reasonable amount as
Cephalon may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will pay in exchange for
such lost, stolen or destroyed CIMA Certificate the applicable Merger
Consideration payable with respect to the shares of CIMA Common Stock formerly
represented thereby without any interest thereon.
3.09 Withholding Rights. Each of Surviving Corporation, Cephalon and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of CIMA
Common Stock or any holder of CIMA Stock Options or any other equity rights in
CIMA, such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the Treasury Regulations or any
provision of state, local or foreign Tax Law. To the extent that amounts are so
withheld by Surviving Corporation, Cephalon or the Exchange Agent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of CIMA Common Stock
or the holder of CIMA Stock Options or any other equity rights in CIMA, as
applicable, in each case, in respect of which such deduction and withholding was
made by Surviving Corporation, Cephalon or the Exchange Agent, as the case may
be.
3.10 Further Assurances. After the Effective Time, the officers and
directors of Surviving Corporation shall be authorized to execute and deliver,
in the name and on behalf of CIMA or MergerCo, any deeds, bills of sale,
assignments or assurances and to take and do, in the
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name and on behalf of CIMA or MergerCo, any other actions and things to vest,
perfect or confirm of record or otherwise in Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by Surviving Corporation as a result of, or in
connection with, the Merger.
3.11 Stock Transfer Books. The stock transfer books of CIMA shall be
closed immediately upon the Effective Time; and thereafter, there shall be no
further registration of transfers of shares of CIMA Common Stock outstanding as
of the Effective Time on the records of CIMA. On or after the Effective Time,
any CIMA Certificates presented to the Exchange Agent, Cephalon or Surviving
Corporation for any reason shall be converted into the right to receive the
Merger Consideration with respect to the shares of CIMA Common Stock formerly
represented thereby or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such shares of CIMA Common Stock as
determined in accordance with Section 262 of the DGCL.
3.12 CIMA Stock Options. Each option to purchase CIMA Common Stock (a
"CIMA Stock Option") that was granted pursuant to the CIMA Stock Plans prior to
the Effective Time, whether or not then exercisable or vested at the Effective
Time, and which remains outstanding immediately prior to the Effective Time,
shall cease to represent a right to acquire shares of CIMA Common Stock and
shall, at the Effective Time, be converted into the right to receive an amount
in cash equal to $34.00, less an amount equal to (a) the exercise price for such
CIMA Stock Option plus (b) any applicable tax withholding amounts.
Notwithstanding the preceding sentence, any CIMA Stock Option with respect to
which the applicable exercise price per share is greater than or equal to $34.00
shall be fully exercisable prior to the Effective Time in accordance with the
terms of the CIMA Stock Plans, and any such CIMA Stock Option that is not
exercised prior to the Effective Time shall be canceled as of the Effective Time
and holders of such CIMA Stock Options shall not receive any consideration for
the cancellation of such CIMA Stock Options. Cephalon or the Surviving
Corporation shall pay the cash consideration to be paid for the CIMA Stock
Options, via check, as promptly as practicable but, in any event, within ten
Business Days after the Effective Time.
3.13 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, if any holder of CIMA common stock shall demand to be paid the "fair
value" of such holder's shares of CIMA Common Stock, as provided in Section 262
of the DGCL, such shares shall not be converted into or exchangeable for the
right to receive the Merger Consideration except as provided in this Section
3.13, and CIMA shall give Cephalon notice thereof and Cephalon shall have the
right to participate in all negotiations and proceedings with respect to any
such demands. Neither CIMA nor the Surviving Corporation shall, except with the
prior written consent of Cephalon, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively withdrawn or lost
the right to dissent, the shares of CIMA Common Stock held by such Dissenting
Stockholder shall thereupon be treated as though such shares had been converted
into the Merger Consideration pursuant to Section 3.01.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.01 CIMA Forbearances. CIMA agrees that from the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, as required
by applicable Law or as Previously Disclosed, without the prior written consent
of the Chief Executive Officer of Cephalon (which consent will not be
unreasonably withheld or delayed), it will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. (1) Conduct its business and the business of
its Subsidiaries other than in the ordinary and usual course in substantially
the same manner as heretofore conducted, (2) fail to use commercially reasonable
efforts to preserve intact their business organizations, assets (including
Intellectual Property Rights) and goodwill, maintain their rights, licenses,
franchises and authorizations and their existing relations with customers,
suppliers, licensees, licensors and business associates having material business
relationships with them and keep available the services of their current
employees, officers and other managers; provided, that the foregoing shall not
preclude the termination of employees in the ordinary course of business, or (3)
take any action reasonably likely to materially impair its ability to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby.
(b) Operations. Enter into any new material line of business.
(c) Capital Stock. Issue, authorize for issuance, sell, or otherwise
permit to become outstanding, or dispose of or encumber or pledge, or authorize
or propose the creation of, any additional shares of its capital stock or any
Rights related thereto or any other securities in respect of or in substitution
for shares of its capital stock, other than pursuant to Rights outstanding on
the date of this Agreement pursuant to written agreements or plans.
(d) Dividends, Distributions, Repurchases. (1) Make, declare, pay or
set aside for payment any dividend payable in cash, stock or property on, or in
respect of, or declare or make any distribution on, any shares of its capital
stock (other than dividends and distributions from its wholly owned Subsidiaries
to it or another of its wholly owned Subsidiaries) or (2) directly or
indirectly, adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire any shares of its capital stock or any Rights related thereto.
(e) Dispositions; Licenses. Sell, transfer, mortgage, encumber,
lease, license or otherwise dispose of or discontinue any of its assets
(including Intellectual Property Rights), business or properties, except for
sales, transfers, mortgages, encumbrances, licenses or other dispositions or
discontinuances (1) in the ordinary course of business consistent with past
practice or its current strategic plans as disclosed to Cephalon prior to the
date hereof, including sales of inventory and other current assets and licenses
of Intellectual Property Rights, (2) in a transaction that, together with other
such transactions, is not material to it and its Subsidiaries, taken as a whole,
(3) transactions between it and any of its respective direct or indirect wholly
owned Subsidiaries or between such wholly owned Subsidiaries, or (4) pursuant to
Section 6.09(b).
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(f) Acquisitions. Acquire (1) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or Person or division thereof, or (2) any assets, except in the
case of each of clause (1) and (2) above, (x) acquisitions of inventory,
Intellectual Property Rights and other items in the ordinary course of business
consistent with past practice, or (y) acquisitions the total consideration for
which does not exceed $10,000,000 individually and $20,000,000 in the aggregate
(excluding contingent milestone and royalty payments not required to be
reflected on a balance sheet as of the date of such acquisition prepared in
accordance with GAAP), provided that any such acquisitions do not present a
material risk that the Closing Date will be materially delayed or that the
Requisite Regulatory Approvals will be more difficult to obtain in any material
respect.
(g) Constituent Documents. Amend, alter or modify its Constituent
Documents (or similar governing documents).
(h) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
GAAP (as advised by its regular independent accountants) or applicable
regulatory accounting requirements.
(i) [Intentionally Omitted]
(j) Indebtedness and Investments. (1) Incur any indebtedness for
borrowed money or guarantee or otherwise become contingently liable for any such
indebtedness of another Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities, guarantee or otherwise become
contingently liable for any debt securities of another Person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect of any
of the foregoing, except for borrowings incurred in the ordinary course of
business consistent with past practice and except for intercompany indebtedness
between it and any of its respective direct or indirect wholly owned
Subsidiaries or between such wholly owned Subsidiaries, or (2) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than between it and any of its direct or indirect wholly owned Subsidiaries or
between such Subsidiaries, and other than investments made in the ordinary
course of business consistent with past practice.
(k) Noncompetes; Exclusivity Arrangements. Other than in the
ordinary course of business consistent with past practice or its current
strategic plans as disclosed to the other party prior to the date hereof, enter
into any agreement or arrangement that (1) limits or otherwise restricts it or
its respective Affiliates or any successor thereto, from engaging or competing
in any line of business, field or geographic area or with respect to the
development, license or supply of any pharmaceutical product or delivery device
or (2) provides exclusive rights or licenses to a third Person with respect to
Intellectual Property Rights.
(l) Capital Expenditures. Make or agree to make any new capital
expenditure or expenditures in the aggregate in excess of the amount Previously
Disclosed.
(m) Contracts. (1) Other than in the ordinary course of business,
enter into any agreement or agreements involving aggregate payments by it and
its Subsidiaries that are
16
material to it and its Subsidiaries taken as a whole, or (2) terminate or
materially and adversely amend, modify or change any Material Contract or waive,
release, transfer or assign any material rights or claims thereunder, other than
in the ordinary course of business consistent with past practice, or (3) enter
into any agreement with respect to the voting of its capital stock or any
securities held by it or any of its Subsidiaries.
(n) Taxes. Make any tax election or amend any Tax Return that,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the tax liability of the Person making the election, or settle
or compromise any material income tax liability.
(o) Litigation. Waive, release, assign, settle, discharge, pay,
satisfy or compromise any material rights or claims, or any material litigation
or arbitration in a manner that is materially adverse to it.
(p) Standstill. Modify, amend or terminate, or waive, release or
assign, any material rights or claims with respect to any confidentiality or
standstill agreement to which it is a party and which relates to a business
combination; provided that if it receives an Acquisition Proposal and its Board
of Directors concludes in good faith, after consultation with a nationally
recognized financial advisor and its outside legal counsel, that such
Acquisition Proposal constitutes a Superior Proposal (and continues to
constitute a Superior Proposal after taking into account any amendment or
modification to this Agreement proposed by the other party hereto during any
three Business Day period referenced in Section 6.03(d)), or its Board of
Directors concludes in good faith, after consultation with a nationally
recognized financial advisor and its outside legal counsel, that there is a
reasonable likelihood that such Acquisition Proposal would reasonably be
expected to result in a Superior Proposal, then it may waive material rights
under any standstill provision with the Person making such Acquisition Proposal
to the extent necessary to permit such Person to engage in discussions or
negotiations with it with respect to such Acquisition Proposal.
(q) Affiliate Transactions. Other than in the ordinary course of
business consistent with past practice, engage in any transactions, or enter
into any contract, agreement or arrangement, except as disclosed in filings with
the SEC prior to the date of this Agreement, with any Affiliate (other than any
Subsidiary) or amend, waive or relinquish any rights relating to any such
transaction, contract, agreement or arrangement.
(r) Benefit Arrangements. Except as required by law or contemplated
hereby, enter into, adopt or amend in any material respect or terminate any
Benefit Arrangement, or materially change any actuarial or other assumption used
to calculate funding obligations with respect to any Pension Plan, or change the
manner in which contributions to any Pension Plan are made or the basis on which
such contributions are determined.
(s) Employee Benefits. (1) Except for normal increases in the
ordinary course of business that, in the aggregate, do not materially increase
benefits or compensation expenses, or except as expressly contemplated hereby,
increase the compensation of any director, officer or other key employee or pay
or vest any benefit or amount not expressly required to be paid or vested by a
Benefit Arrangement as in effect on the date of this Agreement to any such
Person or (2) enter into any agreement with respect to, or pay (except as
required pursuant to Benefits
17
Arrangements (including employment contracts) in effect as of the date of this
Agreement), any severance, termination, parachute, change-in-control, stay bonus
or similar compensation or benefit.
(t) Takeover Statutes. Take any action to render inapplicable, or to
exempt any third party from, (1) the provisions of Section 203 of the DGCL, or
(2) any other state Takeover Law or state Law that purports to limit or restrict
business combinations or the ability to acquire or vote shares.
(u) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02 CIMA and Cephalon Forbearances. Except as required by applicable Law,
CIMA and Cephalon shall not, and shall not permit any of their respective
Subsidiaries to, voluntarily take any action that would, or that would
reasonably be expected to, (i) result in any of the conditions to the
consummation of the Merger not being satisfied, (ii) materially impair,
materially delay or prevent the consummation of the Merger and the other
transactions contemplated hereby or (iii) enter into any contract with respect
to, or otherwise agree or commit to do, any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Letters. Before entry into this Agreement, CIMA delivered
to Cephalon a disclosure letter, and Cephalon delivered to CIMA a disclosure
letter (respectively, each disclosure letter a "Disclosure Letter"), setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more representations or
warranties contained in Section 5.03 (with respect to CIMA); Section 5.04 (with
respect to Cephalon); and Section 5.05 (with respect to MergerCo), as the case
may be, or to one or more of its covenants contained in Articles IV and VI;
provided that the mere inclusion of an item in a Disclosure Letter as an
exception to representation or warranty will not be deemed an admission by a
party that such item is material or was required to be disclosed therein.
5.02 Standard. For all purposes of this Article V, no representation or
warranty of CIMA, Cephalon or MergerCo contained in Section 5.03, Section 5.04
or Section 5.05 (other than the representations and warranties contained in
Sections 5.03(b) and 5.05(a), which shall be true in all material respects) will
be deemed untrue, and no party will be deemed to have breached a representation
or warranty as a consequence of the existence of any fact, event or circumstance
unless such fact, circumstance or event, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 5.03, Section 5.04 or Section 5.05 (read for this
purpose without regard to any individual reference to "materiality" or "material
adverse effect"), has had or is reasonably likely to have a Material Adverse
Effect with respect to CIMA or Cephalon, as the case may be.
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5.03 Representations and Warranties of CIMA. Except as Previously
Disclosed, CIMA hereby represents and warrants to Cephalon, as follows:
(a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified or licensed to do
business and is in good standing in all jurisdictions where its ownership or
leasing of property or assets or its conduct of business requires it to be so
qualified.
(b) CIMA Stock.
(1) The authorized capital stock of CIMA consists of
60,000,000 shares of CIMA Common Stock and 5,000,000 shares of CIMA Preferred
Stock. As of October 31, 2003, (i) 14,522,740 shares of CIMA Common Stock and no
shares of CIMA Preferred Stock were outstanding, (ii) 1,739,843 shares of CIMA
Common Stock were subject to CIMA Stock Options under the CIMA Stock Plans,
(iii) 4,725,617 shares of CIMA Common Stock were reserved for issuance under the
CIMA Stock Plans, (iv) 619,425 shares of CIMA Common Stock were held in the
treasury of CIMA and (v) 5,000,000 shares of CIMA Preferred Stock were
designated as Series A Junior Participating Preferred Stock, none of which were
outstanding. The outstanding shares of CIMA Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and nonassessable,
and subject to no preemptive rights (and were not issued in violation of any
preemptive rights). CIMA has heretofore furnished Cephalon complete and correct
copies of the Constituent Documents of CIMA and such Constituent Documents are
in full force and effect. CIMA is not in violation of any of the provisions of
its Constituent Documents.
(2) Except as set forth above, and except for CIMA Stock
Options issued and outstanding, CIMA Rights under the CIMA Rights Agreement and
outstanding purchase rights under the CIMA Stock Purchase Plan, as of the date
of this Agreement, there are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement and also including any rights plan or
other anti-takeover agreement, obligating CIMA to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of CIMA Common Stock or
obligating CIMA or to grant, extend or enter into any such agreement or
commitment. As of the date hereof, there are no obligations, contingent or
otherwise, of CIMA to (i) repurchase, redeem or otherwise acquire any shares of
CIMA Common Stock except in connection with the exercise of CIMA Stock Options
issued and outstanding or (ii) provide material funds (in the form of a loan,
capital contribution or other investment) to, or make any material investment in
(in the form of a loan, capital contribution or other investment), or provide
any material guarantee with respect to the obligations of, any Person. There are
no outstanding stock appreciation rights or similar derivative securities or
Rights of CIMA. There are no bonds, debentures, notes or other indebtedness of
CIMA having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
CIMA may vote. There are no voting trusts, irrevocable proxies or other
agreements or understandings to which CIMA is a party or is bound with respect
to the voting of any shares of CIMA Common Stock. CIMA has not agreed to
register any securities under the Securities Act or under any state securities
law or granted registration rights to any Person or entity (except rights which
have
19
terminated or expired). CIMA has no outstanding obligations in respect of prior
acquisitions of businesses to pay, in the form of securities, cash or other
property, any portion of the consideration payable to the seller or sellers in
such transaction. As of the date hereof, CIMA has no Subsidiaries.
(3) CIMA has previously made available to Cephalon complete
and correct copies of the CIMA Stock Plans, the CIMA Stock Purchase Plan, and
the CIMA Rights Agreement, including, in each case, all amendments thereto. CIMA
has previously made available to Cephalon a complete and correct list setting
forth as of October 28, 2003, (i) the number of CIMA Stock Options outstanding
(listing grantee and exercise price), and (ii) the weighted average exercise
price for all outstanding CIMA Stock Options, and complete and correct copies of
the relevant written agreements, including amendments thereto, evidencing the
grant of outstanding CIMA Stock Options.
(c) [Intentionally Omitted]
(d) Subsidiaries.
(1) (A) It owns, directly or indirectly, all the outstanding
equity securities of each of its Subsidiaries free and clear of any Liens, (B)
no equity securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly owned Subsidiaries) by reason of any
Right or otherwise, (C) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly owned Subsidiaries), (D) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose of
such securities and (E) all the equity securities of each Subsidiary held by it
or its Subsidiaries have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable and free of preemptive rights. It has
no investment in any other entity other than its Subsidiaries.
(2) Each of its Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in all
jurisdictions where its ownership or leasing of property or its conduct of
business requires it to be so qualified.
(3) Each of its direct and indirect Subsidiaries in existence
on the date hereof is listed on Section 5.03(d)(3) of its Disclosure Letter.
(e) Power. It and each of its Subsidiaries has the corporate (or
comparable) power and authority to carry on its business as it is now being
conducted and to own, lease and operate all its properties and assets; and it
has the corporate (or comparable) power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
(f) Authority. It has duly authorized and validly executed and
delivered this Agreement. This Agreement and the transactions contemplated
hereby have been approved by the CIMA Board, and duly and validly authorized by
all necessary respective corporate action applicable to it, subject only to
receipt of the affirmative vote of the holders of a majority of the
20
outstanding shares of CIMA Common Stock to adopt this Agreement (the "CIMA
Stockholder Approval"). This Agreement is its valid and legally binding
obligation, enforceable in accordance with the terms hereof (except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity principles).
CIMA represents to Cephalon that the CIMA Stockholder Approval is the only vote
of the holders of any class or series of capital stock of CIMA required to adopt
this Agreement.
(g) Regulatory Approvals; No Defaults.
(1) No consents or approvals of, or filings or registrations
with, or notice to, or authorizations, permits or declarations of, any
Governmental Authority or with any other Person are required to be made or
obtained by it or any of its Subsidiaries in connection with the execution,
delivery or performance by it of this Agreement or to consummate the Merger
except for (A) filing of notices, and expiration of the related waiting period,
under the HSR Act, (B) filings of applications and notices with, and receipt of
approvals or nonobjections from, the SEC and state securities authorities, the
National Association of Securities Dealers, Inc. and Nasdaq, (C) filings under
the Exchange Act, (D) receipt of the CIMA Stockholder Approval and (E) the
filing of the Certificate of Merger.
(2) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
(A) constitute a breach or violation of, or a default under (or an event which
with notice or lapse of time or both would become a default), result in any loss
of any benefit under, give rise to any Lien, any acceleration of remedies or any
penalty, increase any benefit or right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture, note, mortgage, lease or other contract, commitment,
agreement or instrument to which it or of any of its Subsidiaries or its or
their properties is subject or bound, (B) conflict with, constitute a breach or
violation of, or a default under, its Constituent Documents or those of any of
its Subsidiaries or (C) assuming that the regulatory consents, approvals,
authorizations, permits and declarations described in Section 5.03(g)(1) have
been obtained and all filings and notifications described in Section 5.03(g)(1)
have been made and the expiration or termination of related waiting periods,
conflict with, violate or require any consent or approval under any such Law
applicable to it or its Subsidiaries or by which any of its or its Subsidiaries'
property or assets is bound.
(3) As of the date hereof, it is not aware of any reason why
the necessary regulatory approvals and consents will not be received in order to
permit consummation of the Merger.
(h) Financial Reports and Regulatory Documents.
(1) It has timely filed its Annual Reports on Form 10-K for
the fiscal years ended December 31, 2000, 2001 and 2002, and all other reports,
registration statements, prospectuses, forms, definitive proxy statements,
schedules and documents (including all exhibits, post-effective amendments and
supplements thereto) required to be filed by it or any of its Subsidiaries
subsequent to December 31, 2000 under the Securities Act or the Exchange Act
21
(collectively, its "Regulatory Filings"). Each of its Regulatory Filings, as of
the date filed, (A) complied in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, 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 to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. As of the date of this Agreement, none of its Subsidiaries
is subject to the periodic reporting requirements of the Exchange Act.
(2) Each of the consolidated financial statements (including
the notes and schedules thereto) contained in the Regulatory Filings were
prepared in accordance with GAAP as in effect on the date of such report applied
on a consistent basis throughout the periods involved (except as may be
indicated therein or in the notes thereto) and each fairly presented in all
material respects the consolidated financial position, results of operations and
cash flows of it and its consolidated Subsidiaries as at the respective dates
thereof for the periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which did not and would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on it or its Subsidiaries, taken as a whole). Its books and
records and those of its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
(3) As of the date hereof, except as and to the extent set
forth on its and its consolidated Subsidiaries' consolidated balance sheet as of
December 31, 2002 included in its Annual Report on Form 10-K for the year ended
December 31, 2002 (including the notes thereto), or as set forth on a
consolidated balance sheet (including the notes thereto) included in Regulatory
Filings filed with the SEC after December 31, 2002 and prior to the date of this
Agreement, neither it nor any of its Subsidiaries has any Liabilities of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto prepared in
accordance with GAAP, except for (i) Liabilities incurred in the ordinary course
of business since December 31, 2002, (ii) Liabilities which are accrued or
reserved against and reflected in the Company's consolidated financial
statements as of December 31, 2002, and (iii) Liabilities incurred in connection
with this Agreement.
(i) Absence of Certain Changes or Events. From December 31, 2002 to
the date hereof (except as disclosed in its Annual Report on Form 10-K for the
year ended December 31, 2002 or in its other Regulatory Filings (including the
notes thereto) filed after December 31, 2002 and prior to the date of this
Agreement), it and its Subsidiaries have conducted their businesses in the
ordinary course of business consistent with past practice and, since December
31, 2002, there has not been (1) any change, event, or development that,
individually or in the aggregate, has had or would be reasonably likely to have
a Material Adverse Effect with respect to it and its Subsidiaries, taken as a
whole, (2) any change, event or development that would, individually or in the
aggregate, reasonably be expected to prevent it from performing its obligations
under this Agreement or consummating the transactions contemplated hereby, (3)
any declaration, payment or setting aside for payment of any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, other than dividends or distributions by any of
its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries,
any sale, transfer, mortgage, pledge or other disposition of (or grant of
permission for any of the foregoing), or encumbrance on, any assets or
22
properties, real, personal or mixed, material to it and its Subsidiaries taken
as a whole, (5) any increase in any manner of the compensation of any of its or
any of its Subsidiaries' officers, directors or Employees, or entrance into,
establishment, amendment or termination of any Benefits Arrangement with, for or
in respect of, any officer, director, or Employee of it or any of its
Subsidiaries other than pursuant to the terms of agreements in effect prior to
December 31, 2002 or in the ordinary course of business consistent with past
practice, or (6) the entering into of any agreement or commitment to do any of
the foregoing.
(j) Litigation. Except as Previously Disclosed or set forth in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2002 or
Regulatory Filings filed with the SEC since December 31, 2002 and prior to the
date hereof, there is no suit, action, audit, claim, investigation or proceeding
pending or, to its knowledge, threatened in writing against or affecting it or
any of its Subsidiaries (and it is not aware of any basis for any such suit,
action, audit, claim, investigation, or proceeding) that, individually or in the
aggregate, is reasonably likely to (1) be material to it and its Subsidiaries,
taken as a whole, or (2) prevent or delay it in any material respect from
performing its obligations under, or consummating the transactions contemplated
by, this Agreement. Except as Previously Disclosed, to its knowledge, as of the
date hereof, none of its officers or directors or the officers and directors of
any of its Subsidiaries is a defendant in any claim, action, suit or proceeding
commenced by any of its stockholders or any stockholder (or comparable equity
owner) of its Subsidiaries with respect to the performance of his or her duties
in such capacity, nor is it aware of any demand by any of its stockholders that
it commence any claim, action, suit or proceeding against any of its officers or
directors.
(k) Owned Real Property. Section 5.03(k) of its Disclosure Letter
sets forth a complete and accurate list of the real property owned by it or any
of its Subsidiaries (the "Owned Real Property"). It or one of its Subsidiaries
has good fee simple title (or other similar title in jurisdictions outside the
United States) to the Owned Real Property free and clear of any Liens or
defects.
(l) Leases.
(1) Section 5.03(l) of its Disclosure Letter sets forth a list
of all material leases, subleases and occupancy agreements, together with all
amendments and supplements thereto, with respect to all real properties in which
it or any of its Subsidiaries has a leasehold interest, whether as lessor or
lessee (each, a "Lease" and collectively, the "Leases"; the property covered by
Leases under which it or such Subsidiary is a lessee is referred to herein as
the "Leased Real Property").
(2) Each Lease is in full force and effect. Neither it nor any
of its Subsidiaries is in default under any Lease and, to its knowledge, no
other Person party to a Lease is in default.
(m) Intellectual Property. Section 5.03(m) of the Disclosure Letter
sets forth an accurate and complete list of: (i) all registered Marks, and all
pending applications for registration of any Marks anywhere in the world, owned
by it or its Subsidiaries; (ii) all Patents and application for Patents,
anywhere in the world, owned by it or its Subsidiaries; (iii) all registered
Copyrights and pending applications for registration of any Copyrights anywhere
in
23
the world owned by it or its Subsidiaries; and (iv) all Software owned by it or
its Subsidiaries that is material to the operation of its business as presently
conducted, but excluding off-the-shelf and in-licensed Software (collectively,
"Owned Intellectual Property"). Except as set forth in Section 5.03(m) of the
Disclosure Letter, it and its Subsidiaries own all right, title, and interest in
the Owned Intellectual Property. It or its Subsidiaries own, or are licensed or
otherwise possess legal enforceable rights to use the Intellectual Property
Rights that are used in its businesses, and the businesses of its Subsidiaries,
as currently conducted. To its knowledge, all material patents, trademarks,
trade names, service marks and copyrights held by it or its Subsidiaries are
valid and subsisting. To its knowledge, it and its Subsidiaries are not
infringing any intellectual property rights of any other Person. To its
knowledge, no claim is pending or, to its knowledge, threatened with respect to
the ownership, validity, license or use of, or any infringement resulting from,
the Intellectual Property Rights. To its knowledge, the Intellectual Property
Rights are not being infringed or misappropriated by any other Person. There are
no restrictions on the direct or indirect transfer of the Intellectual Property
Rights that would be triggered by the transactions contemplated hereby. To its
knowledge, it and its Subsidiaries have taken reasonable precautions in
accordance with standard industry practice to protect the secrecy,
confidentiality and value of all material Trade Secrets of it or its
Subsidiaries, including requiring their employees and officers to execute and
deliver confidentiality, assignment of rights and non-disclosure agreements. To
its knowledge, no employee of it or its Subsidiaries is in violation of any
material term of any confidentiality or nondisclosure agreement.
(n) Insurance. All material insurance policies carried by or
covering it and its Subsidiaries with respect to their businesses, assets and
properties are in full force and effect, and, to its knowledge, no notice of
cancellation has been given with respect to any such policy. Neither it nor any
of its Subsidiaries has assigned, pledged or transferred any rights under any
such insurance policies. There are no claims by it or any Subsidiary under any
such policy or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause (other than a customary
reservation of rights clause). All necessary notifications of claims have been
made by it or its Subsidiaries to insurance carriers.
(o) Regulatory Matters.
(1) To its knowledge, all manufacturing, processing,
distribution, labeling, storage, testing, specifications, sale or marketing of
products performed by or on behalf of it and its Subsidiaries are in compliance
with all applicable laws, rules, regulations, guidances or orders administered
or issued by the Food and Drug Administration, the Drug Enforcement Agency and
any other Governmental Authority.
(2) To its knowledge, all pre-clinical and clinical
investigations conducted or sponsored by it or any of its Subsidiaries are being
conducted in compliance with all recommendations of the Food and Drug
Administration and all applicable laws, rules, regulations and guidances,
including Good Laboratory Practices, investigational new drug requirements, Good
Clinical Practice requirements (including informed consent and institutional
review boards designed to ensure the protection of the rights and welfare of
human subjects), and federal and state laws, rules, regulations and guidances
restricting the use and disclosure of individually identifiable health
information. To its knowledge, neither it nor any of its Subsidiaries has
received any information which could reasonably be expected to lead to the
24
denial of any application for approval currently pending before the Food and
Drug Administration.
(3) Neither it nor any of its Subsidiaries has received any
oral or written communication (including any warning letter, untitled letter,
Form 483s or similar notices), or is otherwise aware of any action or proceeding
pending or, to its knowledge, threatened (including any prosecution, injunction,
seizure, civil fine, suspension or recall), in each case alleging that it or any
of its Subsidiaries is not currently in compliance with any and all applicable
laws, regulations or orders implemented by the Food and Drug Administration, the
Drug Enforcement Agency, or any other Governmental Authority responsible for
regulating the pharmaceutical industry. To its knowledge, none of its Employees
is or has been the subject of any similar pending or threatened action or
proceeding.
(4) Neither it nor any of its Subsidiaries has received any
correspondence from the Food and Drug Administration regarding, or is aware of,
any pending or threatened action or proceeding against it, any of its
Subsidiaries or any of its Employees regarding any debarment action or
investigation undertaken pursuant to the Generic Drug Enforcement Act of 1992,
21 U.S.C. Sections 335(a), (b) and (c), or any other similar regulation of the
Food and Drug Administration.
(5) To its knowledge, no data generated by it or any of its
Subsidiaries that has been provided to its clients is the subject of any
regulatory or other action, either pending or threatened, by the Food and Drug
Administration or other Governmental Authority relating to the truthfulness or
scientific adequacy of such data.
(6) To its knowledge, neither it nor any of its Subsidiaries
is the subject, officially or otherwise, of any pending or threatened
investigation by the Food and Drug Administration pursuant to its Fraud, Untrue,
Material Facts, Bribery, and Illegal Gratuities Final Policy or by the
Department of Health and Human Services Office of Inspector General ("OIG") or
United States Department of Justice ("DOJ") pursuant to the Federal
Anti-Kickback Statute 42 U.S.C.
(7) Section 1320a-7(b) and the Civil False Claims Act (31
U.S.C. Section 3729 et seq.) and the regulations promulgated pursuant to such
statutes. To its knowledge, neither it nor any of its Subsidiaries nor any of
its Employees has knowingly committed any act, made any statement, or failed to
make any statement, that would reasonably be expected to provide a basis for the
Food and Drug Administration to invoke its Fraud, Untrue, Material Facts,
Bribery, and Illegal Gratuities Final Policy or that would reasonably be
expected to provide a basis for liability under the Federal Anti-Kickback
Statute or the Civil False Claims Act and any regulations promulgated
thereunder.
(p) Environmental.
(1) It and its Subsidiaries are in compliance with all, and
have no Liability under any, applicable Environmental Laws. There is no claim
with respect to Environmental Laws pending or, to its knowledge, threatened
against it or any of its Subsidiaries and, to its knowledge, there are no facts
or circumstances that could give rise to such a claim that
25
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Neither it nor any of its Subsidiaries has either
assumed or undertaken, or agreed to assume or undertake, responsibility for any
Liability or obligation of any other Person, arising under or relating to
Environmental Laws, including any obligation for investigation or corrective or
remedial action, other than an assumption by operation of law as the result of
the merger of a Person with and into it or any of its Subsidiaries.
(2) "Liability" means all indebtedness, obligations and other
liabilities and contingencies of a Person, whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due.
(3) "Environmental Law" means any federal, state, local,
provincial, foreign, civil and criminal Law, statute, ordinances, common law,
rules, regulations, policies and guidance documents with the effect of law, now
in effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to pollution, health, worker health and safety or protection
of the environment, including those relating to the use, handling,
transportation, treatment, storage, disposal, release, exposure or discharge of
Hazardous Substances.
(4) "Hazardous Substances" means (i) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (ii) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law.
(q) Compliance with Laws. Each of it and its Subsidiaries:
(1) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with (the
"Permits"), all Governmental Authorities (including all authorizations under the
Federal Food, Drug and Cosmetic Act of 1938, as amended and the regulations of
the United States Food and Drug Administration promulgated thereunder) that are
required for it to own or lease and operate its properties or other assets and
to conduct its business in the manner described in the Regulatory Filings prior
to the date hereof and as it is presently conducted, and all such Permits are
valid and in full force and effect and, to its knowledge, no event has occurred
which permits, or upon the giving of notice or passage of time or both, would
permit revocation, non-renewal, modification, suspension, limitation or
termination of any Permit;
(2) conducts its business in compliance with all applicable
Laws, and is not in conflict with, or in default or violation of, any Law
applicable to it or by which any of its property or assets is bound, or any
Permits; and
(3) has received, since December 31, 2000, no written
notification from any Governmental Authority (A) asserting that it or any of its
Subsidiaries is not in compliance with any Law which such Governmental Authority
enforces or (B) threatening to revoke any Permit.
26
(r) Material Contracts; Defaults.
(1) As of the date hereof, except as filed as exhibits to its
Regulatory Filings prior to the date of this Agreement, neither it nor any of
its Subsidiaries is a party to, and none of their respective assets, businesses
or operations is bound by, any contract, agreement, commitment, arrangement,
lease or other instrument (whether written or oral) that (a) is a "material
contract" (as such term is defined in Item 601(a)(10) of Regulation S-K
promulgated under the Securities Act), (b) relates to any indebtedness in excess
of $10,000,000, (c) provides for aggregate payments from it or any of its
Subsidiaries in excess of $10,000,000, has an unexpired term exceeding six
months and cannot be terminated without penalty upon not more than 30 days'
prior written notice, or (d) materially limits its freedom or the freedom of any
of its Subsidiaries to compete in any line of business or with any Person or in
any geographical area or which would so materially limit its freedom or the
freedom of any of its Subsidiaries so to compete after the Effective Time
(collectively, its "Material Contracts"). Each of its Material Contracts is
valid and binding on it or its Subsidiary party thereto and, to its knowledge,
each other Person thereto, and is in full force and effect and enforceable
against it or such Subsidiary, as the case may be, in accordance with its terms,
(except as enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles and (ii) to the extent applicable, securities laws limitations on the
enforceability of provisions regarding indemnification in connection with the
sale or issuance of securities). No customer party to a Material Contract has
given notice of termination or notice of election to self manufacture products
currently manufactured by CIMA.
(2) Neither it nor any of its Subsidiaries is in violation,
breach or default under any of its Material Contracts, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a violation, breach or default.
(s) Customers. Since December 31, 2002, neither it nor any of its
Subsidiaries has received written notice that any material customer intends to
cancel, terminate or otherwise modify any relationship with it or any of its
Subsidiaries.
(t) Employees; Labor Relations. Neither it nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining agreement or
other contract or understanding with a labor union or labor organization. There
is no (i) unfair labor practice, labor dispute (other than routine individual
grievances) or labor arbitration proceeding pending or, to its knowledge,
threatened against it or any of its Subsidiaries, (ii) to its knowledge,
activity or proceeding by a labor union or representative thereof to organize
any of its employees or any employees of any of its Subsidiaries, or (iii)
lockouts, strikes, slowdowns, work stoppages or to its knowledge threats thereof
by or with respect to such employees.
(u) Employee Benefit Plans.
(1) All Benefits Arrangements covering its current employees
or former employees and those of its Subsidiaries (collectively, "Employees",
and each individually, an "Employee") and its current or former directors and
those of its Subsidiaries, including: (i) "employee benefit plans" within the
meaning of Section 3(3) of ERISA; and (ii)
27
deferred compensation, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans (collectively, "Benefit Plans" and each
individually, a "Benefit Plan"), are Previously Disclosed. True and complete
copies of all Benefit Plan Documents, including any trust instruments and
insurance contracts forming a part of any Benefit Plan Documents, and all
amendments thereto, have been made available to the other party.
(2) All of its Benefit Plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, to the extent subject to ERISA,
are in substantial compliance with ERISA. Each Benefit Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan"), and which is intended to be qualified under Section 401(a) of
the Code, is so qualified, and has received a favorable determination letter
from the Internal Revenue Service, or the remedial amendment period under
applicable Internal Revenue Service guidance in which to apply for such letter
and make any amendments that are necessary to obtain a favorable determination
as to the current qualified status of such Pension Plan has not yet expired, and
it is not aware of any circumstances reasonably likely to result in revocation
of any such favorable determination letter. Each Benefit Plan which is intended
to be part of or funded through a voluntary employees' beneficiary association
within the meaning of Section 501(c)(9) of the Code has (i) received an opinion
letter from the Internal Revenue Service recognizing its exempt status under
Section 501(c)(9) of the Code and (ii) filed a timely notice with the Internal
Revenue Service pursuant to Section 505(c) of the Code, and it is not aware of
circumstances likely to result in the loss of the exempt status of such Benefit
Plan under Section 501(c)(9) of the Code. There is no material pending or, to
the knowledge of CIMA, threatened litigation relating to its Benefit
Arrangements (other than a claim for benefits in the ordinary course). Neither
it, nor to the knowledge of CIMA, any plan fiduciary of any Benefit Arrangement,
has engaged in any transaction in violation of Sections 404 or 406 of ERISA or
any "prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code, or has otherwise violated the provisions of Part 4 of Title I,
Subtitle B of ERISA. It has not knowingly participated in a violation of Part 4
of Title I, Subtitle B of ERISA by any plan fiduciary of any Benefit Arrangement
and has not been assessed any civil penalty under Section 502(l) of ERISA.
(3) No liability under Subtitle C or D of Title IV of ERISA
has been or is reasonably expected to be incurred by it, any of its
Subsidiaries, or any of their respective ERISA Affiliates with respect to any
ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them.
None of it, any of its Subsidiaries, or any of their respective ERISA Affiliates
has contributed to a "multiemployer plan," within the meaning of Section 3(37)
of ERISA, at any time on or after September 26, 1980. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Benefit Arrangement which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA within the 12-month period ending on the date
hereof.
(4) All contributions required to be made under the terms of
any of its Benefit Arrangements have been timely made or have been reflected on
its consolidated financial statements included in its Regulatory Filings. No
Benefit Arrangement has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or
28
Section 302 of ERISA and neither it, nor any of its Subsidiaries or their
respective ERISA Affiliates has an outstanding funding waiver. Neither it nor
any of its Subsidiaries or their respective ERISA Affiliates has provided, or is
required to provide, security to any of its Benefit Arrangements pursuant to
Section 401(a)(29) of the Code.
(5) There has been no amendment to, announcement by it or any
of its Subsidiaries relating to, or change in Employee participation or coverage
under, any Benefit Plan that would increase materially the expense of
maintaining such Benefit Plan above the level of the expense incurred therefor
for the most recently completed fiscal year. Neither its execution of this
Agreement, the performance of its obligations hereunder, the consummation of the
transactions contemplated by this Agreement, the termination of the employment
of any of its employees within a specified time of the Effective Time nor
stockholder approval of the transactions covered by this Agreement, will (x)
limit its right, in its sole discretion, to administer or amend in any respect
or terminate any of its Benefit Plans or any related trust, (y) entitle any of
its Employees to severance pay or any increase in severance pay, or (z), except
as expressly contemplated hereby, accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of its Benefit Plans. Without limiting the
foregoing, as a result of the consummation of the transactions contemplated by
this Agreement (including, as a result of the termination of the employment of
any of its employees within a specified time of the Effective Time) neither it
nor any of its Subsidiaries will be obligated to make a payment to an individual
that would be a "parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services performed or to be
performed in the future.
(v) Related Party Transactions. Except as disclosed in Regulatory
Filings filed prior to the date of this Agreement, since December 31, 2002,
neither it nor any of its Subsidiaries has entered into any relationship or
transaction of the sort that would be required to be disclosed by it pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act.
(w) Taxes. (1) All Tax Returns that are required to be filed (taking
into account any extensions of time within which to file) by or with respect to
it and its Subsidiaries have been duly and timely filed, and all such Tax
Returns are complete and accurate in all material respects, (2) all Taxes shown
to be due on the Tax Returns referred to in clause (1) or that are otherwise due
and payable have been paid in full, except for Taxes which are being contested
in good faith and for which adequate reserves have been established on the
balance sheets contained in the financial statements contained in the Regulatory
Filings filed prior to the date hereof, (3) all Taxes that it or any of its
Subsidiaries is obligated to withhold from amounts owing to any Employee,
creditor or third party have been paid over to the proper Governmental Authority
in a timely manner, to the extent due and payable, and (4) no extensions or
waivers of statutes of limitation have been given by or requested with respect
to any of its U.S. federal income taxes or those of its Subsidiaries. Its unpaid
Taxes and those of its Subsidiaries did not, as of the dates of the most recent
financial statements contained in the Regulatory Filings filed before the date
hereof, exceed the reserve for Liabilities for Taxes (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the balance sheets (rather than in any notes
thereto) contained in such financial
29
statements. Since December 31, 2002, neither it nor any of its Subsidiaries has
incurred any Liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice, (y) changed its Tax
elections or the Tax elections of any of its Subsidiaries or any accounting
method used by it or any of its Subsidiaries for Tax purposes, where such Tax
election or change in accounting method has had, or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect, or (z)
settled or compromised any material liability for income Taxes of it and its
Subsidiaries taken as a whole. It has delivered or made available to the other
party complete and accurate copies of its federal, state and local Tax Returns
and those of its Subsidiaries and each of their predecessors for the years ended
December 31, 1999, 2000 and 2001, and complete and accurate copies of all
examination reports and statements of deficiencies assessed against or agreed to
by any of it and its Subsidiaries or any predecessors since December 31, 1999.
There are no pending or, to its knowledge, threatened audits, assessments or
other actions for or relating to any Liability in respect of Taxes (including
any deficiencies for Taxes) of any of it or its Subsidiaries, and there are no
matters under discussion with Governmental Authorities, or known to it, with
respect to Taxes that are likely to result in an additional Liability for Taxes
with respect to any of it and its Subsidiaries. No Liens for Taxes exist with
respect to any of its assets or properties or those of its Subsidiaries, except
for statutory Liens for Taxes not yet delinquent or that are being contested in
good faith and reserved for in accordance with GAAP. Neither it nor any of its
Subsidiaries has been a party to any distribution as either a "distributing
corporation" or a "controlled corporation" in which the parties to such
distribution treated the distribution as one to which Section 355 of the Code
applied (i) in the two (2) years prior to the date of this Agreement, or (ii)
which could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) that includes
the Merger. Except for the affiliated group of which it is the common parent,
each of it and its Subsidiaries is not and has never been a member of an
affiliated group of corporations within the meaning of Section 1504 of the Code
or any group that has filed a combined, consolidated or unitary Tax Return.
Neither it nor any of its Subsidiaries has liability for the Taxes of any Person
(including an individual, corporation, general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
labor union or other entity or Governmental Authority) other than it and its
Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign Law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise. Neither it nor any of its Subsidiaries has
entered into any transaction identified as a "listed transaction" for purposes
of Treasury Regulations Section 1.6011-4(b)(2) or 301.6111-2(b)(2). If either it
or any of its Subsidiaries has entered into any transaction such that, if the
treatment claimed by it or its Subsidiaries were to be disallowed, the
transaction would constitute a substantial understatement of federal income tax
within the meaning of Section 6662 of the Code, then it believes that it has
either (x) substantial authority for the tax treatment of such transaction or
(y) disclosed on its Tax Return the relevant facts affecting the tax treatment
of such transaction.
(x) Books and Records; Internal Controls. It maintains a system of
internal controls for financial reporting sufficient to provide reasonable
assurance (i) that records are maintained in reasonable detail that accurately
and fairly reflect the transactions and dispositions of its assets; (ii) that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that its receipts and expenditures are
being made only in accordance with authorizations of its management and
directors; and (iii) regarding prevention
30
or timely detection of any unauthorized acquisition, use or disposition of its
assets that could have a material effect on its financial statements.
(y) Marketable Investments. Section 5.03(y) of its Disclosure Letter
lists by amount and type each available-for-sale security owned by it or any of
its Subsidiaries as of a recent date. There are no restrictions of any kind
which prevent or restrict the sale of such available-for-sale securities.
(z) Takeover Laws and Provisions. It has 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 (collectively, "Takeover Laws"),
other than Section 203 of the DGCL. The action of its Board of Directors in
approving this Agreement (and the transactions provided for herein) is
sufficient to render inapplicable to this Agreement (and the transactions
provided for herein) the restrictions on "business combinations" (as defined in
Section 203 of the DGCL) as set forth in Section 203 of the DGCL. It has taken
all action required to be taken by it in order to make this Agreement and the
transactions contemplated hereby comply with, and this Agreement and the
transactions contemplated hereby do comply with, the requirements of any
Articles, Sections or provisions of its Constituent Documents concerning
"business combination", "fair price", "voting requirement", "constituency
requirement" or other related provisions (collectively, "Takeover Provisions").
(aa) Financial Advisors, Etc. None of it, its Subsidiaries or any of
their officers, directors or Employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated herein, except that, in connection
with this Agreement, it has retained Deutsche Bank Securities Inc. as its
financial advisor with respect to the transactions contemplated by this
Agreement, the arrangements with which have been disclosed to the other party
prior to the date hereof. As of the date hereof, the CIMA Board has received a
written opinion of Deutsche Bank Securities Inc. to the effect that, as of the
date of such opinion, the Merger Consideration is fair from a financial point of
view to the holders of CIMA Common Stock.
(bb) Recommendation of CIMA Board. The CIMA Board, by resolutions
adopted unanimously (which resolutions have not been rescinded or amended) at
one or more meetings, each of which were duly called and held, and at which a
quorum was present and acting throughout, has (i) determined that this Agreement
and the transactions contemplated hereby are advisable, fair to, and in the best
interests of, CIMA and the stockholders of CIMA, (ii) approved this Agreement
and transactions contemplated hereby, and any other matters required to be
approved or adopted in order to effect the Merger and other transactions
contemplated by this Agreement, which approval has not been rescinded or
modified, (iii) resolved to recommend approval and adoption of this Agreement by
its stockholders, (iv) directed that this Agreement be submitted to its
stockholders for consideration in accordance with the terms of this Agreement,
and (v) resolved that this Agreement and the transactions contemplated hereby,
including the Merger, constitute a "Superior Proposal" as such term is defined
in the Agreement and Plan of Merger, dated as of August 5, 2003, by and between
aaiPharma Inc., CIMA, Scarlet Holding Corporation, Scarlet MergerCo, Inc. and
Crimson
31
MergerCo, Inc. (the "aaiPharma Merger Agreement"). The aaiPharma Merger
Agreement has been terminated in accordance with the terms thereof.
(cc) CIMA Rights Agreement. CIMA has amended the CIMA Rights
Agreement to ensure that (i) none of a "Distribution Date" or a "Shares
Acquisition Date" (in each case as defined in the CIMA Rights Agreement) will
occur, and none of Cephalon or any of its stockholders or any of their
"Affiliates" or "Associates" as of the date hereof (including MergerCo) will be
deemed to be an "Acquiring Person" (in each case as defined in the CIMA Rights
Agreement) by reason of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby; and (ii) the Rights will
expire immediately prior to the Effective Time. No "Distribution Date" or
"Shares Acquisition Date" has occurred.
5.04 Representations and Warranties With Respect to Cephalon. Except as
Previously Disclosed, Cephalon hereby represents and warrants to CIMA, as
follows:
(a) Organization, Standing and Authority. Each of Cephalon and
MergerCo is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each of Cephalon and
MergerCo is duly qualified or licensed to do business and is in good standing in
all jurisdictions where its ownership or leasing of property or assets or its
conduct of business requires it to be so qualified.
(b) Power. Each of Cephalon and MergerCo has the corporate power and
authority to carry on its business as it is now being conducted and to own,
lease and operate all its properties and assets; and each of Cephalon and
MergerCo has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby.
(c) Authority. Each of Cephalon and MergerCo has duly authorized and
validly executed and delivered this Agreement. This Agreement and the
transactions contemplated hereby have been approved by its and MergerCo's Board
of Directors and duly and validly authorized by all necessary respective
corporate action applicable to it. This Agreement is its and MergerCo's valid
and legally binding obligation enforceable in accordance with the terms hereof
(except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(d) Regulatory Approvals; No Defaults.
(1) No consents or approvals of, or filings or registrations
with, or notice to, or authorizations, permits or declarations of, any
Governmental Authority or with any other Person are required to be made or
obtained by it or any of its Subsidiaries in connection with the execution,
delivery or performance by it of this Agreement or to consummate the Merger
except for (A) filing of notices, and expiration of the related waiting period,
under the HSR Act, (B) filings of applications and notices with, and receipt of
approvals or nonobjections from, the SEC and state securities authorities, the
National Association of Securities Dealers, Inc. and Nasdaq, (C) filings under
the Exchange Act, (D) the filing of the Certificate of Merger.
32
(2) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
(A) constitute a breach or violation of, or a default under (or an event which
with notice or lapse of time or both would become a default), result in any loss
of any benefit under, give rise to any Lien, any acceleration of remedies or any
penalty, increase any benefit or right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture, note, mortgage, lease or other contract, commitment,
agreement or instrument to which it or any of its Subsidiaries or its or their
properties is subject or bound, (B) conflict with, constitute a breach or
violation of, or a default under, its Constituent Documents or those of any of
its Subsidiaries or (C) assuming that the regulatory consents, approvals,
authorizations, permits and declarations described in Section 5.04(d)(1) have
been obtained and all filings and notifications described in Section 5.04(d)(1)
have been made and the expiration or termination of related waiting periods,
conflict with, violate or require any consent or approval under any such Law
applicable to it or its Subsidiaries or by which any of its or its Subsidiaries'
property or assets is bound.
(e) Financing. Cephalon and MergerCo has sufficient cash available
to pay the Merger Consideration for all shares of CIMA Common Stock.
(f) Financial Advisors, Etc. None of it, its Subsidiaries or any of
their officers, directors or Employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated herein, except that, in connection
with this Agreement, it has retained ▇.▇. ▇▇▇▇▇▇ Securities Inc. as its
financial advisor with respect to the transactions contemplated by this
Agreement, the arrangements with which have been disclosed to the other party
prior to the date hereof. As of the date hereof, the Cephalon Board has received
a written opinion of ▇.▇. ▇▇▇▇▇▇ Securities Inc. to the effect that, as of the
date of such opinion, the Merger Consideration is fair from a financial point of
view to Cephalon.
5.05 Representations and Warranties With Respect to MergerCo. Except as
Previously Disclosed, Cephalon hereby represents and warrants to CIMA, as
follows:
(a) Capital Stock of MergerCo. The authorized capital stock of
MergerCo consists of 1,000 shares of MergerCo Common Stock, of which 100 shares
are outstanding, all of which outstanding shares are held of record and
beneficially by Cephalon.
(b) No Business Activities. MergerCo has not conducted any
activities or incurred any Liabilities other than in connection with its
organization and maintenance of good standing, the negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
MergerCo has no Subsidiaries.
33
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, Cephalon
and CIMA will use all reasonable best efforts to take, or cause to be taken, in
good faith, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit
consummation of the Merger as promptly as practicable and otherwise to enable
consummation of the transactions contemplated hereby, and each will cooperate
fully with, and furnish information to, the other party to that end.
(b) As soon as reasonably practicable following the execution of
this Agreement, Cephalon, as the holder of all of the outstanding shares of
MergerCo Common Stock, will approve and adopt this Agreement.
6.02 Proxy Statement; Stockholder Approval.
(a) As promptly as reasonably practicable and in any event not later
than the twenty days following the date hereof, CIMA shall prepare and file with
the SEC the proxy materials relating to the CIMA Meeting (such proxy statement,
and any amendments or supplements thereto, the "Proxy Statement"). Cephalon
agrees to cooperate, and to cause its Subsidiaries to cooperate, with CIMA, its
counsel and its accountants, in the preparation of the Proxy Statement. CIMA
shall provide Cephalon with a reasonable opportunity to review and comment on
the Proxy Statement prior to filing such with the SEC, and will promptly provide
Cephalon with a copy of all such filings made with the SEC. The Proxy Statement
shall comply as to form in all material respects with the applicable provisions
of the Exchange Act and the rules and regulations thereunder. CIMA shall use
reasonable best efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable after the date hereof. CIMA shall, as promptly as
practicable after receipt thereof, provide Cephalon copies of any written
comments and advise the Cephalon of any oral comments with respect to the Proxy
Statement received from the SEC. CIMA shall provide Cephalon with a reasonable
opportunity to review and comment on any amendment or supplement to the Proxy
Statement prior to filing such with the SEC, and will promptly provide Cephalon
with a copy of all such filings made with the SEC. CIMA shall mail the Proxy
Statement to its stockholders as soon as reasonably practicable after the Proxy
Statement shall have been cleared by the SEC; provided, however, that CIMA shall
consult and cooperate with Cephalon in determining the appropriate time for
mailing the Proxy Statement in light of the date set for the CIMA Meeting. Each
of Cephalon and MergerCo shall furnish all information concerning it and the
holders of its capital stock as CIMA may reasonably request in connection with
such actions and the preparation of the Proxy Statement.
(b) CIMA will advise Cephalon, promptly after it receives notice
thereof, of the time when the Proxy Statement has been cleared or any request by
the SEC for amendment or supplement of the Proxy Statement.
34
(c) Cephalon, CIMA and MergerCo each agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to stockholders and at the
time of the CIMA 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 such
statement was made, not misleading. If, at any time prior to the Effective Time,
any information relating to CIMA, Cephalon, MergerCo or any of their
Subsidiaries, or any of their respective Affiliates, officers or directors,
should be discovered by CIMA, Cephalon or MergerCo that should be set forth in
an amendment or supplement to the Proxy Statement so that such document would
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party hereto and, to the extent
required by Law, an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and disseminated to the
stockholders of CIMA.
(d) Notwithstanding any other provision in this Agreement to the
contrary, no amendment or supplement (including by incorporation by reference)
to the Proxy Statement shall be made without the approval of both Cephalon and
CIMA, which approval shall not be unreasonably withheld or delayed; provided
that with respect to documents filed by a party which are incorporated by
reference in the Proxy Statement, this right of approval shall apply only with
respect to information relating to the other party or its business, financial
condition or results of operations; provided, further, that CIMA, in connection
with a Change in the CIMA Recommendation (as defined in Section 6.02(e)), may
amend or supplement the Proxy Statement (including by incorporation by
reference) pursuant to a Qualifying Amendment (as defined below) to effect such
a Change, and in such event, the right of approval shall apply only with respect
to information relating to the other party or its business, financial condition
or results of operations, and shall be subject to the right of each party to
have its Board of Directors' deliberations and conclusions accurately described.
A "Qualifying Amendment" means an amendment or supplement to the Proxy Statement
(including by incorporation by reference) to the extent it contains (i) a Change
in the CIMA Recommendation, (ii) a statement of the reasons of the CIMA Board
for making such Change in the CIMA Recommendation and (iii) additional
information reasonably related to the foregoing.
(e) Prior to the termination of this Agreement, CIMA shall duly take
all lawful action to call, give notice of, convene and hold a meeting of its
stockholders (the "CIMA Meeting") as soon as reasonably practicable following
the date the Proxy Statement is cleared by the SEC and after coordination with
Cephalon for the purpose of obtaining the CIMA Stockholder Approval; provided
that, subject to applicable Law, so long as the Proxy Statement is cleared by
the SEC not later than thirty Business Days prior to the Termination Date, the
CIMA Meeting shall be held not later than five Business Days prior to the
Termination Date. In connection with the CIMA Meeting and the transactions
contemplated hereby, CIMA will (i) subject to applicable Law and this Section
6.02(e), use its reasonable best efforts (including postponing or adjourning the
CIMA Meeting to obtain a quorum or to solicit additional proxies) to obtain the
necessary approvals by its stockholders of this Agreement and (ii) otherwise
comply with all legal requirements applicable to the CIMA Meeting. The CIMA
Board shall
35
recommend adoption of this Agreement by the stockholders of CIMA as set forth in
Section 5.03(bb) (the "CIMA Recommendation"), and shall not Change in any manner
adverse to Cephalon such recommendation or take any action or make any statement
in connection with the CIMA Meeting inconsistent with such recommendation
(collectively, a "Change in the CIMA Recommendation"); provided that the
foregoing shall not prohibit accurate disclosure (and such disclosure shall not
be deemed to be a Change in the CIMA Recommendation) of factual information
regarding the business, financial condition or results of operations of CIMA or
Cephalon or the fact that an Acquisition Proposal has been made, the identity of
the party making such proposal or the material terms of such proposal (provided
that the CIMA Board does not withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Cephalon the CIMA
Recommendation) in the Proxy Statement or otherwise, to the extent such
information, facts, identity or terms is required to be disclosed under
applicable Law; and, provided further, that the CIMA Board may make a Change in
the CIMA Recommendation pursuant to Section 6.03(e) hereof. Notwithstanding any
Change in the CIMA Recommendation, this Agreement shall be submitted to the
stockholders of CIMA at the CIMA Meeting for the purpose of adopting this
Agreement and approving the Merger; provided that this Agreement shall not be
required to be submitted to the stockholders of CIMA at the CIMA Meeting if this
Agreement has been terminated pursuant to Section 8.01 hereof. For purposes of
this Agreement, a Change in the CIMA Recommendation shall be deemed to include a
recommendation by the CIMA Board of a third party Acquisition Proposal with
respect to CIMA.
(f) Nothing in this Section 6.02 shall permit either party to
terminate this Agreement (except as specifically provided in Article VIII).
6.03 Acquisition Proposals.
(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, CIMA agrees that neither it nor any of its
Subsidiaries nor any of the officers, directors or employees of it or its
Subsidiaries shall, and that it shall use its reasonable best efforts to cause
its and its Subsidiaries' other Representatives not to, directly or indirectly,
(i) initiate, solicit, encourage, knowingly facilitate or induce any inquiry
with respect to, or the making, submission or announcement of, any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any nonpublic information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal
(except to notify such Person as to the existence of these provisions or to the
extent specifically permitted pursuant to this Section 6.03), (iii) accept,
approve, endorse or recommend any Acquisition Proposal (except to the extent
specifically permitted pursuant to this Section 6.03), or (iv) enter into any
letter of intent or similar document or any agreement, commitment or
understanding contemplating or otherwise relating to any Acquisition Proposal or
a transaction contemplated thereby (except for confidentiality agreements
specifically permitted pursuant to Section 6.03(c)(3)). CIMA and its officers,
directors and employees will immediately cease and cause to be terminated, and
shall use its reasonable best efforts to cause its and its Subsidiaries' other
Representatives to immediately cease and terminate, any activities, discussions
or negotiations conducted before the date of this Agreement with any Persons
other than Cephalon with respect
36
to any Acquisition Proposal, and will use its reasonable best efforts to enforce
any confidentiality or similar agreement relating to any such Acquisition
Proposal.
(b) CIMA will as promptly as practicable (and in no event later than
within one Business Day after receipt thereof) notify Cephalon in writing
following receipt of any Acquisition Proposal or any request for nonpublic
information or inquiry which it reasonably believes could lead to an Acquisition
Proposal. Such notice shall set forth in reasonable detail the substance and
material terms of such Acquisition Proposal, request or inquiry (including the
identity of the Person making such Acquisition Proposal, request or inquiry).
CIMA will keep Cephalon apprised of any related developments, discussions and
negotiations (including any material changes or modifications to the terms and
conditions of the Acquisition Proposal, request or inquiry) on a current basis,
and provide to Cephalon, as soon as reasonably practicable, copies of all
written materials provided or made available in connection with such Acquisition
Proposal, request or inquiry (including the form of any merger agreement or
acquisition agreement, as the case may be, in connection with any such
Acquisition Proposal). CIMA shall provide Cephalon with forty-eight (48) hours'
prior notice (or such lesser prior notice as is provided to the members of its
Board of Directors) of any meeting of the CIMA Board at which such Board of
Directors is reasonably expected to consider any Acquisition Proposal.
(c) Notwithstanding anything in this Agreement to the contrary, CIMA
shall be permitted to engage in discussions or negotiations with, and provide
nonpublic information to, any Person that has made an unsolicited bona fide
written Acquisition Proposal with respect to it, if and only to the extent that:
(1) the CIMA Stockholder Approval shall not have been
obtained;
(2) (x) the CIMA Board has concluded in good faith, after
consultation with a nationally recognized financial advisor and its outside
legal counsel, such Acquisition Proposal constitutes a Superior Proposal (and
continues to constitute a Superior Proposal after taking into account any
amendment or modification to this Agreement proposed by the other party hereto
during any three Business Day period referenced below in Section 6.03(d)), or
(y) the CIMA Board concludes in good faith, after consultation with a nationally
recognized financial advisor and its outside legal counsel, that there is a
reasonable likelihood that such Acquisition Proposal would reasonably be
expected to result in a Superior Proposal;
(3) prior to providing any nonpublic information to any
Person, it shall have entered into a confidentiality agreement with such third
party on terms no less favorable to it than the Confidentiality Agreement; and
(4) prior to providing any nonpublic information to any Person
or entering into discussions or negotiations with any Person, it has notified
Cephalon promptly of such Acquisition Proposal (a "Superior Proposal Notice")
and has otherwise complied with its obligations under Section 6.03(b).
(d) For a period of not less than three Business Days after CIMA's
delivery of any Superior Proposal Notice to Cephalon, it shall, if requested by
Cephalon, negotiate in good
37
faith with Cephalon to revise this Agreement so that the Acquisition Proposal
that constituted a Superior Proposal no longer constitutes a Superior Proposal
(a "Former Superior Proposal"). The terms and conditions of this Section 6.03
shall again apply to any inquiry or proposal made by any Person who withdraws a
Superior Proposal or who made a Former Superior Proposal (after withdrawal or
after such time as such proposal is a Former Superior Proposal).
(e) Notwithstanding anything in this Agreement to the contrary, CIMA
shall be permitted to effect a Change in the CIMA Recommendation if and only to
the extent that:
(1) the CIMA Stockholder Approval shall not have been
obtained;
(2) it shall have (x) provided written notice to Cephalon
stating that it intends to change its recommendation and the manner in which it
intends to do so, and (y) complied with its obligations under Sections 6.03(b)
and (d); and
(3) the CIMA Board has concluded in good faith, after receipt
of advice of its outside legal counsel, that the failure of the Board of
Directors to effect a Change in the CIMA Recommendation would result in a breach
of its fiduciary obligations to its stockholders under applicable Law.
(f) Nothing contained in this Agreement shall prohibit CIMA or its
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act,
provided that the content of any such disclosure thereunder shall be governed by
the terms of this Agreement. Without limiting the foregoing proviso, CIMA shall
not effect a Change in the CIMA Recommendation unless specifically permitted
pursuant to the terms of Section 6.03(e).
(g) CIMA shall not submit to the vote of its stockholders any
Acquisition Proposal, or propose to do so, prior to termination of this
Agreement.
(h) CIMA agrees that it will use reasonable best efforts to promptly
inform its Representatives of the obligations undertaken in this Section 6.03.
6.04 [Intentionally Omitted]
6.05 Press Releases; Public Announcements. Cephalon and CIMA shall consult
with each other before issuing, and provide each other the opportunity to review
and make reasonable comment upon, any press release, written employee
communication or other written stockholder communication with respect to the
Merger or this Agreement and shall not issue, or allow any of their respective
Subsidiaries to issue, any such communication or make any such public statement
without the prior consent of the other party, which will not be unreasonably
withheld or delayed; provided that a party may, without the prior consent of the
other party (but after prior consultation, to the extent practicable in the
circumstances), issue such communication or make a Regulatory Filing or other
public statement that may be required by applicable Law or securities exchange
rules on which the CIMA Common Stock or any security of Cephalon is listed, as
applicable; provided, further, that a party may make any public statement in
response to specific questions by the press, analysts, investors or those
attending industry conferences or financial analyst conference calls, so long as
any such statements are not inconsistent with previous press
38
releases, public disclosures or public statements made jointly by CIMA and
Cephalon and do not reveal any non-public information regarding the other party.
Cephalon and CIMA shall cooperate to develop all public communications and make
appropriate members of management available at presentations related to the
transactions contemplated by this Agreement as reasonably requested by the other
party.
6.06 Access; Information.
(a) Each of Cephalon and CIMA agrees that upon reasonable notice and
subject to applicable Laws relating to the exchange of information, it shall
(and shall cause its Subsidiaries to) afford the other party, and the other
party's Representatives, such access during normal business hours, upon
reasonable notice, throughout the period before the Effective Time to the books,
records (including Tax Returns and work papers of independent accountants),
properties, personnel and to such other information as any party may reasonably
request and, during such period, it will furnish promptly to such other party
all information concerning the business, properties and personnel of it as the
other may reasonably request; provided that such investigation shall not
unreasonably disrupt the furnishing party's operations. Neither party nor any of
its Subsidiaries shall be required to afford access or disclose information that
would jeopardize attorney-client privilege or contravene any binding agreement
with any third party. The parties shall make appropriate substitute arrangements
in circumstances where the previous sentence applies.
(b) Each party agrees that it shall hold as confidential any
information that is nonpublic and confidential to the extent required by, and in
accordance with, the Confidentiality Agreement, dated as of October 1, 2003,
between Cephalon and CIMA (the "Confidentiality Agreement"). Notwithstanding
anything to the contrary set forth in this Agreement or in any other written or
oral understanding or agreement to which the parties hereto are parties or by
which they are bound, including the Confidentiality Agreement, the parties
hereto acknowledge and agree that any obligations of confidentiality contained
herein and therein shall not apply to the Tax treatment and Tax structure of the
Merger upon the earlier to occur of (i) the date of the public announcement of
discussions relating to the Merger, (ii) the date of the public announcement of
the Merger, or (iii) the date of the execution of the Agreement, all within the
meaning of Treasury Regulations Section 1.6011-4; provided, however, that each
party recognizes that the privilege each has to maintain, in its sole
discretion, the confidentiality of a communication relating to the Merger,
including a confidential communication with its attorney or a confidential
communication with a federally authorized tax practitioner under Section 7525 of
the Code, is not intended to be affected by the foregoing.
(c) No investigation by either party of the business and affairs of
the other party, pursuant to this Section 6.06 or otherwise, shall affect or be
deemed to modify or waive any representation, warranty, covenant or agreement in
this Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.07 Takeover Laws and Rights Plans.
(a) No party shall take any action that would cause the transactions
contemplated by this Agreement to be subject to requirements imposed by any
Takeover Law,
39
and each of them shall take all necessary steps within its control to exempt (or
ensure the continued exemption of) those transactions from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect. No party shall take any action that would cause the
transactions contemplated by this Agreement not to comply with any Takeover
Provisions, and each of them shall take all necessary steps within its control
to make those transactions comply with (or continue to comply with) the Takeover
Provisions.
(b) The CIMA Board shall not, without the prior written consent of
Cephalon, (i) amend the CIMA Rights Agreement or (ii) take any action to, or
make any determination under, the CIMA Rights Agreement, including a redemption
of the CIMA Rights, except upon the termination of this Agreement pursuant to
Section 8.01(i).
6.08 [Intentionally Omitted]
6.09 Regulatory and Third Party Approvals.
(a) Subject to the terms and conditions herein provided, CIMA and
Cephalon shall:
(1) as promptly as reasonably practicable make their
respective filings under the HSR Act with respect to the Merger, and thereafter
promptly make any other required submissions under the HSR Act;
(2) use their reasonable best efforts to cooperate with one
another in (A) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from Governmental
Authorities in connection with the execution and delivery of this Agreement and
the consummation of the Merger and the transactions contemplated hereby (the
"Requisite Regulatory Approvals") and (B) timely making all such filings in
respect of those Requisite Regulatory Approvals and timely seeking all such
Requisite Regulatory Approvals;
(3) use their reasonable best efforts to prepare and file, as
applicable, as soon as is reasonably practical, all documentation to effect and
obtain all Requisite Regulatory Approvals;
(4) promptly notify each other as soon as is reasonably
practicable of any material communication concerning this Agreement or the
transactions contemplated hereby (including the Merger) to that party or its
Subsidiaries from any Governmental Authority and permit the other party to
review in advance any proposed communications concerning this Agreement or the
transactions contemplated hereby (including the Merger) to any Governmental
Authority;
(5) to the extent reasonably practicable, not agree to
participate in any meeting or discussion with any Governmental Authority in
respect of any filings, investigation or other inquiry concerning this Agreement
or the transactions contemplated hereby (including the Merger) unless it
consults with the other party in advance and, to the extent reasonably
practicable and permitted by such Governmental Authority, gives the other party
the opportunity to attend and participate in the meeting or discussion;
40
(6) furnish the other party with copies of all material
correspondence, filings and communications (and memoranda setting forth the
substance thereof) between them and their Affiliates and their respective
Representatives on the one hand, and any Governmental Authority or members or
their respective staffs on the other hand, with respect to this Agreement and
the Merger;
(7) furnish the other party with such necessary information
and reasonable assistance as such other party and its Affiliates may reasonably
request in connection with their preparation of necessary filings, registrations
or submissions of information to any Governmental Authority, including any
filings necessary or appropriate under the provisions of the HSR Act; and
(8) not voluntarily extend any waiting period under the HSR
Act and/or enter into any agreement with a Governmental Authority to delay or
not to consummate the Merger except with the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed (which
reasonableness shall be determined in light of CIMA's and Cephalon's obligation
to consummate the Merger as promptly as reasonably practicable following the
date of this Agreement).
CIMA, Cephalon and their respective Subsidiaries may designate any
competitively sensitive information provided to the other under this Section
6.09(a) as "outside counsel only." Such information shall be given only to
outside counsel of the recipient. In addition, CIMA, Cephalon and their
respective Subsidiaries may redact any competitively sensitive information from
such documents shared with the other party or its counsel that is not pertinent
to the subject matter of a Requisite Regulatory Approval.
(b) Without limiting Section 6.09(a), CIMA and Cephalon shall:
(1) each use its reasonable best efforts to avoid the entry
of, or to have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing, including defending through litigation
on the merits any claim asserted in any court by any party; and
(2) each use its reasonable best efforts to avoid or eliminate
impediments under any antitrust, competition or trade regulation law that may be
asserted by any Governmental Authority with respect to the Merger so as to
enable the Closing to occur as soon as reasonably possible (and in any event
prior to the Termination Date), provided that nothing in this Section 6.09 shall
require either CIMA or Cephalon to (i) license, sell, divest or dispose of any
assets or businesses of CIMA or Cephalon or any of their respective Subsidiaries
or (ii) otherwise take or commit to take any action that limits its freedom of
action with respect to, or its ability to retain, any of the assets or
businesses of CIMA or Cephalon or any of their respective Subsidiaries if, any
such sale, divestiture, disposition or action (x) is not conditioned upon the
consummation of the Merger or (y) would, individually or in the aggregate, have
a Material Adverse Effect on the Surviving Corporation or Cephalon after giving
effect to the Merger.
41
(c) Each of CIMA and Cephalon shall give (or shall cause their
respective Subsidiaries to give) any notices to non-governmental third parties,
and use, and cause their respective Subsidiaries to use, reasonable best efforts
to obtain any non-governmental third party consents with respect to it, (i)
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, (ii) required to be disclosed in Section 5.03(g) of the CIMA
Disclosure Letter or (iii) required to prevent a CIMA Material Adverse Effect or
a Cephalon Material Adverse Effect from occurring prior to or after the
Effective Time. In the event that either party shall fail to obtain any third
party consent described in the first sentence of this Section 6.09(c), such
party shall use reasonable best efforts, and shall take any such actions
reasonably requested by the other party hereto, to minimize any adverse effect
upon CIMA and Cephalon, their respective Subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent; provided that no
obligation to make a material payment or to grant a material right shall be
imposed by this Section 6.09(c).
6.10 Indemnification.
(a) Following the Effective Time, Cephalon and Surviving Corporation
will indemnify, defend and hold harmless, and provide advancement of expenses
to, the present and former directors and officers of CIMA or any of its
Subsidiaries (each, an "Indemnified Party"), to the fullest extent permitted by
Law, against all costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
as incurred, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of actions or omissions occurring at or before the Effective Time (including
the transactions contemplated by this Agreement).
(b) For a period of six years following the Effective Time,
Surviving Corporation shall cause to be maintained in effect in the Constituent
Documents of it or any successor of it, provisions with respect to exculpation,
indemnification and advancement of expenses that are at least as favorable to
the intended beneficiaries as those presently contained in the Constituent
Documents of CIMA to the extent permitted by Law.
(c) For a period of six years following the Effective Time, Cephalon
shall, or shall cause Surviving Corporation to, provide director's and officer's
liability insurance for the benefit of the present and former officers and
directors of CIMA or any of its Subsidiaries with respect to claims against such
directors and officers arising from facts or events occurring before the
Effective Time (including the transactions contemplated by this Agreement),
which insurance will contain at least the same coverage (and not less than
$15,000,000 of coverage with respect to CIMA) and amounts, and contain terms and
conditions no less advantageous to the Indemnified Party as that coverage
currently provided to such Indemnified Party by CIMA; provided, however, that
Cephalon or Surviving Corporation shall not be required to pay annual premiums
in excess of $4,000,000, in which case Cephalon or Surviving Company shall
obtain in the aggregate as much comparable insurance as is reasonably available
for such amount to provide, to the extent practicable, the same amount of
coverage with respect to the present and former officers and directors of CIMA
and any of its Subsidiaries as coverage with respect to the present and former
officers and directors of Cephalon and any of its Subsidiaries; and provided,
further, that an Indemnified Party may be required to make application and
provide customary
42
representations and warranties to Cephalon's or Surviving Corporation's, as
applicable, insurance carrier for the purpose of obtaining such insurance.
(d) The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the Constituent Documents of CIMA, any other indemnification
arrangement, the DGCL or otherwise. The provisions of this Section 6.10 shall
survive the consummation of the Merger.
(e) If Cephalon or Surviving Corporation or any of its successors or
assigns consolidates with or merges into any other entity and is not the
continuing or surviving entity of such consolidation or merger or transfers all
or substantially all of its assets to any other entity, then and in each case,
Cephalon or Surviving Corporation, as applicable, will cause proper provision to
be made so that the successors and assigns of Cephalon or Surviving Corporation,
as applicable, shall assume the obligations set forth in this Section 6.10.
(f) The provisions of this Section 6.10 are expressly intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and Representatives.
6.11 Benefit Plans.
(a) From and after the Effective Time, Cephalon shall, and shall
cause its Subsidiaries (including Surviving Corporation), to cause the Benefit
Arrangements maintained by any one of them after the Effective Time to
recognize, at the least, each Continued Employee's years of service and
employment and level of seniority with any one of them prior to the Effective
Time for purposes of eligibility, vesting, benefit accrual and benefit
determination under such Benefit Arrangements (other than benefit accruals under
any defined benefit pension plan) maintained by any one of them after the
Effective Time to the same extent that such years of service and employment and
level of seniority were recognized by the Continued Employee's employer's
substantially similar Benefit Arrangement immediately prior to the Effective
Time. Moreover, from and after the Effective Time, Cephalon shall, and shall
cause its Subsidiaries (including Surviving Corporation) to, cause each Benefit
Plan maintained by any one of them after the Effective Time that a Continued
Employee may be eligible to participate in on or after the Effective Time to
waive any preexisting condition exclusion with respect to participation and
coverage requirements applicable to Continued Employees to the extent that such
exclusion did not apply to the Continued Employee prior to the Effective Time
under any similar Benefit Plan in which the Continued Employee participated
immediately prior to the Effective Time. If after the Effective Time, Cephalon
or any of its Subsidiaries (including Surviving Corporation) provides coverage
under a group health plan for Continued Employees (including their eligible
dependents) that is different from the group health plan in which the Continued
Employees participated immediately prior to the Effective Time, then Cephalon
shall cause, or shall cause the plan sponsor to cause, such group health plan to
credit such Continued Employees, for the current year, with any deductibles and
co-payments already incurred during such year under the group health plan in
which the Continued Employees participated immediately prior to the Effective
Time.
43
(b) From and after the Effective Time, Cephalon shall honor, fulfill
and discharge and shall cause Surviving Corporation to honor, fulfill and
discharge, in accordance with its terms, each Benefit Arrangement and each
employment and termination agreement between CIMA and any officer, director or
employee of CIMA, in each case in place immediately prior to the Effective Time,
including (A) all legal and contractual obligations pursuant to outstanding
retirement plans, salary and bonus deferral plans, vested and accrued benefits
and similar employment and benefit arrangements and agreements (specifically
including all of the "change in control" provisions under Benefit Arrangements
of CIMA) and (B) all vacation, personal and sick days accrued by Employees as of
the Effective Time. From and after the Effective Time, until the second
anniversary of the Effective Time, Cephalon and Surviving Corporation shall not
adopt or modify any Benefit Arrangement that would create or enhance any
disparity in the aggregate compensation and benefits between similarly situated
regular, full time employees of Cephalon on the one hand and of Surviving
Corporation on the other hand, other than to reflect local and competitive
employment market conditions. However, nothing contained in any of the foregoing
provisions of this Section 6.11(b) or elsewhere in this Agreement shall (x)
require Cephalon or its Subsidiaries (including Surviving Corporation) to
continue (A) any particular compensation or benefits or compensation, benefits
or employment agreement for any particular period of time beyond that to which
it is contractually bound or (B) any Benefit Arrangement for any particular
period of time beyond that to which it is contractually or otherwise legally
bound or (y) prevent the amendment, modification or termination of any such
compensation or benefits, compensation, benefits or employment agreement or
Benefit Arrangement except as may be prohibited by the terms thereof or
otherwise by law.
(c) Prior to the Effective Time, CIMA shall take all action
necessary to terminate the CIMA Stock Purchase Plan.
(d) Prior to the Effective Time, CIMA shall take all action
necessary to cause all CIMA Stock Options outstanding immediately prior to the
Effective Time to become fully vested and exercisable immediately prior to the
Effective Time.
6.12 Notification of Certain Matters. Cephalon and CIMA shall each give
prompt notice to the other party of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained herein
that reasonably could be expected to give rise, individually or in the
aggregate, to the failure of a condition in Article VII; provided, however, that
the delivery of any notice pursuant to this Section 6.12 shall not cure any
breach of any representation or warranty, the failure to comply with any
covenant, the failure to meet any condition or otherwise limit or affect the
remedies available hereunder to the party receiving such notice.
6.13 Exemption from Liability Under Section 16(b). Prior to the Effective
Time, the CIMA Board, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the interpretive guidance of
the SEC so that the disposition by any officer or director of CIMA who is a CIMA
Insider of shares of CIMA Common Stock or CIMA
44
Stock Options pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16 of the Exchange Act.
6.14 Control of Other Party's Business. Nothing contained in this
Agreement shall give any party, directly or indirectly, the right to control or
direct the operations of the other party prior to the consummation of the
Merger. Prior to the consummation of the Merger, each of Cephalon and CIMA shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
6.15 Treasury Regulation Statement. On the Closing Date, CIMA shall
deliver to Cephalon a properly executed statement in accordance with the
requirements of Treasury Regulation Section 1.897-2(h) and in a form reasonably
acceptable to Cephalon for purposes of satisfying Cephalon's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
ARTICLE VII
CONDITIONS TO THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each of Cephalon, MergerCo and CIMA to consummate the
Merger are subject to the fulfillment or written waiver by Cephalon and CIMA
before the Effective Time of each of the following conditions:
(a) Stockholder Approval. The CIMA Stockholder Approval shall have
been obtained.
(b) HSR Act. Any waiting period applicable to consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) Regulatory Approvals. Other than filings pursuant to the HSR
Act, all consents, approvals and authorizations of any Governmental Authority
required of CIMA or any of their Subsidiaries to consummate the Merger, the
failure of which to be obtained or taken, individually or in the aggregate,
would have a Material Adverse Effect on Cephalon or Surviving Corporation
(determined, for purposes of this clause, after giving effect to the Merger),
shall have been obtained.
(d) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Merger or makes illegal the consummation of the Merger (each
party agreeing to use its reasonable best efforts, subject to the provisions of
Section 6.09, including appealing to higher courts, to have any judgment,
decree, injunction or order lifted).
7.02 Conditions to CIMA's Obligation. CIMA's obligation to consummate the
Merger is also subject to the fulfillment or written waiver by CIMA before the
Effective Time of each of the following conditions:
45
(a) Cephalon's Representations and Warranties. The representations
and warranties of Cephalon in this Agreement, after giving effect to the
standard set forth in Section 5.02, shall be true and correct as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date; and CIMA shall have received a certificate, dated the Closing
Date, signed on behalf of Cephalon by the Chief Executive Officer or Chief
Financial Officer of Cephalon to that effect.
(b) Performance of Cephalon's Obligations. Cephalon shall have
performed or complied with in all material respects all obligations required to
be performed or complied with by it under this Agreement at or before the
Effective Time; and CIMA shall have received a certificate, dated the Closing
Date, signed on behalf of Cephalon by the Chief Executive Officer or Chief
Financial Officer of Cephalon to that effect.
7.03 Conditions to Cephalon's Obligation. Cephalon's obligation to
consummate the Merger is also subject to the fulfillment or written waiver by
Cephalon before the Effective Time of each of the following conditions:
(a) CIMA's Representations and Warranties. The representations and
warranties of CIMA in this Agreement, after giving effect to the standard set
forth in Section 5.02, shall be true and correct as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date; and Cephalon shall have received a certificate, dated the Closing
Date, signed on behalf of CIMA by the Chief Executive Officer or Chief Financial
Officer of CIMA to that effect.
(b) Performance of CIMA's Obligations. CIMA shall have performed or
complied with in all material respects all obligations required to be performed
or complied with by it under this Agreement at or before the Effective Time; and
Cephalon shall have received a certificate, dated the Closing Date, signed on
behalf of CIMA by the Chief Executive Officer or Chief Financial Officer of CIMA
to that effect.
(c) CIMA Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect on CIMA or any event
or development that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on CIMA.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger may be
abandoned, at any time before the Effective Time, whether before or (except as
restricted below) after approval of the matters presented in connection with the
Merger by the stockholders of CIMA:
46
(a) Mutual Agreement. By Cephalon or CIMA, with the mutual agreement
of the other party, which agreement shall have been approved by action of their
respective Boards of Directors;
(b) Breach by Cephalon. By CIMA, if there has occurred and is
continuing a breach by Cephalon of any representation, warranty, covenant or
agreement contained in this Agreement, after giving effect to the standard set
forth in Section 5.02, that (x) would result in a failure of a condition set
forth in Section 7.02 (a) or (b) and (y) cannot be cured prior to the
Termination Date, provided that CIMA shall have given Cephalon written notice,
delivered at least 30 days prior to such termination, stating CIMA's intention
to terminate this Agreement pursuant to this Section 8.01(b), absent a cure, and
the basis for such termination;
(c) Breach by CIMA. By Cephalon, if there has occurred and is
continuing a breach by CIMA of any representation, warranty, covenant or
agreement contained in this Agreement, after giving effect to the standard set
forth in Section 5.02, that (x) would result in a failure of a condition set
forth in Section 7.03 (a) or (b) and (y) cannot be cured prior to the
Termination Date, provided that Cephalon shall have given CIMA written notice,
delivered at least 30 days prior to such termination, stating Cephalon's
intention to terminate this Agreement pursuant to this Section 8.01(c), absent a
cure, and the basis for such termination;
(d) Adverse CIMA Action. By Cephalon, if (i) prior to obtaining the
CIMA Stockholder Approval, the CIMA Board shall have withdrawn or changed or
modified the CIMA Recommendation in a manner adverse to Cephalon, (ii) prior to
obtaining the CIMA Stockholder Approval, the CIMA Board shall have approved or
recommended to CIMA's stockholders an Acquisition Proposal, (iii) prior to
obtaining the CIMA Stockholder Approval, a tender offer or exchange offer for
shares of CIMA Common Stock is commenced (other than by Cephalon or any of its
Affiliates) and the CIMA Board fails to recommend that CIMA's stockholders
reject such tender or exchange offer within ten Business Days after receipt of
Cephalon's request to do so, or (iv) for any reason CIMA fails to call, hold or
convene the CIMA Meeting by the fifth Business Day prior to the Termination Date
(if the CIMA Meeting is required to be held on or prior to such date pursuant to
Section 6.02(f)); provided, however, that Cephalon's right to terminate this
Agreement under clause (iv) shall not be available if at such time CIMA would be
entitled to terminate this Agreement under Section 8.01(b); provided, further,
that the right to terminate this Agreement under this Section 8.01(d) shall not
be available to Cephalon after the CIMA Stockholder Approval has been obtained;
(e) [Intentionally Omitted]
(f) Delay. By Cephalon or CIMA, if the Effective Time has not
occurred by the close of business on April 30, 2004; provided that (i) in the
event that the Proxy Statement has not been cleared by the SEC on or prior to
the date (the "SEC Deadline Date") that is thirty Business Days prior to April
30, 2004, such April 30, 2004 date shall be extended by the number of days after
the SEC Deadline Date (not to exceed sixty calendar days) required for the Proxy
Statement to be cleared by the SEC and (ii) in the event the Closing has not
occurred by April 30, 2004 solely due to the failure to obtain a Requisite
Regulatory Approval (excluding the clearance by the SEC of the Proxy Statement),
such April 30, 2004 date shall be extended by sixty days whether or not extended
pursuant to clause (i) of this Section 8.01(f) (the April 30,
47
2004, as extended pursuant to the preceding proviso, the "Termination Date");
provided, further, that the right to terminate this Agreement under this Section
8.01(f) shall not be available to any party whose failure to comply with any
provision of this Agreement has been the cause of, or materially contributed to,
the failure of the Effective Time to occur on or before such date;
(g) Stockholders Do Not Approve. By Cephalon or CIMA, if the CIMA
Stockholder Approval shall not have been obtained at a duly held meeting of the
stockholders of CIMA called for such purpose (including any adjournment or
postponement thereof); provided that the right to terminate this Agreement under
this Section 8.01(g) shall not be available to any party whose failure to comply
with any provision of this Agreement has been the cause of, or materially
contributed to, the failure to obtain the CIMA Stockholder Approval;
(h) Denial of Regulatory Approval. By Cephalon or CIMA, if any
Governmental Authority of competent jurisdiction shall have issued an order,
judgment, decision, opinion, decree or ruling or taken any other action (which
the party seeking to terminate shall have used its reasonable best efforts to
resist, resolve, annul, quash, or lift, as applicable) permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement, and such order, decree, ruling or action shall have become final and
non-appealable; provided that the right to terminate this Agreement under this
Section 8.01(h) shall not be available to any party whose failure to comply with
any provision of this Agreement has been the cause of, or materially contributed
to, such action;
(i) CIMA Superior Proposal. By CIMA, if, prior to receipt of the
CIMA Stockholder Approval, the CIMA Board (i) concludes in good faith, following
receipt of advice of its outside legal counsel, that the failure to accept a
Superior Proposal would result in a breach of its fiduciary duties under
applicable law, and (ii) determines to accept such Superior Proposal, but only
if CIMA fulfills its obligation to pay a termination fee to Cephalon under
Section 8.02 hereof concurrent with such termination; provided, however, that
CIMA's right to terminate this Agreement under this Section 8.01(i) shall not be
available if CIMA is then in breach of Section 6.03; or
(j) [Intentionally Omitted.]
The party desiring to terminate this Agreement pursuant to Section
8.01 (other than pursuant to Section 8.01(a)) shall give written notice of such
termination to the other parties.
8.02 Effect of Termination and Abandonment.
(a) Limitation of Liability. In the event of any termination of this
Agreement as provided in Section 8.01, this Agreement shall forthwith become
wholly void and of no further force and effect (except with respect to Section
5.03(aa), Section 6.06(b), this Section 8.02 and Article IX, which shall remain
in full force and effect) and there shall be no liability on the part of
Cephalon, CIMA or MergerCo, except with respect to Section 5.03(aa), Section
6.06(b), this Section 8.02 and Article IX and with respect to any Liabilities or
damages incurred or suffered by a party as a result of the willful breach by the
other party of any of its
48
representations, warranties, covenants or other agreements set forth in this
Agreement (after giving effect to the standard in Section 5.02).
(b) CIMA Expenses. CIMA and Cephalon agree that if this Agreement is
terminated pursuant to Section 8.01(b), then Cephalon shall pay to CIMA an
amount equal to the sum of CIMA's Expenses up to an amount equal to $5,500,000.
(c) Cephalon Expenses. CIMA and Cephalon agree that if this
Agreement is terminated pursuant to Section 8.01(c), then CIMA shall pay to
Cephalon an amount equal to the sum of Cephalon's Expenses up to an amount equal
to $5,500,000.
(d) Payment of Expenses. Payment of Expenses pursuant to Sections
8.02(b) or 8.02(c) shall be made not later than two Business Days after delivery
to the other party of notice of demand for payment and a documented itemization
setting forth in reasonable detail all Expenses of the party entitled to receive
payment (which itemization may be supplemented and updated from time to time by
such party until the ninetieth (90th) day after such party delivers such notice
of demand for payment).
(e) [Intentionally Omitted.]
(f) CIMA Termination Fee. CIMA agrees to pay to Cephalon (without
duplication) the fees set forth below under the following circumstances:
(1) If (A) this Agreement is terminated pursuant to Section
8.01(g) or 8.01(d)(iii) and (B) after the date hereof, but prior to the time of
the CIMA Meeting, an Acquisition Proposal relating to CIMA had been publicly
proposed or publicly announced, and (C) on or prior to the twelve-month
anniversary of the termination of this Agreement, CIMA consummates, or enters
into an agreement providing for, a Competing Transaction, CIMA shall pay
Cephalon a fee of $16,250,000 at the earlier of the time CIMA consummates, or
enters into the agreement providing for a Competing Transaction.
(2) If Cephalon terminates this Agreement pursuant to Section
8.01(d)(i), 8.01(d)(ii) or 8.01(d)(iv), CIMA shall pay Cephalon a fee of
$16,250,000 within two Business Days following termination.
(3) CIMA shall pay to Cephalon a fee of $16,250,000 prior to
or concurrently with any termination of this Agreement by CIMA pursuant to
Section 8.01(i). In no event shall fees payable by CIMA pursuant to Section
8.02(c) and this Section 8.02(f) exceed $16,250,000.
(g) Cephalon Termination Fee. If this Agreement is terminated
pursuant to (i) Section 8.01(f) as a result of the failure of a condition set
forth in Sections 7.01(b) or 7.01(d) to be satisfied on or before the
Termination Date or (ii) Section 8.01(h), Cephalon shall pay to CIMA a fee of
$16,250,000 within two Business Days following termination.
(h) All payments to be made by a party under this Section 8.02 shall
be made by wire transfer of immediately available funds to an account designated
by the other party.
49
(i) The parties each agree that the agreements contained in this
Section 8.02 are integral parts of the transaction contemplated by this
Agreement and that, without these agreements, neither CIMA nor Cephalon would
enter into this Agreement. Accordingly, if a party fails to promptly pay the
other party an amount due under this Section 8.02, such failing party shall pay
the costs and expenses of such other party (including reasonable legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
legal action, taken to collect payment, together with interest on the amount of
the payment at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. The representations, warranties, agreements and covenants
contained in this Agreement will not survive the Effective Time (other than
Section 2.04, Article III, Sections 6.04, 6.06(b), 6.10, 6.11 and this Article
IX).
9.02 Waiver; Amendment. At any time before the Effective Time, whether
before or after the CIMA Stockholder Approval is obtained, any provision of this
Agreement may be (a) waived by the party benefited by the provision, but only in
writing, or (b) amended or modified at any time, but only by a written agreement
executed in the same manner as this Agreement; provided, however, that after the
CIMA Stockholder Approval is obtained, there shall not be made any amendment or
waiver that by law or the listing requirements of Nasdaq requires further
approval by the stockholders of CIMA without such further approval first being
obtained. At any time prior to the Effective Time, the parties, by action taken
or authorized by their respective boards of directors, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to constitute an original.
9.04 Governing Law. This Agreement is governed by, and will be interpreted
in accordance with, the laws of the State of Delaware applicable to contracts
made and to be performed entirely within that State, without regard to the
conflicts of laws principles of any State.
9.05 Expenses. Subject to Section 8.02, in the event that the Merger is
not consummated pursuant to this Agreement, each party will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby, except that Cephalon and CIMA will each bear and pay
one-half of the following expenses: (i) the costs (excluding the fees and
disbursements of Representatives) incurred in connection with the preparation
50
(including copying and printing and distributing) of the Proxy Statement and
applications to Governmental Authorities for the approval of the Merger and (ii)
all listing, filing or registration fees, including fees paid for filing the
Proxy Statement with the SEC, filing fees for the HSR Act notices and any other
fees paid for filings with Governmental Authorities.
9.06 Notices. All notices, requests and other communications given or made
under this Agreement must be in writing and will be deemed given when personally
delivered, facsimile transmitted (with confirmation), five Business Days after
mailing by registered or certified mail (return receipt requested), or one
Business Day after overnight mailing by reputable overnight courier, to the
Persons and addresses set forth below or such other place as such party may
specify by notice.
If to Cephalon or MergerCo, to:
Cephalon, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President, General
Counsel and Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to CIMA, to:
CIMA LABS INC.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
R. ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
51
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
represents the entire understanding of the parties hereto regarding the
transactions contemplated hereby and supersede any and all other oral or written
agreements previously made or purported to be made, other than the
Confidentiality Agreement, which will survive the execution and delivery of this
Agreement. No representation, warranty, inducement, promise, understanding or
condition not set forth in this Agreement has been made or relied on by any
party in entering into this Agreement. Except for Section 6.10, which is
intended to benefit the Indemnified Parties to the extent stated, nothing
expressed or implied in this Agreement is intended to confer any rights,
remedies, obligations or liabilities upon any Person other a party to this
Agreement.
9.08 Severability. If any provision of this Agreement or the application
thereof to any Person (including the officers and directors of Cephalon or CIMA)
or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions, or the application of
such provision to Persons or circumstances other than those as to which it has
been held invalid or unenforceable, will remain in full force and effect and
will in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination,
the parties will negotiate in good faith in an effort to agree upon a suitable
and equitable substitute provision to effect the original intent of the parties.
Prior to the termination of this Agreement in accordance with its terms, the
absence of a vote, approval or adoption by the stockholders of Cephalon or CIMA
will not render invalid or inoperative any provision hereof not specifically
required to be contained in the plan of merger to be adopted by such
stockholders pursuant to the applicable provisions of the DGCL.
9.09 Submission to Jurisdiction; Waivers. Each party hereto irrevocably
agrees that any legal action or proceeding with respect to this Agreement or for
recognition and enforcement of any judgment in respect hereof brought by any
party hereto or its successors or assigns may be brought and determined in the
Chancery or other Courts of the State of Delaware, and each party hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the nonexclusive
jurisdiction of the aforesaid courts. Each party hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a)
any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to lawfully serve
process, (b) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), or (c) to the
fullest extent permitted by applicable law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper or (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.
9.10 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
52
9.11 Acknowledgment. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
9.12 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of Law or otherwise), without the prior
written consent of each other party hereto, and any attempt to make any such
assignment without such consent shall be null and void.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
53
IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
CEPHALON, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., Ph.D.
Title: Chairman and Chief Executive Officer
CIMA LABS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Interim Chief Executive Officer
MERGERCO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., PhD.
Title: President
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
54
ANNEX 1
FORM OF SURVIVING CORPORATION CERTIFICATE OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
CIMA LABS INC.
----------------------
FIRST: The name of the Corporation is CIMA LABS INC. (the "Corporation").
SECOND: The registered office of the Corporation is to be located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, in the City of Wilmington, in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the DGCL.
FOURTH: The total number of shares of capital stock which the Corporation
is authorized to issue is 1,000 shares of Common Stock, par value $0.01 per
share.
FIFTH: Unless and except to the extent that the bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
SIXTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors of the Corporation is
expressly authorized to make, alter and repeal the bylaws of the Corporation,
subject to the power of the stockholders of the Corporation to alter or repeal
any bylaw whether adopted by them or otherwise.
SEVENTH: A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the DGCL as the same exists or may
hereafter be amended. Any amendment, modification or repeal of the foregoing
sentence shall not adversely affect any right or protection of a director of the
Corporation hereunder in respect of any act or omission occurring prior to the
time of such amendment, modification or repeal.
EIGHTH: The Corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
article.
ANNEX 2
FORM OF SURVIVING CORPORATION BY-LAWS
BYLAWS
OF
CIMA LABS INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES AND FISCAL YEAR
1.01. REGISTERED OFFICE: The registered office of the corporation shall be
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle,
Delaware, until otherwise established in the manner provided by law.
1.02. OTHER OFFICES: The corporation may also have offices at such other
places within or without the State of Delaware as the board of directors may
from time to time determine or the business of the corporation requires.
1.03. FISCAL YEAR: The fiscal year of the corporation shall end on the
31st of December in each year.
ARTICLE II
NOTICE - WAIVERS - MEETINGS
2.01. NOTICE, WHAT CONSTITUTES:
(a) NOTICE TO STOCKHOLDERS: Whenever, under the provisions of the
General Corporation Law of the State of Delaware (the "DGCL") or the certificate
of incorporation or these bylaws, notice is required to be given to any
stockholder, it shall mean (i) notice in writing delivered personally or mailed
to the stockholder at his address as it appears on the books of the corporation,
or (ii) if consented to by the stockholder, notice by a form of communication,
not directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process (any such method, an "electronic transmission").
(b) NOTICE TO DIRECTORS: Whenever, under the provisions of the DGCL
or the certificate of incorporation or these bylaws, notice is required to be
given to any director, it shall mean (i) notice in writing delivered personally
or mailed (whether by United States mail, courier or other form of express
delivery service) to the director at his address as it appears on the books of
the corporation or (ii) if consented to by the director, notice by electronic
transmission.
(c) WHEN NOTICE IS DEEMED GIVEN: If the notice is sent by mail, it
shall be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the stockholder or director at such stockholder's or
director's address as it appears on the books of the corporation. If notice is
given by facsimile telecommunication, it shall be deemed to be given when
directed to a number at which the stockholder or director has consented to
receive notice. If notice is given by electronic mail, it shall be deemed given
when directed to an electronic mail address at which the stockholder or director
has consented to receive notice. If notice is given by a posting on an
electronic network together with separate notice to the stockholder or director
of such specific posting, it shall be deemed to be given upon the later of such
posting and the giving of such separate notice. If notice is given by another
form of electronic transmission, it shall be deemed given when directed to the
stockholder or director. Any consent to notice by electronic transmission shall
be revocable by the stockholder or director by written notice to the
corporation. An affidavit of the secretary or an assistant secretary or of the
transfer agent or other agent of the corporation that notice has been given by a
form of electronic transmission shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS: Notice of a regular
meeting of the board of directors need not be given. Notice of every special
meeting of the board of directors shall be given to each director either (a) in
writing delivered personally or mailed (whether by United States mail, courier
or other form of express delivery service) to the director at his address as it
appears on the books of the corporation, (b) by telephonic communications, or
(c) by electronic transmission. Notice by personal delivery, telephonic
communications, or electronic transmission shall be given at least 24 hours
prior to such special meeting. Notice by courier or express delivery service
shall be given at least 48 hours prior to such special meeting. Notice by United
States mail shall be given at least five days prior to such special meeting.
Every such notice shall state the time and place of the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the board need be specified in a notice of the meeting.
2.03. NOTICE OF MEETINGS OF STOCKHOLDERS: Written notice of the place, if
any, date and hour of every meeting of the stockholders, whether annual or
special, as well as the means of remote communication, if any, by which
stockholders and proxyholders may be deemed to be present in person and vote at
such meeting, shall be given to each stockholder of record entitled to vote at
the meeting not less than five nor more than 60 days before the date of the
meeting. Every notice of a special meeting shall state the purpose or purposes
thereof.
2.04. WAIVERS OF NOTICE:
(a) WRITTEN WAIVER: Whenever notice is required to be given under
any provisions of the DGCL or the certificate of incorporation or these bylaws,
a written waiver, signed by the person or persons entitled to the notice, or a
waiver by electronic transmission by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a committee of
directors need be
2
specified in any written waiver of notice of such meeting or any waiver by
electronic transmission.
(b) WAIVER BY ATTENDANCE: Attendance of a person at a meeting,
either in person or by proxy, shall constitute a waiver of notice of such
meeting, except where a person attends a meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.
2.05. EXCEPTION TO REQUIREMENTS OF NOTICE:
(a) GENERAL RULE: Whenever notice is required to be given, under any
provision of the DGCL or the certificate of incorporation or these bylaws, to
any person with whom communication is unlawful, the giving of such notice to
such person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such notice to
such person. Any action or meeting which shall be taken or held without notice
to any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given.
(b) STOCKHOLDERS WITHOUT FORWARDING ADDRESSES: Whenever notice is
required to be given, under any provision of the DGCL or the certificate of
incorporation or these bylaws, to any stockholder to whom (i) notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to such person during the period
between such two consecutive annual meetings, or (ii) all, and at least two,
payments (if sent by first class mail) of dividends or interest on securities
during a 12 month period, have been mailed addressed to such person at his
address as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice had been duly given. If
any such person shall deliver to the corporation a written notice setting forth
the person's then current address, the requirement that notice be given to such
person shall be reinstated. The exception in clause (i) of this subsection (b)
shall not be applicable to any notice returned as undeliverable if the notice
given was by electronic transmission.
(c) UNDELIVERABLE ELECTRONIC TRANSMISSIONS: Any consent to delivery
of notice by electronic transmission shall be deemed revoked if (i) the
corporation is unable to deliver by electronic transmission two consecutive
notices by the corporation in accordance with such consent and (ii) such
inability becomes known to the secretary or an assistant secretary of the
corporation or to the transfer agent or other person responsible for the giving
of notice; provided, however, that the inadvertent failure to treat such
inability as a revocation shall not invalidate any meeting or other action. In
the event any consent to electronic delivery is deemed revoked under this
Section 2.05(c), delivery of notice shall be made by other means unless subject
to an exception under subsections (a) or (b) above.
2.06. CONFERENCE MEETINGS: One or more directors may participate in a
meeting of the board, or of a committee of the board, by means of conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear
3
each other. Participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
ARTICLE III
MEETINGS OF STOCKHOLDERS
3.01. PLACE OF MEETING; PARTICIPATION BY REMOTE COMMUNICATION: All
meetings of the stockholders of the corporation shall be held at such place
within or without the State of Delaware as shall be designated by the board of
directors in the notice of such meeting. The board of directors may, in its sole
discretion, determine (a) that the meeting shall not be held at any place, but
shall instead be held solely by means of remote communication equipment or (b)
that in addition to being held at the place specified in the notice of the
meeting, the stockholders may participate in the meeting and be deemed present
in person and vote by means of remote communication. Subject to any guidelines
or procedures adopted by the board of directors, stockholders and proxyholders
not physically present at a meeting of stockholders but who attend by means of
remote communication approved by the board of directors may participate in the
meeting and be deemed present in person and vote at the meeting; provided,
however, that (x) the corporation must implement reasonable measures to verify
that each person deemed present and permitted to vote at the meeting by means of
remote communication is a stockholder or proxyholder, (y) the corporation must
implement reasonable measures to provide such stockholders and proxyholders a
reasonable opportunity to participate in the meeting and to vote on matters
submitted to the stockholders, including an opportunity to read or hear the
proceedings of the meeting substantially concurrently with such proceedings, and
(z) if any stockholder or proxyholder votes or takes other action at the meeting
by means of remote communication, a record of such vote or other action shall be
maintained by the corporation.
3.02. ANNUAL MEETING: The board of directors may fix and designate the
date and time of the annual meeting of the stockholders and at said meeting the
stockholders then entitled to vote shall elect directors and shall transact such
other business as may properly be brought before the meeting.
3.03. SPECIAL MEETINGS: Special meetings of the stockholders of the
corporation may be called at any time by the chairman of the board, a majority
of the board of directors, the president, or at the request, in writing, of
stockholders entitled to cast at least a majority of the votes that all
stockholders are entitled to cast at the particular meeting. At any time, upon
the written request of any person or persons who have duly called a special
meeting, which written request shall state the purpose or purposes of the
meeting, it shall be the duty of the secretary to fix the date of the meeting
which shall be held at such date and time as the secretary may fix, not less
than ten nor more than 60 days after the receipt of the request, and to give due
notice thereof. If the secretary shall neglect or refuse to fix the time and
date of such meeting and give notice thereof, the person or persons calling the
meeting may do so.
4
3.04. QUORUM, MANNER OF ACTING AND ADJOURNMENT:
(a) QUORUM: The holders of a majority in voting power of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders except as otherwise provided by the
DGCL, by the certificate of incorporation or by these bylaws. If a quorum is not
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time until a quorum is present or
represented, without notice other than announcement at the meeting of the time
and place, if any, to which the meeting has been adjourned and the means of
remote communication, if any, by which stockholders and proxyholders may be
deemed to be present in person and vote at such adjourned meeting. At any such
adjourned meeting at which a quorum is present or represented, the corporation
may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
(b) MANNER OF ACTING: Directors shall be elected by a plurality of
the votes of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. In all matters other than the
election of directors, the affirmative vote of the majority in voting power of
shares present in person or represented by proxy at the meeting and entitled to
vote thereon shall be the act of the stockholders, unless the question is one
upon which, by express provision of the applicable statute or the certificate of
incorporation, a different vote is required in which case such express provision
shall govern and control the decision of the question. The stockholders present
in person or represented by proxy at a duly organized meeting can continue to do
business until adjournment, notwithstanding withdrawal of enough stockholders to
leave less than a quorum.
3.05. ORGANIZATION: At every meeting of the stockholders, the chairman of
the board, if there be one, or in the case of a vacancy in the office or absence
of the chairman of the board, one of the following persons present in the order
stated: the vice chairman of the board, if one has been appointed, the
president, the vice presidents in their order of rank or seniority, a chairman
designated by the board of directors or a chairman chosen by the stockholders
entitled to cast a majority of the votes which all stockholders present in
person or by proxy are entitled to cast, shall act as chairman of the meeting,
and the secretary, or, in the absence of the secretary, an assistant secretary,
or in the absence of the secretary and the assistant secretaries, a person
appointed by the chairman of the meeting, shall act as secretary of the meeting.
3.06. VOTING:
(a) GENERAL RULE: Unless otherwise provided in the certificate of
incorporation, each stockholder shall be entitled to one vote, in person or by
proxy, for each share of capital stock having voting power held by such
stockholder.
(b) VOTING AND OTHER ACTION BY PROXY:
5
(i) A stockholder may authorize another person or persons to
act for the stockholder as proxy. In the case of a proxy granted by execution of
a writing, such execution may be accomplished by the stockholder or the
authorized officer, director, employee or agent of the stockholder signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature. A
stockholder may authorize another person or persons to act for the stockholder
as proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder
of the proxy to receive such transmission if such telegram, cablegram or other
means of electronic transmission sets forth or is submitted with information
from which it can be determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder.
(ii) No proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(iii) A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only so long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
3.07. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING: Any action required to
be taken at any annual or special meeting of stockholders of the corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required in this
section to the corporation, written consents signed by a sufficient number of
holders to take action are delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. A telegram, cablegram or other electronic transmission
consenting to an action to be taken and transmitted by a stockholder or
proxyholder, or by a person or person authorized to act for a stockholder or
proxyholder, shall be deemed to be written, signed and dated for purposes of
this section, provided that any such telegram, cablegram or other electronic
transmission sets forth or is delivered with information from which the
corporation can determine (a) that the telegram, cablegram or other electronic
transmission was transmitted by the stockholder or proxyholder or by a person or
persons authorized to act for the stockholder or proxyholder and
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(b) the date on which such stockholder or proxyholder or authorized person or
persons transmitted such telegram, cablegram or electronic transmission. The
date on which such telegram, cablegram or electronic transmission is transmitted
shall be deemed to be the date on which such consent was signed. No consent
given by telegram, cablegram or other electronic transmission shall be deemed to
have been delivered until such consent is reproduced in paper form and until
such paper form shall be delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Notwithstanding the
foregoing limitations on delivery, consents given by telegram, cablegram or
other electronic transmission may be otherwise delivered to the principal place
of business of the corporation or to an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded if, to the extent and in the manner provided by resolution of the board
of directors of the corporation. Any copy, facsimile or other reliable
reproduction of a consent in writing may be substituted or used in lieu of the
original writing for any and all purposes for which the original writing could
be used, provided that such copy, facsimile or other reproduction shall be a
complete reproduction of the entire original writing. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and who, if the action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of holders to take the action
were delivered to the corporation.
3.08. VOTING LISTS: The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting. The list shall be arranged in alphabetical order, showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Electronic mail addresses or other electronic contact information
need not be included on such list. The list shall be open to the examination of
any stockholder, for any purpose germane to the meeting for a period of at least
10 days prior to the meeting: (a) on a reasonably accessible electronic network,
provided that the information required to gain access to such list is provided
with the notice of the meeting, or (b) during ordinary business hours, at the
principal place of business of the corporation. In the event that the
corporation determines to make the list available on an electronic network, the
corporation may take reasonable steps to ensure that such information is
available only to stockholders of the corporation. If the meeting is to be held
at a place, then the list shall be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. If the meeting is to be held solely by means of
remote communication, then the list shall be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible
electronic network, and the information required to access such list shall be
provided with the notice of the meeting.
3.09. INSPECTORS OF ELECTION:
(a) APPOINTMENT: Elections of directors need not be by written
ballot, and the vote upon any other matter need not be by written ballot. In
advance of any meeting of stockholders the board of directors may, and if
required by law shall, appoint one or more
7
inspectors, who need not be stockholders, to act at the meeting. If inspectors
are not so appointed, the chairman of the meeting may, and if required by law
shall, and upon the demand of any stockholder or his proxy at the meeting and
before voting begins shall, appoint one or more inspectors. The number of
inspectors shall be either one or three, as determined in the case of inspectors
appointed upon demand of a stockholder or his proxy, by stockholders present
entitled to cast a majority of the votes which all stockholders present are
entitled to cast thereon. No person who is a candidate for office shall act as
an inspector. In case any person appointed as an inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
board of directors in advance of the convening of the meeting, or at the meeting
by the chairman of the meeting.
(b) DUTIES: If inspectors are appointed, they shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the authenticity,
validity and effect of proxies and ballots, shall receive votes or ballots,
shall hear and determine all challenges and questions in any way arising in
connection with the right to vote, shall count and tabulate all votes, shall
determine the result, and shall do such acts as may be proper to conduct the
election or vote with fairness to all stockholders. If there be three inspectors
of election, the decision, act or certificate of a majority shall be effective
in all respects as the decision, act or certificate of all.
(c) REPORT: On request of the chairman of the meeting or of any
stockholder or his proxy, or if required by law, the inspectors shall make a
report in writing of any challenge or question or matter determined by them, and
execute a certificate of any fact found by them.
ARTICLE IV
BOARD OF DIRECTORS
4.01. POWERS: All powers vested by law in the corporation shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of directors.
4.02. NUMBER AND TERM OF OFFICE:
(a) Number.--The board of directors shall consist of such number of
directors as may be determined from time to time by resolution of the board of
directors.
(b) Term of Office.--Each director shall hold office until the
expiration of the term for which he was elected or until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal. A decrease in the number of directors shall not have the effect of
shortening the term of any incumbent director.
4.03. VACANCIES:
(a) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having a right to vote as a
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single class may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until their successors are elected and qualified or until
their earlier death, resignation or removal. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute. Whenever the holders of any class or classes of stock or series thereof
are entitled to elect one or more directors by the provisions of the certificate
of incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
(b) Action by Resigned Directors.--When one or more directors resign
from the board effective at a future date, the directors then in office,
including those who have so resigned, shall have power by the applicable vote to
fill the vacancies, the vote thereon to take effect when the resignations become
effective.
4.04. RESIGNATIONS: Any director may resign at any time upon notice given
in writing or by electronic transmission to the corporation. The resignation
shall be effective upon receipt thereof by the corporation or at such subsequent
time as shall be specified in the notice of resignation and, unless otherwise
specified in the notice, the acceptance of the resignation shall not be
necessary to make it effective.
4.05. REMOVAL: Any director or the entire board of directors may, unless
otherwise provided by law, be removed with or without cause by the holders of
shares entitled to cast a majority of the votes which all stockholders are
entitled to cast at an election of directors.
4.06. ORGANIZATION: At every meeting of the board of directors, the
chairman of the board, if there be one, or, in the case of a vacancy in the
office or absence of the chairman of the board, one of the following officers
present in the order stated: the vice chairman of the board, if there be one,
the president, the vice presidents in their order of rank and seniority, or a
chairman of the meeting chosen by a majority of the directors present, shall
preside, and the secretary, or, in the absence of the secretary, an assistant
secretary, or in the absence of the secretary and the assistant secretaries, any
person appointed by the chairman of the meeting, shall act as secretary of the
meeting.
4.07. PLACE OF MEETING: Meetings of the board of directors shall be held
at such place within or without the State of Delaware as the board of directors
may from time to time determine, or as may be designated in the notice of the
meeting.
4.08. REGULAR MEETINGS: Regular meetings of the board of directors shall
be held without notice at such time and place as shall be designated from time
to time by resolution of the board of directors.
9
4.09. SPECIAL MEETINGS: Special meetings of the board of directors shall
be held whenever called by the president or by two or more of the directors.
4.10. QUORUM, MANNER OF ACTING AND ADJOURNMENT:
(a) GENERAL RULE: At all meetings of the board a majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by the DGCL or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present.
(b) UNANIMOUS WRITTEN CONSENT: Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors may be taken without a meeting, if all
members of the board consent thereto in writing or by electronic transmission,
and the writing or writings or electronic transmission or transmissions are
filed with the minutes of proceedings of the board. Such filing shall be in
paper form if the minutes are maintained in paper form and shall be in
electronic form if the minutes are maintained in electronic form.
4.11. EXECUTIVE AND OTHER COMMITTEES:
(a) ESTABLISHMENT: The board of directors may, by resolution,
establish an Executive Committee and one or more other committees, each
committee to consist of one or more directors. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee and the alternate or alternates, if
any, designated for such member, the member or members of the committee present
at any meeting and not disqualified from voting, whether or not they constitute
a quorum, may unanimously appoint another director to act at the meeting in the
place of any such absent or disqualified member.
(b) POWERS: The Executive Committee, if established, and any such
other committee to the extent provided in the resolution establishing such
committee shall have and may exercise all the power and authority of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by the DGCL to be submitted to stockholders
for approval, (ii) adopting, amending or repealing any bylaw of the corporation,
(iii) the creation or filling vacancies in the board of directors or (iv) the
amendment or repeal of any resolution of the board of directors that by its
terms is amendable or repealable only by the board of directors. The Executive
Committee shall, without limitation, have the power and authority to declare
dividends, to authorize the issuance of stock and to adopt a certificate of
ownership and merger pursuant to Section 253 of
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the DGCL (provided that no vote of stockholders of the corporation is required
for the effectuation of such merger). Other committees shall have such names as
may be determined from time to time by resolution adopted by the board of
directors. Each committee so formed shall keep regular minutes of its meetings
and report the same to the board of directors when required.
(c) COMMITTEE PROCEDURES: The term "board of directors" or "board,"
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall be
construed to include and refer to the Executive Committee and any other
committees of the board.
4.12. COMPENSATION OF DIRECTORS: Unless otherwise restricted by the
certificate of incorporation, the board of directors shall have the authority to
fix the compensation of directors and a director may be a salaried officer of
the Corporation.
ARTICLE V
OFFICERS
5.01. NUMBER, QUALIFICATIONS AND DESIGNATION: The officers of the
corporation shall be chosen by the board of directors and shall include a
president, a secretary, a treasurer (and in addition may include one or more
vice presidents) and such other officers as may be elected in accordance with
the provisions of Section 5.03 of this Article V. Any number of offices may be
held by the same person. Officers may, but need not, be directors or
stockholders of the corporation. The board of directors may elect from among the
members of the board a chairman of the board and a vice chairman of the board
who shall be officers of the corporation.
5.02. ELECTION AND TERM OF OFFICE: The officers of the corporation, except
those elected by delegated authority pursuant to Section 5.03 of this Article,
shall be elected annually by the board of directors, and each such officer shall
hold office for a term of one year and until a successor is elected and
qualified, or until his or her earlier resignation or removal. Any officer may
resign at any time upon written notice to the corporation.
5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS: The board of directors
may from time to time elect such other officers and appoint such committees,
employees or other agents as it deems necessary, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as are
provided in these bylaws, or as the board of directors may from time to time
determine. The board of directors may delegate to any officer or committee the
power to elect subordinate officers and to retain or appoint employees or other
agents, or committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
5.04. REMOVAL OF OFFICERS AND AGENTS: Any officer or agent of the
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
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5.05. VACANCIES: A vacancy in any office because of death, resignation,
removal, disqualification, or any other cause, may be filled by the board of
directors or by the officer or committee to which the power to fill such office
has been delegated pursuant to Section 5.03, as the case may be, and if the
office is one for which these bylaws prescribe a term, shall be filled for the
unexpired portion of the term.
5.06. THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD: The chairman of the
board, if there be one, or in the absence of the chairman, the vice chairman of
the board, if there be one, shall preside at all meetings of the stockholders
and of the board of directors, and shall perform such other duties as may from
time to time be assigned to them by the board of directors.
5.07. THE PRESIDENT: The president shall have general supervision over the
business and operations of the corporation, subject, however, to the control of
the board of directors. The president shall, in general, perform all duties
incident to the office of president, and such other duties as from time to time
may be assigned by the board of directors.
5.08. THE VICE PRESIDENTS: The vice presidents shall perform the duties of
the president in the absence of the president and such other duties as may from
time to time be assigned to them by the board of directors or by the president.
5.09. THE SECRETARY: The secretary, or an assistant secretary, shall
attend all meetings of the stockholders and of the board of directors and shall
record the proceedings of the stockholders and of the directors and of
committees of the board in a book or books to be kept for that purpose; shall
see that notices are given and records and reports properly kept and filed by
the corporation as required by law; shall be the custodian of the seal of the
corporation and see that it is affixed to all documents to be executed on behalf
of the corporation under its seal; and, in general, shall perform all duties
incident to the office of secretary, and such other duties as may from time to
time be assigned by the board of directors or the president.
5.10. THE CHIEF FINANCIAL OFFICER AND TREASURER: The chief financial
officer and treasurer, or an assistant treasurer, shall have or provide for the
custody of the funds or other property of the corporation; shall collect and
receive or provide for the collection and receipt of moneys earned by or in any
manner due to or received by the corporation; shall deposit all funds in his or
her custody as treasurer in such banks or other places of deposit as the board
of directors may from time to time designate; whenever so required by the board
of directors, shall render an account showing his or her transactions as
treasurer and the financial condition of the corporation; and, in general, shall
discharge such other duties as may from time to time be assigned by the board of
directors or the president.
5.11. OFFICERS' BONDS: No officer of the corporation need provide a bond
to guarantee the faithful discharge of the officer's duties unless the board of
directors shall by resolution so require a bond in which event such officer
shall give the corporation a bond (which shall be renewed if and as required) in
such sum and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of office.
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5.12. SALARIES: The salaries of the officers and agents of the corporation
elected by the board of directors shall be fixed from time to time by the board
of directors.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
6.01. FORM AND ISSUANCE:
(a) ISSUANCE: The shares of the corporation shall be represented by
certificates unless the board of directors shall by resolution provide that some
or all of any class or series of stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until the
certificate is surrendered to the corporation. Notwithstanding the adoption of
any resolution providing for uncertificated shares, every holder of stock
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
corporation by, the chairman or vice chairman of the board of directors, or the
president or vice president, and by the treasurer or an assistant treasurer, or
the secretary or an assistant secretary, representing the number of shares
registered in certificate form.
(b) FORM AND RECORDS: Stock certificates of the corporation shall be
in such form as approved by the board of directors. The stock record books and
the blank stock certificate books shall be kept by the secretary or by any
agency designated by the board of directors for that purpose. The stock
certificates of the corporation shall be numbered and registered in the stock
ledger and transfer books of the corporation as they are issued.
(c) SIGNATURES: Any of or all the signatures upon the stock
certificates of the corporation may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer,
transfer agent or registrar, before the certificate is issued, it may be issued
with the same effect as if the signatory were such officer, transfer agent or
registrar at the date of its issue.
6.02. TRANSFER: Transfers of shares shall be made on the share register or
transfer books of the corporation upon surrender of the certificate therefor,
endorsed by the person named in the certificate or by an attorney lawfully
constituted in writing. No transfer shall be made which would be inconsistent
with the provisions of Article 8, Title 6 of the Delaware Uniform Commercial
Code-Investment Securities.
6.03. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES: The board of
directors may direct a new certificate of stock or uncertificated shares to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or the legal representative of the owner, to give
the corporation a bond sufficient to indemnify against any claim that may be
13
made against the corporation on account of the alleged loss, theft or
destruction of such certificate or the issuance of such new certificate or
uncertificated shares.
6.04. RECORD HOLDER OF SHARES: The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Delaware.
6.05. DETERMINATION OF STOCKHOLDERS OF RECORD:
(a) MEETINGS OF STOCKHOLDERS: In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the board of directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the board of directors, and which record
date shall not be more than 60 nor less than ten days before the date of such
meeting. If no record date is fixed by the board of directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the board of
directors fixes a new record date for the adjourned meeting.
(b) CONSENT OF STOCKHOLDERS: In order that the corporation may
determine the stockholders entitled to consent to corporate action in writing
without a meeting, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which date shall not be more than ten
days after the date upon which the resolution fixing the record date is adopted
by the board of directors. If no record date has been fixed by the board of
directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the board
of directors is required by the DGCL, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by the DGCL, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
(c) DIVIDENDS: In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the
14
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
ARTICLE VII
INDEMNIFICATION
7.01 SCOPE OF INDEMNIFICATION:
(a) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, which
is covered by subsection (b) below) by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court of
competent jurisdiction in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for
15
such expenses which the Court of Chancery or such other court of competent
jurisdiction shall deem proper.
(c) To the extent that a present or former director or officer of
the corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) above (unless
ordered by a court of competent jurisdiction) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) above. Such determination shall
be made, with respect to a person who is a director or officer at the time of
such determination, (i) by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum or (ii) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum or (iii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion or (iv)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil criminal, administrative or investigative
action, suit or proceeding may, if approved by the Board of Directors, be paid
by the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
this Section 7.01. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Section 7.01 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this Section 7.01.
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(h) For purposes of this Section 7.01, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the resulting or
surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this Section 7.01, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Section 7.01.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 7.01 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement, vote
of stockholders or disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation's obligation to advance expenses
(including attorneys' fees).
7.02 PROCEEDINGS INITIATED BY INDEMNIFIED REPRESENTATIVES: Notwithstanding
any other provision of this Article, the corporation shall not indemnify under
this Article a person for any liability incurred in a proceeding initiated
(which shall not be deemed to include counter-claims or affirmative defenses) or
participated in as an intervenor or "amicus curiae" by the person seeking
indemnification unless such initiation of or participation in the proceeding is
authorized, either before or after its commencement, by the affirmative vote of
a majority of the directors in office.
7.03 PAYMENT OF INDEMNIFICATION: Any person entitled to indemnification
under Section 7.01 shall be entitled to indemnification within 30 days after a
written request for indemnification has been delivered to the Secretary.
7.04 CONTRIBUTION: In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in this Article or
otherwise is applicable
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but for any reason is held to be unavailable, the corporation shall contribute
to the liabilities to which the person entitled to indemnification under Section
7.01 may be subject, in such proportion as is appropriate to reflect the intent
of this Article or otherwise.
7.05 DISCHARGE OF DUTY: A person entitled to indemnification under Section
7.01 shall be deemed to have discharged such person's duty to the corporation if
he or she has relied on information, advice or an opinion, report or statement
prepared by:
(a) one or more officers or employees of the corporation whom such
person believes to be reliable and competent with respect to the matter
presented;
(b) legal counsel, public accountants or other persons as to matters
that the such person believes are within the person's professional or expert
competence; or
(c) a committee of the Board of Directors as to matter within its
area of responsibility.
7.06 AMENDMENT OR REPEAL: Notwithstanding anything contained in these
bylaws, this Article shall not be repealed or amended or modified to limit the
indemnification rights provided hereunder except upon the affirmative approval
of the holders of three-quarters of the stock of each class entitled to vote
thereon. All rights to indemnification under this Article shall be deemed a
contract between the corporation and the person entitled to indemnification
under Section 7.01 pursuant to which the corporation and each such person intend
to be legally bound. Any repeal, amendment or modification hereof shall be
prospective only and shall not affect any rights or obligations then existing.
7.07 RELIANCE ON PROVISIONS: Each person who shall act as a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise shall be
deemed to be doing so in reliance upon the rights of indemnification provided by
this Article.
ARTICLE VIII
GENERAL PROVISIONS
8.01. DIVIDENDS: Subject to the restrictions contained in the DGCL and any
restrictions contained in the certificate of incorporation, the board of
directors may declare and pay dividends upon the shares of capital stock of the
corporation.
8.02. CONTRACTS: Except as otherwise provided in these bylaws, the board
of directors may authorize any officer or officers including the chairman and
vice chairman of the board of directors, or any agent or agents, to enter into
any contract or to execute or deliver any instrument on behalf of the
corporation and such authority may be general or confined to specific instances.
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8.03. CORPORATE SEAL: The corporation shall have a corporate seal, which
shall have inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
8.04. DEPOSITS: All funds of the corporation shall be deposited from time
to time to the credit of the corporation in such banks, trust companies, or
other depositories as the board of directors may approve or designate, and all
such funds shall be withdrawn only upon checks signed by such one or more
officers or employees as the board of directors shall from time to time
determine.
8.05. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(a) General Rule: A contract or transaction between the corporation and
one or more of its directors or officers or between the corporation and another
corporation, partnership, joint venture, trust or other enterprise in which one
or more of its directors or officers are directors or officers or have a
financial or other interest, shall not be void or voidable solely for that
reason, or solely because the director or officer is present at or participates
in the meeting of the board of directors that authorizes the contract or
transaction, or solely because his, her or their votes are counted for that
purpose, if:
(1) the material facts as to the relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors and the board of directors authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors even though the disinterested directors are less than a quorum;
(2) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon and the contract or transaction is
specifically approved in good faith by vote of those stockholders; or
(3) the contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified by the board of directors
or the stockholders.
(b) Quorum: Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors which authorizes
a contract or transaction specified in subsection (a).
8.06. CORPORATE RECORDS:
(a) EXAMINATION BY STOCKHOLDERS: Every stockholder shall, upon
written demand under oath stating the purpose thereof, have a right to examine,
in person or by agent or attorney, during the usual hours for business, for any
proper purpose, the stock ledger, list of stockholders, books or records of
account, and records of the proceedings of the stockholders and directors of the
corporation, and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance
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where an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing which authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business. Where the stockholder seeks to inspect the books and records of the
corporation, other than its stock ledger or list of stockholders, the
stockholder shall first establish (1) that the stockholder has complied with the
provisions of this section respecting the form and manner of making demand for
inspection of such documents; and (2) that the inspection sought is for a proper
purpose. Where the stockholder seeks to inspect the stock ledger or list of
stockholders of the corporation and has complied with the provisions of this
section respecting the form and manner of making demand for inspection of such
documents, the burden of proof shall be upon the corporation to establish that
the inspection sought is for an improper purpose.
(b) EXAMINATION BY DIRECTORS: Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to the person's position as a
director.
8.07. AMENDMENT OF BYLAWS: These bylaws may be altered, amended or
repealed or new bylaws may be adopted either (a) by vote of the stockholders at
a duly organized annual or special meeting of stockholders, or (b) by vote of a
majority of the board of directors at any regular or special meeting of
directors if such power is conferred upon the board of directors by the
certificate of incorporation.
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