AGREEMENT AND PLAN OF MERGER
BETWEEN
GENZYME CORPORATION
AND
PHARMAGENICS, INC.
_____________________________
Dated as of January 31, 1997
_____________________________
TABLE OF CONTENTS
Page
SECTION 1 - THE MERGER................................................. 1
1.1 The Merger................................................... 1
1.2 Effective Time.................................................1
1.3 Closing...................................................... 1
1.4 Effects of the Merger......................................... 2
1.5 Articles of Organization and By-Laws.......................... 2
1.6 Directors and Officers........................................ 2
1.7 Name and Purpose of Surviving Corporation..................... 2
1.8 Conversion of Stock.......................................... 2
1.9 Warrant to Purchase PharmaGenics Series A Stock.............. 4
1.11 No Fractional Shares......................................... 6
1.12 Dissenting Shares............................................ 6
1.13 Indemnification.............................................. 7
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF PHARMAGENICS............. 8
2.1 Organization and Qualification................................ 8
2.2 Authority to Execute and Perform Agreements................... 8
2.3 Capitalization and Title to Shares............................ 9
2.4 Subsidiaries.................................................. 9
2.5 SEC Reports.................................................. 9
2.6 Financial Statements......................................... 10
2.7 Absence of Undisclosed Liabilities........................... 10
2.8 No Material Adverse Change................................... 10
2.9 No Breach.................................................... 11
2.10 Actions and Proceedings...................................... 11
2.11 Tax Matters.................................................. 11
2.12 Compliance with Laws......................................... 12
2.13 Contracts and Other Agreements............................... 12
2.14 Properties................................................... 13
2.15 Intellectual Property........................................ 14
2.16 Employee Benefit Plans....................................... 14
2.17 Employee Relations........................................... 15
2.18 Insurance.................................................... 15
2.19 Brokerage.................................................... 15
2.20 Hazardous Materials.......................................... 15
2.21 Fairness Opinion............................................. 16
2.22 State Anti-Takeover Laws..................................... 16
2.23 Disclosure................................................... 16
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF GENZYME...................17
3.1 Organization..................................................17
3.2 Authority to Execute and Perform Agreement....................17
3.3 Capitalization................................................17
3.4 SEC Reports.................................................. 18
(i)
3.5 Financial Statements......................................... 18
3.6 Absence of Undisclosed Genzyme Liabilities................... 18
3.7 No Material Adverse Change................................... 18
3.8 No Breach.................................................... 19
3.9 Actions and Proceedings...................................... 19
3.10 Compliance with Laws......................................... 19
3.11 Intellectual Property........................................ 20
3.12 Contracts and Other Agreements............................... 20
3.13 Authorization of Credit Facility............................. 20
3.14 Disclosure................................................... 21
SECTION 4 - COVENANTS AND AGREEMENTS................................. 21
4.1 Conduct of Business.......................................... 21
4.2 Corporate Examinations and Investigations.................... 23
4.3 Expenses.................................................... 23
4.4 Authorization from Others.....................................23
4.5 Consummation of Agreement.....................................23
4.6 Further Assurances........................................... 23
4.7 Proxy Statement; Registration Statement...................... 24
4.8 Stockholder Meetings......................................... 24
4.9 PharmaGenics Compliance with Exchange Act and Securities
Act.......................................................... 25
4.10 Genzyme Compliance with Exchange Act and Securities Act....... 25
4.11 Public Announcements and Confidentiality...................... 26
4.12 Affiliate Letters............................................. 26
4.13 Stockholder Agreements........................................ 26
4.14 No Solicitation............................................... 27
4.15 Molecular Oncology Division................................... 27
4.16 Designated Shares............................................. 27
4.17 Stand-by Credit Facility...................................... 27
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF EACH PARTY TO CONSUMMATE THE MERGER ................................. 29
5.1 Approvals..................................................... 29
5.2 Registration Statement........................................ 29
5.3 Absence of Order.............................................. 29
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
GENZYME TO CONSUMMATE THE MERGER........................................ 29
6.1 Representations, Warranties and Covenants..................... 29
6.2 Affiliate Letters............................................. 29
6.3 Stockholder Agreements........................................ 30
6.4 Opinions of Counsel to PharmaGenics........................... 30
6.5 Tax Matters....................................................30
6.6 Dissenting Shares..............................................30
6.7 Certificate of Merger..........................................30
6.8 Comfort Letter................................................ 30
6.9 SAGE License................................................. 30
(ii)
6.10 Unsigned Agreements........................................... 30
6.11 Amendment of PaineWebber Engagement Letter.................... 30
6.12 Exercise of Stock Purchase Option and Transfer of Technology. 31
6.13 Delivery of Cancelled Warrants................................ 31
6.14 Commitment Letter............................................. 31
6.15 Legal Proceedings............................................. 31
6.16 Certificates.................................................. 31
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
PHARMAGENICS TO CONSUMMATE THE MERGER................................... 31
7.1 Representations, Warranties and Covenants..................... 31
7.2 Opinion of Counsel to Genzyme................................. 32
7.3 Tax Opinion.................................................. 32
7.4 Merger Documents............................................. 32
7.5 Certificates.................................................. 32
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER........................... 32
8.1 Termination................................................... 32
8.2 Effect of Termination......................................... 34
8.3 Termination Fee............................................... 34
8.4 Amendment..................................................... 34
8.5 Waiver........................................................ 35
SECTION 9 - MISCELLANEOUS............................................... 35
9.1 No Survival................................................... 35
9.2 Notices....................................................... 35
9.3 Entire Agreement.............................................. 36
9.4 No Third Party Beneficiaries.................................. 36
9.5 Governing Law................................................. 36
9.6 Binding Effect; No Assignment..................................36
9.7 Variations in Pronouns.........................................36
9.8 Counterparts.................................................. 36
EXHIBITS
A Form of GMO Series Designation
B Form of Amendment to Articles of Organization of Genzyme Corporation
C Form of Affiliate Letter
D Form of Stockholder Agreements
E Genzyme Molecular Oncology Division Assets and Liabilities
F Policies of Genzyme Subsequent to Closing
G Form of Promissory Note
H Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
I Form of Opinion of ▇▇▇▇▇▇ & Dodge LLP
(iii)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of January
31, 1997 is between Genzyme Corporation ("Genzyme"), a Massachusetts
corporation, and PharmaGenics, Inc. ("PharmaGenics"), a Delaware corporation.
Genzyme desires to acquire PharmaGenics through a merger of PharmaGenics
with and into Genzyme on the terms and conditions hereof. PharmaGenics
desires to combine its business with Genzyme's molecular oncology business
and for its stockholders to have a continuing equity interest in such
combined businesses. This Agreement and the resulting merger are intended to
be a tax-free "plan of reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Board of
Directors of each of the parties deems it advisable and in the best interests
of, and fair to, their respective stockholders to consummate, and have
approved and recommended that their stockholders approve, the combined
transaction contemplated herein.
Accordingly, in consideration of the foregoing and the mutual
representations and covenants contained herein, the parties hereto agree as
follows:
SECTION 1- THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the Business Corporation Law of the Commonwealth of
Massachusetts (the "MBCL") and the General Corporation Law of the State of
Delaware (the "DGCL"), PharmaGenics shall be merged with and into Genzyme
(the "Merger"). The Merger shall occur at the Effective Time (as defined in
Section 1.2). Following the Merger, Genzyme shall be the surviving
corporation (the "Surviving Corporation") and the separate corporate
existence of PharmaGenics shall cease.
1.2 Effective Time. As soon as practicable after satisfaction or
waiver of all conditions to the Merger, the parties shall cause the Merger to
be consummated by filing and recording articles of merger in accordance with
Section 79 of the MBCL (the "Articles of Merger") and a certificate of merger
in accordance with Section 252(c) of the DGCL (the "Certificate of Merger")
and shall take all such further actions as may be required by law to make the
Merger effective. The Merger shall be effective at such time as the Articles
of Merger and the Certificate of Merger are duly filed with the Secretary of
the Commonwealth of Massachusetts and the Secretary of State of Delaware,
respectively, in accordance with the MBCL and the DGCL, or at such later time
as is specified by mutual agreement in the Articles of Merger and the
Certificate of Merger (the "Effective Time").
1.3 Closing. Immediately prior to the filing of the Articles of Merger
and the Certificate of Merger, a closing (the "Closing") will be held at the
offices of ▇▇▇▇▇▇ & Dodge LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (or
such other place as the parties may agree) for the purpose of confirming
satisfaction or waiver of all conditions to the Merger. The Closing shall
take place on the third business day after the last to occur of:
1
(a) the day this Agreement is adopted by the stockholders of
PharmaGenics pursuant to Section 4.8(a);
(b) the day this Agreement is approved by the stockholders of Genzyme
pursuant to Section 4.8(b); and
(c) the date all other conditions to the Merger (other than those to be
satisfied by deliveries at the Closing) have been satisfied or waived;
or on such other date as the parties may agree. The date on which the
Closing occurs is referred to herein as the "Closing Date".
1.4 Effects of the Merger. The Merger shall have the effects set forth
in Sections 80 and 81 of the MBCL and Sections 259, 260 and 261 of the DGCL.
1.5 Articles of Organization and By-Laws. The articles of organization
of Genzyme as in effect immediately prior to the Effective Time shall be the
articles of organization of the Surviving Corporation immediately after the
Effective Time, provided that such articles shall have been amended to (i)
redesignate the existing classes of Genzyme common stock as series of common
stock, (ii) authorize the Genzyme Board of Directors to designate additional
series of common stock and (iii) designate a new series of Genzyme common
stock having terms substantially as set forth in Exhibit A (the "GMO Series
Designation"). If the conditions set forth in the proviso to the preceding
sentence are not met, the articles of organization of Genzyme, as amended by
the amendment thereto substantially in the form attached hereto as Exhibit B
(the "GMO Charter Amendment") shall be the articles of organization of the
Surviving Corporation immediately after the Effective Time. The by-laws of
Genzyme as in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation immediately after the Effective Time.
1.6 Directors and Officers. The directors and officers of Genzyme
immediately prior to the Effective Time shall be the directors and officers
of the Surviving Corporation immediately after the Effective Time.
1.7 Name and Purpose of Surviving Corporation. The name of the
Surviving Corporation shall be Genzyme Corporation. The purpose of the
Surviving Corporation is to develop, manufacture and sell human health care
products and to engage generally in any business that may lawfully be carried
on by a corporation formed under Chapter 156B of the General Laws of
Massachusetts.
1.8 Conversion of Stock.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Genzyme or PharmaGenics:
(i) All shares of PharmaGenics Series A Convertible Preferred
Stock, $0.01 par value per share ("PharmaGenics Series A Stock"), Series B
Convertible Preferred Stock, $0.01 par value per share ("PharmaGenics Series
B Stock") and Series C Convertible
2
Preferred Stock, $0.01 par value per share ("PharmaGenics Series C Stock"),
outstanding immediately prior to the Effective Time, other than shares held
by PharmaGenics as treasury stock, Dissenting Shares (as defined in Section
1.12) and shares owned by Genzyme or any Subsidiary (as defined in Section
2.4) of Genzyme, shall be converted into and become the right to receive, in
the aggregate, 4,000,000 shares, of Genzyme Molecular Oncology Division
Common Stock, $0.01 par value per share, as defined in the GMO Series
Designation if the conditions set forth in the proviso to the first sentence
of Section 1.5 have been met as of the Effective Time, or if such conditions
have not been met, as defined in the GMO Charter Amendment (in either case,
such series or class of stock is referred to herein as "GMO Stock"). Such
shares of GMO Stock are referred to herein as the "Merger Consideration".
The Merger Consideration will be allocated among the holders of the
PharmaGenics Preferred Stock (as hereinafter defined) in accordance with
Section 1.8(b) of this Agreement, subject to adjustment as described below
and subject to reduction for shares of GMO Stock otherwise allocable to
holders of Dissenting Shares (as described in Section 1.12(c) in the case of
Dissenting Common Shares and Section 1.12(a) in the case of Dissenting Shares
of PharmaGenics Preferred Stock) and for the shares of GMO Stock issuable
upon exercise of the Comdisco Warrant (as defined in Section 1.9) after the
Effective Time. PharmaGenics Series A Stock, PharmaGenics Series B Stock and
PharmaGenics Series C Stock are referred to herein collectively as the
"PharmaGenics Preferred Stock", and the PharmaGenics Preferred Stock,
together with the PharmaGenics Common Stock (as defined below), are referred
to herein collectively as the "PharmaGenics Stock." The Merger Consideration
shall be adjusted as follows:
(A) the Merger Consideration shall be reduced by subtracting the
number of shares of GMO Stock equal to the quotient obtained by dividing (i)
the aggregate fees payable by PharmaGenics to PaineWebber Incorporated
("PaineWebber") in connection with the Merger by (ii) $7.00 (the "GMO Per
Share Value"), and
(B) if the expenses of PharmaGenics paid or incurred in
connection with the preparation, execution and performance of this Agreement
and the transactions contemplated hereby, including any brokerage, investment
banking, accounting and legal fees exceed $1,000,000 in the aggregate, the
Merger Consideration shall be reduced by subtracting the number of shares of
GMO Stock equal to the quotient obtained by dividing (i) the aggregate of
such excess by (ii) the GMO Per Share Value.
(ii) All shares of PharmaGenics Common Stock, $0.01 par value per
share ("PharmaGenics Common Stock") outstanding at the Effective Time shall
be canceled without any conversion thereof and no payment shall be made with
respect thereto.
(iii) All shares of PharmaGenics Stock held at the Effective
Time by PharmaGenics as treasury stock shall be canceled without any
conversion thereof and no payment shall be made with respect thereto.
(iv) All shares of PharmaGenics Stock owned beneficially at the
Effective Time by Genzyme or any Subsidiary of Genzyme shall be canceled
without any conversion thereof and no payment shall be made with respect
thereto.
3
(v) All Dissenting Shares shall be treated in accordance with
Section 1.12.
(vi) All shares of Genzyme capital stock outstanding
immediately prior to the Effective Time shall remain outstanding as shares of
the Surviving Corporation without any conversion thereof.
(b) The Merger Consideration shall be allocated among the holders of
PharmaGenics Preferred Stock outstanding immediately prior to the Effective
Time (other than Dissenting Shares) by allocating to each such holder that
number of shares of GMO Stock determined by multiplying the number of shares
of each class of PharmaGenics Preferred Stock held by such holder by the
applicable conversion factor set forth below:
Series A Conversion Factor: 0.000000058451 multiplied by the number of
shares comprising the Merger Consideration (without reduction for Dissenting
Shares of PharmaGenics Preferred Stock and the shares issuable upon exercise
of the Comdisco Warrant).
Series B Conversion Factor: 0.000000235690 multiplied by the number of
shares comprising the Merger Consideration (without reduction for Dissenting
Shares of PharmaGenics Preferred Stock and the shares issuable upon exercise
of the Comdisco Warrant).
Series C Conversion Factor: 0.000000067564 multiplied by the number of
shares comprising the Merger Consideration (without reduction for Dissenting
Shares of PharmaGenics Preferred Stock and the shares issuable upon exercise
of the Comdisco Warrant).
If, prior to Closing, Genzyme pays a dividend or makes a distribution on any
class of Genzyme capital stock payable in GMO Stock, other than a
distribution of the GMO Designated Shares (as defined in Section 7.a. of the
GMO Series Designation or in Section 8.k. of the GMO Charter Amendment,
whichever is in effect at the Effective Time), or subdivides, combines,
reclassifies or takes other similar actions with respect to the GMO Stock,
the conversion factors described above shall be appropriately adjusted.
1.9 Warrant to Purchase PharmaGenics Series A Stock. At the Effective
Time, the warrant issued by PharmaGenics to Comdisco, Inc. on April 30, 1991
(the "Comdisco Warrant") for the purchase of shares of PharmaGenics Series A
Stock, to the extent outstanding and unexercised, shall cease to represent a
right to acquire shares of PharmaGenics Series A Stock and shall be converted
automatically into a warrant to purchase the number of shares of GMO Stock in
an amount and at an exercise price determined as follows and the right to
receive payment of cash for any fractional shares (as provided in Section
1.11). The number of shares of GMO Stock subject to the Comdisco Warrant
shall be equal to the product obtained by multiplying (i) the number of
shares of PharmaGenics Series A Stock subject to the original Comdisco
Warrant by (ii) the Series A Conversion Factor set forth above. The exercise
price per share of GMO Stock under the new Comdisco Warrant shall be equal to
the quotient obtained by dividing (i) the exercise price per share of
4
PharmaGenics Series A Stock under the original Comdisco Warrant by (ii) the
Series A Conversion Factor, provided that such exercise price shall be
rounded to the nearest cent.
1.10 Exchange of Certificates.
(a) At the Effective Time, the stock transfer books of PharmaGenics
shall be closed and no transfers of shares of PharmaGenics Stock may be made
thereafter. Genzyme shall authorize one or more persons (not affiliated with
Genzyme) to act, until such time as all certificates representing shares of
PharmaGenics Preferred Stock shall have been exchanged in accordance
herewith, as exchange agent hereunder (the "Exchange Agent"). As soon as
practicable after the Effective Time, Genzyme shall cause the Exchange Agent
to mail to all former holders of record of PharmaGenics Preferred Stock
instructions for surrendering their certificates representing PharmaGenics
Preferred Stock in exchange for a certificate or certificates representing
shares of GMO Stock (determined in accordance with Section 1.8(b). Upon such
surrender of a PharmaGenics Preferred Stock certificate to the Exchange
Agent, the holder of such certificate shall be entitled to receive in
exchange therefor, at the time specified in Section 1.10(b), a certificate
representing that number of whole shares of GMO Stock into which the shares
of PharmaGenics Preferred Stock theretofore represented by such certificate
so surrendered shall have been converted pursuant to the provisions of this
Agreement (together with any cash in lieu of fractional shares pursuant to
Section 1.11), and the certificate so surrendered shall forthwith be
canceled. Until surrendered in accordance with the provisions of this
Section, each PharmaGenics Preferred Stock certificate (other than
certificates for shares to be canceled in accordance with Section 1.8(a)(ii),
(iii) and (iv) hereof and Dissenting Shares, if any) shall represent for all
purposes the right to receive shares of GMO Stock and the right to receive
payment of cash for fractional shares, if any, pursuant to Section 1.11
hereof. Until such certificates are surrendered, the holders thereof shall
not be entitled to receive any dividend or other distribution payable to
holders of shares of GMO Stock. Upon such surrender, there shall be paid to
the record holder of the certificates representing shares of GMO Stock issued
upon such exchange, the amount of dividends or other distributions that
became payable following the Effective Time and were not paid because of the
failure to surrender certificates for exchange. In no event shall the persons
entitled to receive such dividends or distributions be entitled to receive
interest thereon. GMO Stock into which the PharmaGenics Preferred Stock
shall be converted in the Merger shall be deemed to have been issued at the
Effective Time. If any GMO Stock certificates are to be issued in a name
other than that in which the PharmaGenics Preferred Stock certificate
surrendered is registered, it shall be a condition of such exchange that the
person requesting such exchange shall deliver to the Exchange Agent all
documents necessary to evidence and effect such transfer and shall pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance
of certificates for such shares of GMO Stock in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(b) All certificates for GMO Stock issued in exchange for PharmaGenics
Preferred Stock shall be held by the Exchange Agent, no delivery thereof to
the former holders of PharmaGenics Preferred Stock, or transfers thereof on
the books of Genzyme, may be made until the earlier of:
5
(i) in the case of certificates to be issued to executive officers
and directors of PharmaGenics and the beneficial owners of five percent (5%)
or more of the PharmaGenics Common Stock (on an as converted basis) and each
of HealthCare Ventures II, L.P., HealthCare Ventures III, L.P., HealthCare
Ventures IV, L.P., ▇▇▇▇▇▇ Trust, Everest Trust and PaineWebber R&D Partners
III, L.P., and their respective affiliates:
(A) 270 days after the effectiveness of a registration statement
for an initial public offering of GMO Stock, (B) three (3) years following
the Closing Date or (C) the distribution or sale of GMO Designated Shares by
Genzyme to the public; provided, however, that in the case of clauses (A) or
(B), if Genzyme, as of such date, has filed a registration statement for a
public offering of GMO Stock (other than the initial public offering of GMO
Stock), such date shall be extended until 90 days after the effective date of
such registration statement, and
(ii) in the case of certificates to be issued to all other holders
of PharmaGenics Preferred Stock:
(A) 180 days after the effectiveness of a registration statement
for an initial public offering of GMO Stock, (B) three (3) years following
the Closing Date or (C) the distribution or sale of GMO Designated Shares by
Genzyme to the public; provided, however, that in the case of clauses (A) or
(B), if Genzyme, as of such date, has filed a registration statement for a
public offering of GMO Stock (other than the initial public offering of GMO
Stock), such date shall be extended until 90 days after the effective date of
such registration statement.
1.11 No Fractional Shares. No certificates representing fractional
shares of GMO Stock shall be issued upon the surrender for exchange of
PharmaGenics Preferred Stock certificates. No fractional interest shall
entitle the owner to vote or to any rights of a security holder. In lieu of
fractional shares, each record holder of shares of PharmaGenics Preferred
Stock who would otherwise have been entitled to a fractional share of GMO
Stock, will receive upon surrender of a PharmaGenics Preferred Stock
certificate an amount in cash (without interest) determined by multiplying
such fraction by the GMO Per Share Value. Genzyme shall not be liable to any
holder of shares of PharmaGenics Preferred Stock for any cash in lieu of
fractional interests delivered to a public official pursuant to applicable
escheat or abandoned property laws.
1.12 Dissenting Shares.
(a) Shares of PharmaGenics Stock held by a stockholder who has properly
exercised appraisal rights with respect thereto in accordance with Section
262 of the DGCL are referred to herein as "Dissenting Shares". Shares of
PharmaGenics Preferred Stock that constitute Dissenting Shares shall not be
converted into Merger Consideration and shares of GMO Stock shall not be
issued pursuant to Section 1.8(b) in exchange therefor. From and after the
Effective Time, a stockholder who has properly exercised such appraisal
rights shall no longer retain any rights of a stockholder of PharmaGenics or
the Surviving Corporation, except those provided under the DGCL.
6
(b) PharmaGenics shall give Genzyme (i) prompt notice of any written
notices and demands under Section 262 of the DGCL with respect to any shares
of capital stock of PharmaGenics, any withdrawal of any such demands and any
other instruments served pursuant to the DGCL and received by PharmaGenics
and (ii) the right to participate in all negotiations and proceedings with
respect to any demands under Section 262 with respect to any shares of
capital stock of PharmaGenics. PharmaGenics shall cooperate with Genzyme
concerning, and shall not, except with the prior written consent of Genzyme,
voluntarily make any payment with respect to, or offer to settle or settle,
any such demands.
(c) If any holder of PharmaGenics Common Stock has properly exercised
appraisal rights with respect to shares of PharmaGenics Common Stock
("Dissenting Common Shares"), Genzyme shall have the right to offset any
payment made, or reasonably expected to be made, by it to such holder in
respect thereof, against the shares of GMO Stock to be delivered as the
Merger Consideration. Such offset shall be made prior to any issuance of
certificates for GMO Stock pursuant to Section 1.10 by subtracting from the
Merger Consideration the number of shares of GMO Stock determined by dividing
(i) all payments made or reasonably expected to be made by Genzyme to the
holders of Dissenting Common Shares by (ii) the GMO Per Share Value. In such
event, the number of shares of GMO Stock allocable pursuant to Section 1.8(b)
in respect of each share of PharmaGenics Preferred Stock shall be
recalculated in accordance with such section using the Merger Consideration
as so reduced.
1.13 Indemnification. If, at any time prior to the delivery to the
former holders of PharmaGenics Preferred Stock of certificates for GMO Stock
pursuant to Section 1.10, any holder of PharmaGenics Stock (as of the
Effective Time) has commenced or threatened (in writing) to commence any
action, suit, or legal, administrative or arbitration proceeding
(collectively referred to herein as a "Proceeding") against either
PharmaGenics or Genzyme, challenging the Merger or seeking damages or
injunctive relief in connection with PharmaGenics's entering into this
Agreement (a "Challenging Stockholder"), Genzyme shall have the right to
offset any cash payment and the value of any noncash payment made, or
reasonably expected to be made, by it to such Challenging Stockholder (and
any reasonably anticipated additional Challenging Stockholders) in respect
thereof and any expenses (including legal expenses) incurred or reasonably
expected to be incurred in connection therewith, against the shares of GMO
Stock to be delivered as the Merger Consideration. Such offset shall be made
prior to any issuance of certificates for GMO Stock pursuant to Section 1.10
by subtracting from the Merger Consideration the number of shares of GMO
Stock determined by dividing (i) all payments and expenses made or reasonably
expected to be made by Genzyme to such Challenging Stockholders by (ii) the
GMO Per Share Value. In such event, the number of shares of GMO Stock
allocable pursuant to Section 1.8(b) in respect of each share of PharmaGenics
Preferred Stock shall be recalculated in accordance with such section using
the Merger Consideration as so reduced or in accordance with any judicial
determination regarding such allocation. If the amount subsequently paid
upon final adjudication or settlement of a Proceeding is less than any offset
previously made with respect to such Proceeding, such excess shall be
allocated in accordance with Section 1.8(b) or in accordance with any
judicial determination made in such Proceeding.
7
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF PHARMAGENICS
Except as set forth on the disclosure schedule delivered to Genzyme on
the date hereof (the "PharmaGenics Disclosure Schedule"), the section numbers
of which are numbered to correspond to the section numbers of this Agreement
to which they refer, PharmaGenics represents and warrants to Genzyme as
follows.
2.1 Organization and Qualification.
(a) PharmaGenics is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full
corporate power and authority to own, lease and operate its assets and to
carry on its business as now being and as heretofore conducted. PharmaGenics
is qualified or otherwise authorized to transact business as a foreign
corporation in all jurisdictions in which such qualification or authorization
is required by law, except for jurisdictions in which the failure to be so
qualified or authorized would not have a material adverse effect on the
assets, properties, business, results of operations or financial condition of
PharmaGenics taken as a whole (the "Business of PharmaGenics"). The
PharmaGenics Disclosure Schedule sets forth each jurisdiction in which
PharmaGenics is qualified or otherwise authorized to transact business as a
foreign corporation or other entity.
(b) PharmaGenics has previously provided to Genzyme true and complete
copies of the charter and by-laws of PharmaGenics as in effect on the date
hereof, and PharmaGenics is not in default in the performance, observation or
fulfillment of either its charter or by-laws. The minute books of
PharmaGenics contain true and complete records of all meetings and consents
in lieu of meetings of the Board of Directors (and any committees thereof)
and of the stockholders since the time of its incorporation and accurately
reflect in all material respects all transactions referred to in such minutes
and consents in lieu of meetings. The stock books or other record of equity
interests of PharmaGenics are true and complete in all material respects.
2.2 Authority to Execute and Perform Agreements. PharmaGenics has the
corporate power and authority to enter into, execute and deliver this
Agreement and, subject to the adoption of this Agreement by the stockholders
of PharmaGenics, to perform fully its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
PharmaGenics. No other corporate action on the part of PharmaGenics is
necessary to consummate the transactions contemplated hereby (other than
approval by the stockholders of PharmaGenics of this Agreement). This
Agreement has been duly executed and delivered by PharmaGenics and, subject
to the foregoing, constitutes a valid and binding obligation of PharmaGenics,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
the rights and remedies of creditors and to general principles of equity.
8
2.3 Capitalization and Title to Shares.
(a) The authorized capital stock of PharmaGenics consists of 15,000,000
shares of PharmaGenics Common Stock, of which 455,108 shares were issued and
outstanding as of the date hereof, and 10,000,000 shares of Preferred Stock .
Of such Preferred Stock, 2,500,000 shares have been designated PharmaGenics
Series A Stock, of which 2,160,000 shares are issued and outstanding;
2,500,000 shares have been designated PharmaGenics Series B Stock, of which
2,138,399 shares are issued and outstanding; and 4,717,700 shares have been
designated PharmaGenics Series C Stock, of which 3,076,556 shares are issued
and outstanding. Such shares are owned of record by the persons and in the
amounts set forth on the PharmaGenics Disclosure Schedule. No other class of
capital stock of PharmaGenics is authorized or outstanding. All of the
issued and outstanding shares of PharmaGenics Stock are duly authorized and
are validly issued, fully paid, nonassessable and free of preemptive rights.
Upon the issuance of shares of PharmaGenics Preferred Stock to JHU (as
defined in Section 4.17) in connection with the amendment of the SAGE license
described in Section 6.9 and upon the exercise by the Partnership (as defined
in Section 6.12) of the option referred to in Section 6.12, the number of
outstanding shares of PharmaGenics Series A, B and Series C Stock will be
2,458,420, 2,270,463 and 4,717,700 respectively.
(b) The issued and outstanding shares of PharmaGenics capital stock
have not been issued in violation of any federal or state law or any
preemptive right or rights to subscribe for or purchase such securities,
except for violations that would not in the aggregate, have a material
adverse effect on the transactions contemplated hereby or the Business of
PharmaGenics.
(c) The PharmaGenics Disclosure Schedule includes a true and complete
list of all outstanding rights, subscriptions, warrants, calls, preemptive
rights, options or other agreements of any kind to purchase or otherwise
receive from PharmaGenics any shares of the capital stock or any other
security of PharmaGenics, and all outstanding securities of any kind
convertible into or exchangeable for such securities. True and complete
copies of all instruments (or the forms of such instruments) referred to in
this Section 2.3(c) have been previously furnished to Genzyme. There are no
shareholder agreements, voting trusts, proxies or other similar agreements or
understandings with respect to the outstanding shares of capital stock of
PharmaGenics to which PharmaGenics is a party.
2.4 Subsidiaries.
(a) PharmaGenics does not own, directly or indirectly, any
Subsidiaries, and does not have any investment in the capital stock of, and
is not a party to a partnership or joint venture with, any other person. As
used in this Agreement, "Subsidiary" or "Subsidiaries" means any corporation
or other legal entity of which a party to this Agreement owns fifty percent
(50%) or more of the stock or other equity interest entitled to vote for the
election of directors or comparable governing body.
2.5 SEC Reports. PharmaGenics has previously delivered to Genzyme its
(i) Annual Report on Form 10-K for the year ended December 31, 1995 (the
"PharmaGenics 10-K"), as filed with the Securities and Exchange Commission
(the "SEC"), (ii) all proxy
9
statements relating to PharmaGenics's meetings of stockholders held or to be
held since December 31, 1995 and (iii) all other reports filed by
PharmaGenics with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since December 31, 1995. As of their
respective dates, such reports complied in all material respects with
applicable SEC requirements and 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 light of the circumstances
under which they were made, not misleading. PharmaGenics has timely filed
with the SEC all reports required to be filed under Sections 13, 14 or 15(d)
of the Exchange Act since December 31, 1995.
2.6 Financial Statements. The consolidated financial statements
contained in the PharmaGenics 10-K and in PharmaGenics's quarterly report on
Form 10-Q for the quarter ended September 30, 1996 (the "PharmaGenics 10-Q")
have been prepared from, and are in accordance with, the books and records of
PharmaGenics and fairly present the consolidated financial condition, results
of operations and cash flows of PharmaGenics as of the dates and for the
periods presented therein, all in accordance with generally accepted
accounting principles applied on a consistent basis, except as otherwise
indicated therein and subject (in the case of the unaudited financial
statements included in the PharmaGenics 10-Q) to normal year-end and audit
adjustments and footnote disclosures, which in the aggregate are not material.
2.7 Absence of Undisclosed Liabilities. At December 31, 1995,
PharmaGenics had no material liabilities of any nature, whether accrued,
absolute, contingent or otherwise (including without limitation, liabilities
as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), required to be
reflected or disclosed in the balance sheet dated December 31, 1995 (or the
notes thereto) included in the PharmaGenics 10-K (the "PharmaGenics Balance
Sheet") that were not adequately reflected or reserved against on the
PharmaGenics Balance Sheet. PharmaGenics has no liabilities of the type
required to be reflected or disclosed on a balance sheet in accordance with
generally accepted accounting principles, other than liabilities (i)
adequately reflected or reserved against on the PharmaGenics Balance Sheet,
(ii) reflected in PharmaGenics's unaudited balance sheet dated September 30,
1996 included in the PharmaGenics 10-Q (the "PharmaGenics Interim Balance
Sheet"), (iii) incurred since September 30, 1996 in the ordinary course of
business and consistent with past practice, (iv) that would not, in the
aggregate, have a material adverse effect on the Business of PharmaGenics or
(v) set forth in Section 2.7 of the PharmaGenics Disclosure Schedule.
2.8 No Material Adverse Change. Since December 31, 1995, except as set
forth in the PharmaGenics 10-K or the PharmaGenics 10-Q, there has not been
(i) any material adverse change in the Business of PharmaGenics (provided,
however, that no material adverse change in the Business of PharmaGenics
shall be deemed to have occurred solely by reason of the fact that the
opinion of PharmaGenics's independent auditors on PharmaGenics financial
statements as of and for the year ended December 31, 1996 includes a
paragraph expressing concern about PharmaGenics's ability to continue as a
going concern) or (ii) action by PharmaGenics which, if taken on or after the
date hereof, would require the consent or approval of Genzyme pursuant to
Section 4.1.
10
2.9 No Breach. Except for (a) the filing of a Proxy Statement (as
defined in Section 4.7) with the SEC pursuant to the Exchange Act, (b) the
filing of the Certificate of Merger with the Secretary of State of Delaware,
and (c) the filing of the Articles of Merger with the Secretary of the
Commonwealth of Massachusetts, the execution, delivery and performance of
this Agreement by PharmaGenics and the consummation by PharmaGenics of the
transactions contemplated hereby will not (i) violate any provision of the
certificate of incorporation or by-laws of PharmaGenics; (ii) violate or
result in a breach of any of the terms or conditions of, result in
modification of the effect of, or otherwise give any other contracting party
the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any instrument, contract or other agreement
to which PharmaGenics is a party or by which its assets or properties are
bound or subject; (iii) violate any law, ordinance or regulation or any
order, judgment, injunction, decree or other requirement of any court,
arbitrator or governmental or regulatory body applicable to PharmaGenics, or
by which its assets or properties are bound; (iv) violate any Permit (as
defined in Section 2.12); (v) require any filing with, notice to, or permit,
consent or approval of, any governmental or regulatory body; or (vi) result
in the creation of any lien or other encumbrance on the assets or properties
of PharmaGenics, excluding from the foregoing clauses (ii), (iii), (iv), (v)
and (vi) any exceptions to the foregoing that, in the aggregate, would not
have a material adverse effect on the Business of PharmaGenics or on the
ability of PharmaGenics to consummate the transactions contemplated hereby.
2.10 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions or decrees of any court, arbitrator or governmental or
regulatory body against PharmaGenics. There are no actions, suits,
investigations or claims or legal, administrative or arbitration proceedings
pending or, to the best knowledge of PharmaGenics, threatened against
PharmaGenics. To the best knowledge of PharmaGenics, there is no fact, event
or circumstance now in existence that reasonably could be expected to give
rise to any action, suit, claim, proceeding or investigation that
individually or in the aggregate would have a material adverse effect upon
the transactions contemplated hereby or upon the Business of PharmaGenics.
2.11 Tax Matters.
(a) PharmaGenics has filed all tax reports and returns required to be
filed by it and has paid or will timely pay all taxes and other charges shown
as due on such reports and returns. PharmaGenics is not delinquent in the
payment of any material tax assessment or other governmental charge
(including without limitation applicable withholding taxes). Any provision
for taxes reflected in the PharmaGenics Balance Sheet or the PharmaGenics
Interim Balance Sheet is adequate for payment of any and all tax liabilities
for periods ending on or before September 30, 1996 and there are no tax liens
on any assets of PharmaGenics except liens for current taxes not yet due.
(b) There has not been any audit of any tax return filed by
PharmaGenics and no audit of any such tax return is in progress and
PharmaGenics has not been notified in writing by any tax authority that any
such audit is contemplated or pending. PharmaGenics has no actual knowledge
of any tax deficiency or claim for additional taxes asserted against
PharmaGenics by any taxing authority and PharmaGenics knows of no grounds for
11
assessment of any additional taxes. No extension of time with respect to any
date on which a tax return was or is to be filed by PharmaGenics is in force,
and no waiver or agreement by PharmaGenics is in force for the extension of
time for the assessment or payment of any tax. For purposes of this
Agreement, the term "tax" includes all federal, state, local and foreign
taxes or assessments, including income, sales, excise, use, franchise,
payroll, withholding, property and import taxes and any interest or penalties
applicable thereto.
(b) PharmaGenics does not, and is not required to, file any franchise,
income or other tax return in any jurisdiction (in the United States or
outside of the United States) other than its jurisdiction of incorporation,
based upon the ownership or use of property therein or the derivation of
income therefrom.
(c) PharmaGenics has not agreed to, nor is required to, make any
adjustments under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
2.12 Compliance with Laws.
(a) PharmaGenics has all licenses, permits, franchises, orders or
approvals of any federal, state, local or foreign governmental or regulatory
body material to the present conduct of its business (collectively,
"Permits"); such Permits are in full force and effect; and no proceeding is
pending or, to the best knowledge of PharmaGenics, threatened to revoke or
limit any such Permit. The PharmaGenics Disclosure Schedule contains a true
and complete list of all such Permits as of the date hereof.
(b) PharmaGenics is not in violation of any applicable law, ordinance
or regulation or any order, judgment, injunction, decree or other requirement
of any court, arbitrator or governmental or regulatory body, except for
violations that would not, in the aggregate, have a material adverse effect
on the Business of PharmaGenics. During the last three years, PharmaGenics
has not received notice of, and there has not been any citation, fine or
penalty imposed against PharmaGenics for, any such violation or alleged
violation. To the best knowledge of PharmaGenics, PharmaGenics has not
received any such notice of violation more than three years ago which has not
been resolved.
2.13 Contracts and Other Agreements. PharmaGenics is not a party to or
bound by, and its properties are not subject to, any contract or other
agreement required to be disclosed in or filed as an exhibit to SEC Form 10-K
or Form 10-Q which is not disclosed in or filed as an exhibit to the
PharmaGenics 10-K or a subsequent 10-Q filed by PharmaGenics. All contracts
and other agreements disclosed in or filed as exhibits to the PharmaGenics
10-K or a subsequent 10-Q and each of the contracts set forth on the
PharmaGenics Disclosure Schedule are valid, subsisting, in full force and
effect, binding upon PharmaGenics, and to the best knowledge of PharmaGenics,
binding upon the other parties thereto in accordance with their terms, and
PharmaGenics is not in default under any of them, nor, to the best knowledge
of PharmaGenics, is any other party to any such contract or other agreement
in default thereunder, nor does any condition exist that with notice or lapse
of time or both would constitute a default by PharmaGenics or, to the best
knowledge of PharmaGenics, by any other party thereunder, or that would give
rise to a termination right on the part of any party thereto, except in each
case, such defaults and conditions as
12
would not, individually or in the aggregate, have a material adverse effect
on the Business of PharmaGenics.
The PharmaGenics Disclosure Schedule sets forth as of the date hereof a
list of the following contracts and other agreements to which PharmaGenics is
a party or by or to which its assets or properties are bound or subject:
(a) any agreement or series of related agreements that requires
aggregate payment by or to PharmaGenics of more than $100,000;
(b) any indenture, trust agreement, loan agreement or note that
involves or evidences outstanding indebtedness, obligations or liabilities
for borrowed money (it being understood that amounts owing to trade creditors
for goods or services in the ordinary course of business are excluded);
(c) any agreement of surety, guarantee or indemnification, other than
(i) an agreement in the ordinary course of business with respect to
obligations in an amount not in excess of $10,000 or (ii) indemnification
provisions contained in leases not otherwise required to be disclosed;
(d) any written agreement with or for the benefit of any officer,
director, employee, consultant or stockholder of PharmaGenics;
(e) any agreement containing covenants of PharmaGenics not to compete
in any line of business, in any geographic area or with any person or
covenants of any other person not to compete with PharmaGenics or in any line
of business of PharmaGenics; and
(f) any agreement granting to or restricting the right of, PharmaGenics
to use a trade name, trademark, logo or Proprietary Right (as defined in
Section 2.15 hereof).
True and complete copies of all of the contracts and other agreements
disclosed in or filed as exhibits to the PharmaGenics 10-K or a subsequent
10-Q or set forth on the PharmaGenics Disclosure Schedule have been
previously provided to Genzyme.
2.14 Properties. PharmaGenics owns and has good title to all of its
assets and properties reflected as owned on the PharmaGenics Balance Sheet,
free and clear of any lien, claim or other encumbrance, except for (i) the
liens, claims or other encumbrances reflected on the PharmaGenics Balance
Sheet, (ii) assets and properties disposed of, or subject to purchase or
sales orders, in the ordinary course of business since the date of the
PharmaGenics Balance Sheet, (iii) liens, claims or other encumbrances
securing the liens of materialmen, carriers, landlords and like persons, all
of which are not yet due and payable, (iv) liens for taxes not yet delinquent
and (v) liens, claims, other encumbrances or defects in title that, in the
aggregate, are not material to the Business of PharmaGenics. PharmaGenics
does not own any real property and does not have any options or contractual
obligations to purchase or acquire any interest in real property.
PharmaGenics owns or has a valid leasehold interest in all of the buildings,
structures, leasehold improvements, equipment and other tangible property
material to the Business of PharmaGenics, all of which are in good
13
and sufficient operating condition and repair, ordinary wear and tear
excepted. PharmaGenics has not received notice that any of such property is
in violation in any material respect of any existing law or any building,
zoning, health, safety or other ordinance, code or regulation.
2.15 Intellectual Property.
(a) PharmaGenics owns, or is licensed to use, or otherwise has the
right to use all patents, trademarks, service marks, trade names, trade
secrets, logos, franchises, and copyrights, and all applications for any of
the foregoing, and all technology, inventions, trade secrets, know-how,
computer software and processes to the extent material to the Business of
PharmaGenics (collectively, the "Proprietary Rights"). PharmaGenics has
previously delivered to Genzyme a certified list of all such patents and
registered copyrights and trademarks, and all applications therefor (the
"PharmaGenics Registered Rights"). All of the PharmaGenics Registered Rights
owned by PharmaGenics, and to the best knowledge of PharmaGenics, all
PharmaGenics Registered Rights licensed to PharmaGenics, have been registered
in, filed in or issued by the United States Patent and Trademark Office, the
United States Register of Copyrights, or the corresponding offices of other
jurisdictions as identified in Section 2.15 of the PharmaGenics Disclosure
Schedule, and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations in the United
States and in each such other jurisdiction.
(b) To the best knowledge of PharmaGenics, the Business of PharmaGenics
as currently conducted does not infringe upon the proprietary rights of
others, nor has PharmaGenics received any notice or claim from any third
party of such infringement by PharmaGenics. PharmaGenics is not aware of any
material unlicensed infringement by any third party on, or any issued
competing claim of right to use or own any of, the Proprietary Rights of
PharmaGenics. To the best knowledge of PharmaGenics, none of the activities
of the employees of PharmaGenics on behalf of PharmaGenics violates any
agreements or arrangements that any such employees have with former
employers. Any exceptions to the representations in this Section 2.15 are
set forth on the certified list of PharmaGenics Registered Rights.
2.16 Employee Benefit Plans. The PharmaGenics Disclosure Schedule sets
forth a complete list of all pension, profit sharing, stock option, stock
purchase, retirement, deferred compensation, welfare, insurance, disability,
bonus, vacation and sick pay, severance pay and similar plans, programs or
arrangements, including without limitation all employee benefit plans as
defined in Section 3 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained by PharmaGenics (the "Plans"). PharmaGenics
does not maintain or contribute to any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and PharmaGenics has not incurred any material
liability under Sections 4062, 4063 or 4201 of ERISA. Each Plan maintained
by PharmaGenics which is intended to be qualified under either Section 401(a)
or 501(c)(9) of the Code is so qualified. Each Plan has been administered in
all material respects in accordance with the terms of such Plan and the
provisions of any and all statutes, orders or governmental rules or
regulations, including without limitation ERISA and the Code, and nothing has
been done or omitted to be done with respect to any Plan that would result in
any material liability on the part of
14
PharmaGenics under Title I of ERISA or Section 4975 of the Code. All reports
required to be filed with respect to all Plans, including without limitation
annual reports on Form 5500, have been timely filed except where the failure
to so file would not have a material adverse effect on the Business of
PharmaGenics. PharmaGenics does not maintain any pension plan subject to
Title IV of ERISA. All claims for welfare benefits incurred by employees on
or before the Closing are or will be fully covered by third-party insurance
policies or programs. Except for continuation of health coverage to the
extent required under Section 4980B of the Code or as otherwise set forth in
this Agreement, there are no obligations under any welfare plan (within the
meaning of Section 3(1) of ERISA) providing benefits after termination of
employment.
2.17 Employee Relations. PharmaGenics has approximately 36 full-time
equivalent employees. PharmaGenics is not delinquent in payments to any of
their employees or consultants for any wages, salaries, commissions, bonuses
or other compensation for any services performed by them to the date hereof
or amounts required to be reimbursed to such employees. Upon termination of
the employment of any employees, neither PharmaGenics nor Genzyme will by
reason of the Merger or anything done prior to the Effective Time be liable
to any such employees for severance pay or any other payments (other than
accrued salary, vacation or sick pay in accordance with PharmaGenics's normal
policies). True and complete information as to the current compensation of
all current directors, officers, employees or consultants of PharmaGenics
including, in each case, name, current job title, annual rate of
compensation, bonus potential, commissions and termination obligations has
been previously provided to Genzyme.
2.18 Insurance. The PharmaGenics Disclosure Schedule sets forth a true
and complete list of all insurance policies and bonds maintained by
PharmaGenics. All of such policies and bonds are in full force and effect
and, to the knowledge of PharmaGenics, are valid and enforceable in
accordance with their terms. PharmaGenics has not received any notice of
cancellation or amendment of any such policy or bond or is in default
thereunder, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
2.19 Brokerage. No broker, finder, agent or similar intermediary (other
than PaineWebber pursuant to the agreement described in Section 2.19 of the
PharmaGenics Disclosure Schedule) has acted on behalf of PharmaGenics in
connection with this Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finders' fees or similar fees or
commissions payable in connection herewith based on any agreement,
arrangement or understanding with PharmaGenics, or any action taken by it.
2.20 Hazardous Materials.
(a) The PharmaGenics Disclosure Schedule includes a true and correct
list of all Hazardous Materials (as hereinafter defined) generated, used,
handled or stored by PharmaGenics, the proper disposal of which has required
or will require any material expenditure by PharmaGenics. There has been no
generation, use, handling, storage or disposal of any Hazardous Materials in
violation of common law or any applicable environmental law at any site owned
or premises leased by PharmaGenics, during the period
15
of PharmaGenics's ownership or lease or, to the best knowledge of
PharmaGenics, prior thereto, excluding any such events that would not, in the
aggregate, have a material adverse effect on the Business of PharmaGenics.
Nor has there been or is there threatened any release of any Hazardous
Materials on or at any such site or premises during such period or to the
best knowledge of PharmaGenics, prior thereto, in violation of common law or
any applicable environmental law or which created or will create an
obligation to report or remediate such release, excluding any such events
that would not, in the aggregate, have a material adverse effect on the
Business of PharmaGenics. "Hazardous Materials" means any "hazardous waste"
as defined in either the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901-6991i, or regulations adopted pursuant to said Act, any
"hazardous substances" or "hazardous materials" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sections 9601 to 9675, and, to the extent not included in the
foregoing, any medical or laboratory waste.
(b) There is no environmental, health or safety matter now in existence
that reasonably could be expected to have a material adverse effect on the
Business of PharmaGenics. PharmaGenics has previously provided to Genzyme
copies of all documents concerning any environmental or health and safety
matter that could have a material adverse effect on the Business of
PharmaGenics, if any, and copies of any environmental audits, risk
assessments or site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans and material correspondence with any
governmental agency regarding the foregoing.
2.21 Fairness Opinion. The Board of Directors of PharmaGenics has
received the opinion of PaineWebber to the effect that, as of the date on
which the Board of Directors authorized this Agreement, the Merger is fair
from a financial point of view to PharmaGenics and its stockholders, and such
opinion has not, as of the date hereof, been withdrawn.
2.22 State Anti-Takeover Laws. Prior to the time this Agreement was
executed, the Board of Directors of PharmaGenics has taken all action
necessary to exempt under or make not subject to Section 203 of the DGCL: (i)
the execution of this Agreement and the Stockholder Agreements (as defined in
Section 4.13); (ii) the Merger; and (iii) the transactions contemplated
hereby and by the Stockholder Agreements.
2.23 Disclosure. The representations, warranties and statements made by
PharmaGenics in this Agreement and in the other documents and certificates
delivered in connection herewith do not contain any untrue statement of a
material fact, and, when taken together, do not omit to state any material
fact necessary to make such representations, warranties and statements, in
light of the circumstances under which they are made, not misleading.
16
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF GENZYME
Except as set forth on the disclosure schedule delivered to PharmaGenics
on the date hereof (the "Genzyme Disclosure Schedule"), the section numbers
of which are numbered to correspond to the section numbers of this Agreement
to which they refer, Genzyme represents and warrants, as follows.
3.1 Organization. Genzyme is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has full corporate power and authority to own, lease and
operate its assets and to carry on its business as now being conducted.
3.2 Authority to Execute and Perform Agreement. Genzyme has the
corporate power and authority to enter into, execute and deliver this
Agreement and, subject to the approval of this Agreement by Genzyme's
stockholders, to perform fully its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Genzyme. No other corporate action on the part of Genzyme is necessary to
consummate the transactions contemplated hereby (other than approval of this
Agreement by the stockholders of Genzyme). This Agreement has been duly
executed and delivered by Genzyme and, subject to the foregoing, constitutes
a valid and binding obligation of Genzyme, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application affecting the rights and remedies of
creditors and to general principles of equity.
3.3 Capitalization. The authorized capital stock of Genzyme consists
of 200,000,000 shares of General Division Common Stock, $0.01 par value per
share ("GGD Stock"), of which 70,586,660 shares were issued and outstanding
as of October 31, 1996, 40,000,000 shares of Tissue Repair Division Common
Stock, $0.01 par value per share ("GTR Stock"), of which 12,892,671 shares
were issued and outstanding as of October 31, 1996, and 10,000,000 shares of
preferred stock, $0.01 par value per share ("Genzyme Preferred Stock"),
issuable in series, none of which are outstanding. Of the Genzyme Preferred
Stock, 2,000,000 and 400,000 shares have been designated as Series A Junior
Participating Preferred Stock and Series B Junior Participating Preferred
Stock, respectively, and reserved for issuance under Genzyme's shareholder
rights plan. The shares of GMO Stock to be issued in the Merger will be,
when issued, duly and validly issued, fully paid and nonassessable, and not
subject to any restriction on transfer imposed by the articles of
organization or by-laws of Genzyme. As of October 31, 1996, except for (a)
an aggregate of 15,894,202 shares of GGD Stock and an aggregate of 3,763,978
shares of GTR Stock reserved for issuance under various stock option, stock
purchase and savings plans of Genzyme, (b) an aggregate of 4,821,710 and
325,465 shares of GGD Stock and GTR Stock, respectively, reserved for
issuance upon the exercise of outstanding warrants, and (c) the Series A and
B Junior Participating Preferred Stock reserved for issuance under Genzyme's
shareholder rights plan, there is no outstanding right, subscription,
warrant, call, preemptive right, option or other agreement of any kind to
purchase or otherwise to receive from Genzyme any shares of the capital stock
of Genzyme and there is no outstanding security of any kind convertible into
or exchangeable for such capital stock. All issued and outstanding
17
shares of GGD Stock and GTR Stock are validly issued, fully paid,
non-assessable and free of any preemptive rights.
3.4 SEC Reports. Genzyme has previously delivered to PharmaGenics its
(i) Annual Report on Form 10-K for the year ended December 31, 1995 (the
"Genzyme 10-K"), as filed with the SEC, (ii) all proxy statements relating to
Genzyme's meetings of stockholders held since December 31, 1995 and (iii) all
other reports filed by Genzyme with the SEC under the Exchange Act since
December 31, 1995. As of their respective dates, such reports complied in
all material respects with applicable SEC requirements and 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
light of the circumstances under which they were made, not misleading.
Genzyme has timely filed with the SEC all reports required to be filed under
Sections 13, 14 or 15(d) of the Exchange Act since December 31, 1995.
3.5 Financial Statements. The consolidated financial statements
contained in the Genzyme 10-K and in Genzyme's quarterly report on Form 10-Q
for the quarter ended September 30, 1996 (the "Genzyme 10-Q") have been
prepared from, and are in accordance with, the books and records of Genzyme
and fairly present the consolidated financial condition, results of
operations and cash flows of Genzyme and its consolidated subsidiaries as of
and for the periods presented therein, all in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise indicated therein and subject (in the case of the unaudited
financial statements included in the Genzyme 10-Q) to normal year-end and
audit adjustments and footnote disclosures, which in the aggregate, are not
material.
3.6 Absence of Undisclosed Genzyme Liabilities. At December 31, 1995,
Genzyme had no material liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others or liabilities
for taxes due or then accrued or to become due), required to be reflected or
disclosed in the balance sheet dated December 31, 1995 (or the notes thereto)
included in the Genzyme 10-K that were not adequately reflected or reserved
against on such balance sheet. Genzyme has no liabilities of the type
required to be reflected or disclosed in a balance sheet under generally
accepted accounting principles, other than liabilities (i) adequately
reflected or reserved against on such balance sheet, (ii) reflected in
Genzyme's unaudited consolidated balance sheet included in the ▇▇▇▇▇▇▇ ▇▇-▇,
(▇▇▇) incurred since September 30, 1996 in the ordinary course of business,
(iv) that would not, in the aggregate, have a material adverse effect on the
assets, properties, business, results of operations or financial condition of
Genzyme and its Subsidiaries taken as a whole (the "Business of Genzyme") or
(v) set forth in Section 3.6 of the Genzyme Disclosure Schedule.
3.7 No Material Adverse Change. Since December 31, 1995, except as set
forth in the Genzyme 10-K or the Genzyme 10-Q, there has not been any
material adverse change in the Business of Genzyme or in the assets and
research programs of Genzyme to be initially allocated to the Molecular
Oncology Division pursuant to Section 4.15 hereof, excluding the assets and
research programs of PharmaGenics (the "Genzyme GMO Business").
18
3.8 No Breach. Except for (a) the filing of the Proxy Statement with
the SEC pursuant to the Exchange Act, (b) the registration of the GMO Stock
under the Securities Act of 1933, as amended (the "Securities Act"), (c)
filings with various blue sky authorities, (d) the filing of the Certificate
of Merger with the Secretary of State of Delaware and (e) the filing of the
Articles of Merger and the Series Designation, if appropriate, with the
Secretary of the Commonwealth of Massachusetts, the execution, delivery and
performance of this Agreement by Genzyme and the consummation by Genzyme of
the transactions contemplated hereby will not (i) violate any provision of
the charter or by-laws of Genzyme; (ii) violate or result in a breach of any
of the terms or conditions of, result in modification of the effect of, or
otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default
under, any instrument, contract or other agreement to which Genzyme is party
or by which any of its assets or properties is bound or subject; (iii)
violate any law, ordinance or regulation or any order, judgment, injunction,
decree or requirement of any court, arbitrator or governmental or regulatory
body applicable to Genzyme or by which any of its assets or properties is
bound; (iv) require any filing with, notice to, or permit, consent or
approval of, any governmental or regulatory body; or (v) result in the
creation of any lien or other encumbrance on the assets or properties of
Genzyme, excluding from the foregoing clauses (ii), (iii), (iv) and (v) any
exceptions to the foregoing that, in the aggregate, would not have a material
adverse effect on the Business of Genzyme, the Genzyme GMO Business or the
ability of Genzyme to consummate the transactions contemplated hereby.
3.9 Actions and Proceedings. There are no actions, suits,
investigations or claims or legal, administrative or arbitration proceedings
pending or, to the best knowledge of Genzyme, threatened against Genzyme or
any Subsidiary of Genzyme that individually or in the aggregate would have a
material adverse effect upon the transactions contemplated hereby, the
Business of Genzyme or the Genzyme GMO Business. To the best knowledge of
Genzyme, there is no fact, event or circumstance now in existence that
reasonably could be expected to give rise to any suit, action, claim,
investigation or proceeding that individually or in the aggregate would have
a material adverse effect upon the transactions contemplated hereby, the
Business of Genzyme or the Genzyme GMO Business.
3.10 Compliance with Laws.
(a) Genzyme has all licenses, permits, franchises, orders or approvals
of any federal, state, local or foreign governmental or regulatory body
material to the present conduct and ownership of the Genzyme GMO Business
(collectively, the "GMO Permits"); such GMO Permits are in full force and
effect; and no proceeding is pending or, to the best knowledge of Genzyme,
threatened to revoke or limit any such GMO Permit.
(b) The Business of Genzyme is not being conducted in violation of any
applicable law, ordinance or regulation or any order, judgment, injunction,
decree or other requirement of any court, arbitrator or governmental or
regulatory body, except for violations that would not, in the aggregate, have
a material adverse effect on the Genzyme GMO Business. During the last three
years, Genzyme has not received notice of, and there has not been any
citation, fine or penalty imposed against the Genzyme GMO Business for, any
such violation or alleged violation. To the best knowledge of Genzyme,
Genzyme has
19
not received any such notice of violation more than three years ago which has
not been resolved.
3.11 Intellectual Property.
(a) Genzyme and its Subsidiaries own, or are licensed to use, or
otherwise have the right to use all patents, trademarks, servicemarks, trade
names, trade secrets, franchises, and copyrights, and all applications for
any of the foregoing, and all technology, know-how and processes to the
extent material to the Genzyme GMO Business as now conducted (collectively,
the "GMO Proprietary Rights"). Genzyme has previously delivered to
PharmaGenics a certified list of all such patents and registered copyrights
and trademarks, and all applications therefor (the "Genzyme Registered
Rights"). All of the Genzyme Registered Rights owned by Genzyme or its
Subsidiaries, and to the best knowledge of Genzyme, all Genzyme Registered
Rights licensed to Genzyme or its Subsidiaries, have been registered in,
filed in or issued by the United States Patent and Trademark Office, the
United States Register of Copyrights, or the corresponding offices of other
jurisdictions, and have been properly maintained and renewed in accordance
with all applicable provisions of law and administrative regulations in the
United States and in each such other jurisdiction.
(b) To the best knowledge of Genzyme, the Genzyme GMO Business as
currently conducted does not infringe upon the proprietary rights of others,
nor has Genzyme or its Subsidiaries received any notice or claim from any
third party of such infringement by Genzyme or any of its Subsidiaries.
Genzyme is not aware of any infringement by any material unlicensed third
party on, or any issued competing claim of right to use or own any of, the
GMO Proprietary Rights. To the best knowledge of Genzyme, none of the
activities of the employees of Genzyme and its Subsidiaries on behalf of
Genzyme and its Subsidiaries violates any agreements or arrangements that any
such employees have with former employers in a way which is materially
adverse to the Genzyme GMO Business. Any exceptions to the representations
in this Section 3.11 are set forth on the certified list of Genzyme
Registered Rights previously delivered.
3.12 Contracts and Other Agreements. All contracts and agreements of
Genzyme that are material to the conduct of the Genzyme GMO Business are set
forth on the Genzyme Disclosure Schedule and are valid, subsisting, in full
force and effect, binding upon Genzyme, and to the best knowledge of Genzyme,
binding upon the other parties thereto in accordance with their terms and
Genzyme is not in default under any of them, nor, to the best knowledge of
Genzyme, is any other party to any such contract or other agreement in
default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default by Genzyme or, to the best knowledge
of Genzyme, by any other party thereunder, or that would give rise to a
termination right on the part of any party thereto, except in each case, such
defaults and conditions as would not, individually or in the aggregate, have
a material adverse effect on the Genzyme GMO Business.
3.13 Authorization of Credit Facility. Genzyme has the corporate power
and authority to enter into the Credit Facility (as defined in Section 4.17),
to fully perform its obligations under the Credit Facility, with or without
stockholder approval of this Agreement. The Credit Facility has been duly
authorized by all necessary corporate action
20
on the part of Genzyme and constitutes a valid and binding obligation of
Genzyme, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity.
3.14 Disclosure. The representations, warranties and statements made by
Genzyme in this Agreement and in the other documents and certificates
delivered in connection herewith do not contain any untrue statement of a
material fact, and, when taken together, do not omit to state any material
fact necessary to make such representations, warranties and statements, in
light of the circumstances under which they are made, not misleading.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 Conduct of Business. Except with the prior written consent of
Genzyme which will not be unreasonably withheld or delayed, and except as
otherwise contemplated by this Agreement, during the period from the date
hereof to the Effective Time, PharmaGenics shall observe the following
covenants:
(a) Affirmative Covenants Pending Closing. PharmaGenics will:
(i) Preservation of Personnel. Subject to compliance by
PharmaGenics with Section 4.1(b)(iii) of this Agreement, use commercially
reasonable efforts to preserve intact its business organization and keep
available the services of its present employees, it being understood that
PharmaGenics's termination of employees with poor performance ratings or
employees whom Genzyme has indicated that it does not wish to employ after
the Merger shall not constitute a violation of this covenant;
(ii) Insurance. Use commercially reasonable efforts to keep in
effect casualty, public liability, worker's compensation and other insurance
policies in coverage amounts not less than those in effect at the date of
this Agreement;
(iii) Preservation of the Business; Maintenance of Properties.
Use commercially reasonable efforts to preserve its business, keep its
properties intact, preserve its goodwill and maintain all physical properties
in good operating condition;
(iv) Intellectual Property Rights. Use commercially reasonable
efforts to preserve and protect the Proprietary Rights;
(v) Stock Options. Take appropriate action (which shall not
include the making of any cash payment) to effect the termination of all
outstanding employee stock options that are not exercised prior to the
Effective Time, it being understood that any action taken by PharmaGenics to
accelerate the vesting schedule of any such stock options shall not
constitute a violation of this covenant;
21
(vi) Ordinary Course of Business. Operate its business solely in
the ordinary course.
(vii) Diagnostics Collaboration with ▇▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ Inc.
Use commercially reasonable efforts to enter into an agreement with
▇▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ Inc. on terms reasonably acceptable to Genzyme.
(b) Negative Covenants Pending Closing. PharmaGenics will not:
(i) Disposition of Assets. Sell or transfer, or mortgage, pledge
or create or suffer to exist any lien on, any of its assets other than sales
or transfers in the ordinary course of business or liens disclosed hereunder
and liens permitted under Section 2.14;
(ii) Liabilities. Except as set forth on Section 4.1(b) of the
PharmaGenics Disclosure Schedule, (A) Incur any obligation or liability other
than in the ordinary course of its business, (B) incur any indebtedness for
borrowed money other than to Genzyme or (C) enter into any contracts or
commitments other than purchase orders and commitments for inventory,
materials and supplies in the ordinary course of business and consistent with
past practice;
(iii) Compensation. Except as may be required by applicable
law, (A) change the compensation or fringe benefits of any officer, director,
employee or agent, except for ordinary merit increases for employees other
than officers based on periodic reviews in accordance with past practices and
increases required pursuant to agreements set forth in Section 4.1(b) of the
PharmaGenics Disclosure Schedule or (B) enter into or modify any plan or any
employment, severance or other agreement with any officer, director,
consultant or employee.
(iv) Capital Stock. Except as set forth on Section 4.1(b) of the
PharmaGenics Disclosure Schedule, make any change in the number of shares of
its capital stock authorized, issued or outstanding or grant any option,
warrant or other right to purchase, or to convert any obligation into, shares
of its capital stock, or declare or pay any dividend or other distribution
with respect to any shares of its capital stock, or sell or transfer any
shares of its capital stock, except upon the exercise of options or warrants
outstanding on the date hereof and disclosed on the PharmaGenics Disclosure
Schedule;
(v) Charter and By-Laws. Amend the certificate of incorporation
or amend the by-laws of PharmaGenics;
(vi) Acquisitions. Except as set forth on Section 4.1(b) of the
PharmaGenics Disclosure Schedule, make any material acquisition of property
other than in the ordinary course of PharmaGenics's business; or
(vii) Material Agreements. Enter into or modify any material
contract, including any license, technology development or technology
transfer agreement with any other person or entity, other than as
contemplated by clause (vii) of Section 4.1(a) and the agreements referenced
in Sections 6.9 and 6.10.
22
4.2 Corporate Examinations and Investigations. Prior to the Effective
Time, Genzyme and PharmaGenics shall each be entitled, through its employees
and representatives, to have such access to the assets, properties, business
and operations of PharmaGenics and Genzyme, as is reasonably necessary or
appropriate in connection with its investigation of the other with respect to
the transactions contemplated hereby. Any such investigation and examination
shall be conducted at reasonable times and under reasonable circumstances so
as to minimize any disruption to or impairment of either party's business and
each party shall cooperate fully therein. No investigation by Genzyme or
PharmaGenics shall diminish or obviate any of the representations,
warranties, covenants or agreements of the other contained in this Agreement.
In order that each party may have full opportunity to make such
investigation, Genzyme and PharmaGenics shall each furnish the
representatives of the other with all such information and copies of such
documents concerning its affairs as such representatives may reasonably
request and cause its officers, employees, consultants, agents, accountants
and attorneys to cooperate fully with such representatives in connection with
such investigation.
4.3 Expenses. Whether or not the Merger is consummated, PharmaGenics
and Genzyme shall each bear their own expenses incurred in connection with
the preparation, execution and performance of this Agreement and the
transactions contemplated hereby. PharmaGenics hereby agrees that such
expenses paid or incurred by it, whether before or after the Closing,
including brokerage, investment banking, accounting and legal fees, will not
exceed $1,000,000 in the aggregate, including not more than $500,000 in fees
payable to PaineWebber.
4.4 Authorization from Others. Prior to the Closing Date, the parties
shall use commercially reasonable efforts to obtain all authorizations,
consents and permits of others required to permit the consummation of the
transactions contemplated by this Agreement.
4.5 Consummation of Agreement. Each party shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to
be performed and fulfilled by it under this Agreement, including without
limitation taking no action which would preclude delivery of the opinions
referred to in Sections 6.5 and 7.3, and to ensure that to the extent within
its control or capable of influence by it, no breach of any of its respective
representations, warranties and agreements hereunder occurs or exists on or
prior to the Effective Time, all to the end that the transactions
contemplated by this Agreement shall be fully carried out in a timely
fashion. In connection with the foregoing, each of PharmaGenics and Genzyme
shall provide, and PharmaGenics shall use commercially reasonable efforts to
cause its stockholders to provide, to counsel to PharmaGenics and counsel to
Genzyme a letter setting forth facts, assumptions and representations on
which such counsel may rely in rendering their respective opinions referred
to in Sections 6.5 and 7.3.
4.6 Further Assurances. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
23
4.7 Proxy Statement; Registration Statement. The parties shall
cooperate in the preparation and filing with the SEC as soon as practicable
of a registration statement on Form S-4 (the "Registration Statement") under
the Securities Act with respect to the GMO Stock to be issued in the Merger,
and will use commercially reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly as practicable and
promptly thereafter will mail the Proxy Statement (as defined below) and the
prospectus included in the Registration Statement to the stockholders of
PharmaGenics and Genzyme. The prospectus in the Registration Statement will
also constitute a proxy statement (the "Proxy Statement") of Genzyme and
PharmaGenics for their respective stockholder meetings referred to in Section
4.8. Prior to the Effective Time, Genzyme shall use commercially reasonable
efforts to qualify the shares of GMO Stock to be issued in the Merger under
the securities or "blue sky" laws of every state of the United States, except
any such state with respect to which counsel for Genzyme has determined that
such qualification is not required under the securities or "blue sky" laws of
such state and except that in no event shall Genzyme be obligated to qualify
as a foreign corporation or to execute a general consent to service of
process in any state in which it has not previously so qualified or has not
previously so consented.
4.8 Stockholder Meetings.
(a) PharmaGenics Stockholder Meeting. PharmaGenics, acting through its
Board of Directors, shall, in accordance with applicable law and its
certificate of incorporation and by-laws:
(i) duly hold a meeting of its stockholders as soon as practicable
after the effective date of the Registration Statement for the purpose of
considering and acting on this Agreement;
(ii) include in the Proxy Statement the recommendation of its Board
of Directors that stockholders of PharmaGenics vote in favor of the adoption
of this Agreement; and
(iii) use commercially reasonable efforts (A) to obtain and
furnish the information required to be included by it in the Proxy Statement
and, after consultation with Genzyme, to respond promptly to any comments
made by the SEC with respect to the Proxy Statement and any preliminary
version thereof, (B) to cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time after the effective date of the
Registration Statement and (C) to obtain the necessary approvals by its
stockholders of this Agreement.
Notwithstanding the foregoing, in the event of a proposed Acquisition
Transaction (as defined in Section 4.14), nothing contained in this Section
4.8(a) shall require the Board of Directors of PharmaGenics to take any
action or refrain from taking any action with respect to such Acquisition
Transaction that the Board of Directors determines in good faith on the
written advice of outside counsel would cause it to breach its fiduciary
obligations under applicable law.
24
(b) Genzyme Stockholder Meeting. Genzyme, acting through its Board of
Directors, shall, in accordance with applicable law and its articles of
organization and by-laws:
(i) duly hold a meeting of its stockholders as soon as practicable
after the effective date of the Registration Statement for the purpose of
considering and acting on this Agreement;
(ii) include in the Proxy Statement the recommendation of its Board
of Directors that stockholders of Genzyme vote in favor of the approval of
this Agreement; and
(iii) use commercially reasonable efforts (A) to obtain and
furnish the information required to be included by it in the Proxy Statement
and, after consultation with PharmaGenics, to respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof, (B) to cause the Proxy Statement to be mailed to
its stockholders at the earliest practicable time after the effective date of
the Registration Statement and (C) to obtain the necessary approvals by its
stockholders of this Agreement.
4.9 PharmaGenics Compliance with Exchange Act and Securities Act.
PharmaGenics covenants and agrees that the information relating to
PharmaGenics in (a) the Proxy Statement at the time the Proxy Statement is
mailed and at the time of the meeting of Genzyme's stockholders to vote on
this Agreement and (b) the Registration Statement at the time the
Registration Statement becomes effective and at the time of the meeting of
Genzyme's stockholders to vote on this Agreement, including in each case as
then amended or supplemented, will comply as to form in all material respects
with the applicable provisions of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder, and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading (subject, if required, to a reasonable period of time for the
parties hereto to take such action as may be necessary to amend or supplement
the Proxy Statement or Registration Statement). All filings made by
PharmaGenics after the date hereof pursuant to the Exchange Act will be made
in a timely fashion, will comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder and will 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 light of the circumstances under which they
are made, not misleading.
4.10 Genzyme Compliance with Exchange Act and Securities Act. Genzyme
covenants and agrees that the information relating to Genzyme in (a) the
Proxy Statement at the time the Proxy Statement is mailed and at the time of
the meeting of PharmaGenics's stockholders to vote on this Agreement and (b)
the Registration Statement, at the time the Registration Statement becomes
effective and at the time of the meeting of PharmaGenics's stockholders to
vote on this Agreement, including in each case as then amended or
supplemented, will comply as to form in all material respects with the
applicable provisions of the Exchange Act and the Securities Act,
respectively, and the rules and regulations
25
thereunder, and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading (subject, if required, to a reasonable
period of time for the parties hereto to take such action as may be necessary
to amend or supplement the Proxy Statement or Registration Statement). All
filings made by Genzyme after the date hereof pursuant to the Exchange Act
will be made in a timely fashion, will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder and will 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 light of the circumstances
under which they are made, not misleading.
4.11 Public Announcements and Confidentiality. Any press release or
other information to the press or any third party with respect to this
Agreement or the transactions contemplated hereby shall require the prior
approval of Genzyme and PharmaGenics, which approval shall not be
unreasonably withheld, provided that a party shall not be prevented from
making such disclosure as it shall be advised by counsel is required by law.
Each party agrees to provide reasonable notice to the other party of any such
required disclosure and to limit such disclosure to what is required by law.
Each party shall also keep confidential and shall not use in any manner any
information or documents obtained from the other party or its representatives
concerning such other party's assets, properties, business and operations,
unless readily ascertainable from public information, already known or
subsequently developed independently, received from a third party not under
an obligation to keep such information confidential or otherwise required by
law. If this Agreement terminates, all copies of any documents obtained by a
party or its representatives from the other party or its representatives will
be returned, except that one copy thereof may be retained by counsel to the
party returning such documents in order to evidence compliance hereunder.
The obligations set forth in the previous two sentences of this Section 4.11
shall survive termination of this Agreement.
4.12 Affiliate Letters. Prior to the Closing Date, PharmaGenics shall
identify to Genzyme all persons who at the time of the meeting of
PharmaGenics's stockholders for the purpose of voting on this Agreement
PharmaGenics believes may be deemed to be "affiliates" of PharmaGenics within
the meaning of Rule 145 under the Securities Act. PharmaGenics shall provide
Genzyme with such information as Genzyme shall reasonably request for
purposes of making its own determination of persons who may be deemed to be
affiliates of PharmaGenics. PharmaGenics shall use commercially reasonable
efforts to cause to be delivered to Genzyme prior to the Closing Date, to the
extent not provided concurrently with the execution of this Agreement, a
letter from each of such affiliates identified by PharmaGenics or Genzyme in
substantially the form attached hereto as Exhibit C (the "Affiliate Letters").
4.13 Stockholder Agreements. Concurrently with the execution of this
Agreement, each executive officer and director of PharmaGenics and the
beneficial owners of five percent (5%) or more of the PharmaGenics Common
Stock (on an as converted basis) and each of HealthCare Ventures II, L.P.,
HealthCare Ventures III, L.P., HealthCare Ventures IV, L.P., ▇▇▇▇▇▇ Trust,
Everest Trust and PaineWebber R&D Partners III, L.P.,
26
will have executed and delivered to Genzyme an agreement substantially in the
form attached hereto as Exhibit D (the "Stockholder Agreements"), which may
be combined with an Affiliate Letter if applicable.
4.14 No Solicitation. PharmaGenics will not, and will not permit any of
its directors, officers, employees, agents or other representatives to, (i)
solicit or initiate discussions with any person, other than Genzyme, relating
to the possible acquisition of PharmaGenics or all or a material portion of
the assets or any of the capital stock of PharmaGenics or any merger or other
business combination involving PharmaGenics (an "Acquisition Transaction") or
(ii) except to the extent required by fiduciary obligations under applicable
law as advised in writing by outside legal counsel, participate in any
negotiations regarding, or furnish to any other person information with
respect to, any effort or attempt by any other person to do or to seek any
Acquisition Transaction (any such activities permitted by the exception
described in this clause (ii) being referred to herein as "Permissible
Negotiations"). PharmaGenics agrees to inform Genzyme orally and in writing
and in reasonable detail (including without limitation the applicable terms
and conditions and identity of the other person) within one business day of
its receipt of any offer, proposal or inquiry relating to any Acquisition
Transaction and any modification thereof or any proposed agreement, to
promptly furnish to Genzyme copies of any material written communications or
documents received with respect to the foregoing and to promptly inform
Genzyme orally and in writing of the nature and status of any discussions or
negotiations regarding the foregoing.
4.15 Molecular Oncology Division. As of the Effective Time, Genzyme
will establish the "Molecular Oncology Division" within Genzyme. The assets
and liabilities initially allocated to the Molecular Oncology Division are
described in Exhibit E hereto. The Board of Directors of Genzyme will adopt
policies to govern the management of the Molecular Oncology Division and its
relationship to the other divisions of Genzyme subsequent to the Effective
Date, including provisions providing for the class vote of holders of GMO
Stock as therein described, substantially as set forth in Exhibit F hereto.
Such policies shall be set forth or described in the prospectus included in
the Registration Statement.
4.16 Designated Shares. The initial number of GMO Designated Shares
shall be 6,000,000.
4.17 Stand-by Credit Facility. Until the earlier of the Closing or the
termination of this Agreement, Genzyme will make available to PharmaGenics a
stand-by credit facility (as described below, the "Credit Facility") to fund
its documented operating costs. Monthly draws against the Credit Facility
may be made once each month starting in December 1996 up to a maximum amount
in each month as set forth below:
27
Month Maximum Draw
----- ------------
December 1996 $250,000
January 1997 $750,000
February 1997 $650,000
March 1997 $450,000
April 1997 $550,000
May 1997 $550,000
Amounts not drawn by PharmaGenics in a designated month shall be
available to cover documented operating expenses in any later month (subject
to the limitations described below), provided, however, that in the event
that such draws involve individual expenditures in excess of $25,000, such
expenditures shall require Genzyme's consent. The maximum amount of monthly
draws shall be reduced by 60% of gross revenues received by PharmaGenics in
the prior month. If PharmaGenics's gross revenues in any month beginning with
November 1996 exceed the product of 1.6667 times the maximum draw for the
succeeding month, the amount of such excess shall be applied first against
the maximum amount drawable in the succeeding month, any remaining excess
shall then be applied against amounts drawable that may be carried forward
from previous months and then any remaining excess shall be carried forward
and shall reduce the maximum amount drawable in subsequent months. Monthly
draws shall be made on the third business day after written notice from
PharmaGenics to Genzyme, which notice shall specify the amount requested to
be drawn and shall include a certification by PharmaGenics as to its gross
revenues received in the prior month and documentation (including a cash
balance and statement of accounts payable) of its operating costs reasonably
satisfactory to Genzyme. In addition to the foregoing, PharmaGenics will
provide Genzyme no later than the end of the following month an unaudited
balance sheet as of the end of such month, an unaudited statement of
operations for the month then ended and an unaudited statement of cash flows
for the month then ended. An additional draw of $250,000 may be made under
the Credit Facility if the SAGE patent licensed under the SAGE license
referred to in Section 6.9 issues while the Credit Facility is in effect;
provided that such draw shall be utilized by PharmaGenics to satisfy its
obligations to ▇▇▇▇▇ ▇▇▇▇▇▇▇ University ("JHU"). PharmaGenics shall provide
prompt written notice to Genzyme of the issuance of such patent, including a
copy of the notice of issuance received from the U.S. Patent and Trademark
Office. Amounts advanced under the Credit Facility shall be evidenced by a
promissory note substantially in the form of Exhibit G attached hereto (the
"Promissory Note").
28
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF EACH PARTY TO CONSUMMATE THE MERGER
The respective obligations of each party to consummate the Merger shall
be subject to the satisfaction, at or before the Effective Time, of each of
the following conditions:
5.1 Approvals. This Agreement shall have been approved by the
affirmative vote of the holders of (i) a majority of the outstanding shares
of PharmaGenics Common Stock, PharmaGenics Series A Stock, PharmaGenics
Series B Stock and PharmaGenics Series C Stock voting as a single class, (ii)
a majority of the outstanding shares of PharmaGenics Common Stock,
PharmaGenics Series A Stock and PharmaGenics Series B Stock voting as a
single class and (iii) a majority in interest of the outstanding shares of
GGD Stock and GTR Stock voting together as a single class; and all consents
and approvals referred to in Sections 2.9 and 3.8 of this Agreement or in the
corresponding sections of each party's Disclosure Schedule, shall have been
obtained; provided, however, that if Genzyme waives the obtaining of any
consent set forth in Section 2.9 of the PharmaGenics Disclosure Schedule,
such consent shall not be a condition to PharmaGenics's obligation to
consummate the Merger.
5.2 Registration Statement. The Registration Statement shall have been
declared effective and shall remain effective and shall not be subject to a
stop order at the Effective Time.
5.3 Absence of Order. No restraining order or injunction of any court
or order of any governmental authority of competent jurisdiction which
prohibits consummation of the Merger shall be in effect.
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
GENZYME TO CONSUMMATE THE MERGER
The obligation of Genzyme to consummate the Merger is subject to the
satisfaction or waiver, at or before the Effective Time, of the following
conditions:
6.1 Representations, Warranties and Covenants. Except as contemplated
or permitted by this Agreement, the representations and warranties of
PharmaGenics contained in this Agreement, individually and in the aggregate,
shall be true and correct at and as of the Effective Time with the same force
and effect as though made on and as of the Effective Time; there shall not
have been any material adverse change in the Business of PharmaGenics since
the date hereof; and PharmaGenics shall have performed and complied in all
material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it at or prior to the Effective
Time. PharmaGenics shall have delivered to Genzyme a certificate, dated the
Closing Date, to the foregoing effect.
6.2 Affiliate Letters. Genzyme shall have received the Affiliate
Letters referred to in Section 4.12.
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6.3 Stockholder Agreements. Genzyme shall have received the
Stockholder Agreements referred to in Section 4.13.
6.4 Opinions of Counsel to PharmaGenics. Genzyme shall have received
an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, counsel to PharmaGenics,
dated the Closing Date substantially in the form attached as Exhibit H.
6.5 Tax Matters. Genzyme shall have received an opinion of ▇▇▇▇▇▇ &
Dodge LLP substantially to the effect that: on the basis of facts and
representations set forth therein or set forth in writing elsewhere and
referred to therein, under the provisions of the Code, for federal income tax
purposes, (i) the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code and (ii) no gain or loss will be recognized by
and there shall be no corporate income tax liability to Genzyme or
PharmaGenics by reason of the Merger.
6.6 Dissenting Shares. The Dissenting Shares shall not exceed two
percent (2%) of the shares of PharmaGenics Common Stock outstanding on the
Closing Date, assuming conversion of all shares of PharmaGenics Preferred
Stock. The number of shares of GGD Stock and GTR Stock held by stockholders
who properly exercise appraisal rights under the MBCL with respect thereto
shall not have an aggregate market value in excess of $28,000,000.
6.7 Certificate of Merger. PharmaGenics shall have executed and
delivered the Articles of Merger and the Certificate of Merger referred to in
Section 1.2.
6.8 Comfort Letter. Genzyme shall have received "comfort letters",
dated as of a date not more than two days prior to the date the Registration
Statement is declared effective and as of a date not more than two days prior
to the Closing Date, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants
for PharmaGenics, in the form, scope and content contemplated by Statement of
Auditing Standards No. 72 issued by the American Institute of Certified
Public Accountants, Inc. relating to the financial statements and other
financial data with respect to PharmaGenics included or incorporated by
reference in the Proxy Statement and Registration Statement and such other
matters as may be reasonably requested by Genzyme.
6.9 SAGE License. The SAGE (Serial Analysis of Gene Expression)
license from JHU to PharmaGenics shall have been amended to delete the
requirement of a $5,000,000 payment to JHU upon consummation of the Merger in
the form attached as exhibit 6.9 to the PharmaGenics Disclosure Schedule.
6.10 Unsigned Agreements. All unsigned agreements between PharmaGenics
and JHU listed in Section 6.10 of the PharmaGenics Disclosure Schedule shall
have been signed in forms reasonably satisfactory to Genzyme and PharmaGenics.
6.11 Amendment of PaineWebber Engagement Letter. The engagement letter
between PharmaGenics and PaineWebber dated as of August 15, 1996 shall have
been amended to provide that PaineWebber's fees with respect to the "Opinion"
and the "sale
30
transaction" (both as therein defined) shall be an aggregate of $500,000,
payable in cash no earlier than December 15, 1997.
6.12 Exercise of Stock Purchase Option and Transfer of Technology.
PaineWebber R&D Partners III, L.P. (the "Partnership") shall have exercised
its option pursuant to Article III of the Stock Purchase Agreement dated
March 15, 1995 by and among PharmaGenics and the Partnership (the "Stock
Purchase Agreement") to exchange all of its rights in and to the Fund
Technology, Background Technology, Targets and related Products and Abandoned
Targets and related Products (all as defined in the Stock Purchase Agreement,
collectively referred to herein as the "Technology") for shares of
PharmaGenics Preferred Stock or PharmaGenics shall have otherwise satisfied
or been released from its obligations under the Stock Purchase Agreement and
the transfer of the Technology shall have been completed.
6.13 Delivery of Cancelled Warrants. The Partnership shall have
delivered cancelled warrant certificates numbered C-1 (for 1,000,000 shares
of PharmaGenics Common Stock) and P-1 (for 666,667 shares of PharmaGenics
Common Stock) each dated April 1, 1994.
6.14 Commitment Letter. PaineWebber shall have delivered to
PharmaGenics and Genzyme a commitment letter stating that it will use its
best efforts to raise not less than $20 million for the Molecular Oncology
Division in a private placement to be commenced within forty-five (45) days
after the Effective Time upon terms mutually agreeable to Genzyme and
PaineWebber.
6.15 Legal Proceedings. No holder of PharmaGenics Stock shall have
commenced or threatened (in writing) to commence any action, suit, or legal,
administrative or arbitration proceeding against either PharmaGenics or
Genzyme, challenging or seeking to enjoin the Merger or seeking damages in
connection with PharmaGenics's entering into this Agreement. In the event
that Genzyme waives compliance with this condition and the Merger is
consummated, the provisions of Section 1.13 shall apply.
6.16 Certificates. PharmaGenics shall have furnished Genzyme with such
certificates of public officials and of PharmaGenics officers as may be
reasonably requested by Genzyme.
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
PHARMAGENICS TO CONSUMMATE THE MERGER
The obligation of PharmaGenics to consummate the Merger is subject to
the satisfaction or waiver, at or before the Effective Time, of the following
conditions:
7.1 Representations, Warranties and Covenants. Except as contemplated
or permitted by this Agreement, the representations and warranties of Genzyme
contained in this Agreement, individually and in the aggregate, shall be true
and correct at and as of the Effective Time with the same force and effect as
though made on and as of the Effective
31
Time; Genzyme shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Effective Time. Genzyme shall have
delivered to PharmaGenics a certificate, dated the Effective Time, to the
foregoing effect.
7.2 Opinion of Counsel to Genzyme. PharmaGenics shall have received
the opinion of ▇▇▇▇▇▇ & Dodge LLP, counsel to Genzyme, dated the Closing Date
and in substantially the form attached as Exhibit I.
7.3 Tax Opinion. PharmaGenics shall have received an opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll substantially to the effect that: on the
basis of facts and representations set forth therein or set forth in writing
elsewhere and referred to therein, which representations are reasonably
consistent with the facts existing at the Effective Time, for federal income
tax purposes, (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code, (ii) no gain or loss will be
recognized by PharmaGenics's stockholders upon the exchange of their shares
of PharmaGenics Preferred Stock solely for shares of GMO Stock (it being
understood that such opinion will not extend to cash received in lieu of
fractional share interests), and (iii) no gain or loss will be recognized by
PharmaGenics by reason of the Merger.
7.4 Merger Documents. Genzyme shall have executed and delivered the
Articles of Merger and the Certificate of Merger referred to in Section 1.2.
7.5 Certificates. Genzyme shall have furnished PharmaGenics with such
certificates of public officials and of Genzyme officers as may be reasonably
requested by PharmaGenics.
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by Genzyme's or
PharmaGenics's stockholders, as follows:
(a) by either PharmaGenics or Genzyme, by written notice to the other,
if the Effective Time shall not have occurred on or before May 31, 1997;
provided, however, that the right to terminate this Agreement under this
Section 8.1(a) shall not be available to any party whose breach of a
representation or warranty or failure to fulfill any covenant or agreement
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date.
(b) by PharmaGenics, by written notice to Genzyme, if there shall have
been a material breach of any of the covenants or agreements or any of the
representations or warranties contained in this Agreement on the part of
Genzyme, which breach is either not cured within twenty (20) days following
written notice to Genzyme or by its nature cannot be cured prior to the
Closing; provided, however, that PharmaGenics shall not have the right to
terminate this Agreement pursuant to this Section 8.1(b) because of the
breach of any
32
representation or warranty unless such breach, together with all such other
breaches, would entitle PharmaGenics not to consummate the transactions
contemplated hereby under Section 7.1;
(c) by Genzyme, by written notice to PharmaGenics, if there shall have
been a material breach of any of the covenants or agreements or any of the
representations or warranties contained in this Agreement on the part of
PharmaGenics, which breach is either not cured within twenty (20) days
following written notice to PharmaGenics or by its nature cannot be cured
prior to the Closing; provided, however, that Genzyme shall not have the
right to terminate this Agreement pursuant to this Section 8.1(c) because of
the breach of any representation or warranty unless such breach, together
with all such other breaches, would entitle Genzyme not to consummate the
transactions contemplated hereby under Section 6.1;
(d) by either Genzyme or PharmaGenics, by written notice to the other,
if any court or governmental entity shall have issued any injunction or taken
any other action permanently restraining, enjoining or otherwise prohibiting
the consummation of the Merger and such injunction or other action shall have
become final and nonappealable;
(e) by either Genzyme or PharmaGenics, by written notice to the other,
if the required approval of the stockholders of either Genzyme or
PharmaGenics of this Agreement shall not have been obtained within
seventy-five (75) days after the Registration Statement has been declared
effective by the SEC;
(f) by Genzyme, by written notice to PharmaGenics, if PharmaGenics's
Board of Directors (i) for any reason fails to call and hold a meeting of
stockholders for the purpose of voting on, or otherwise fails to seek
stockholder approval of, this Agreement as provided in Section 4.8(a) or to
include in the Proxy Statement its recommendation that PharmaGenics's
stockholders vote to approve or consent to this Agreement, (ii) withdraws or
modifies in a manner adverse to Genzyme its approval of or its recommendation
that stockholders vote to approve or consent to this Agreement or (iii)
adopts resolutions approving or otherwise authorizes or recommends an
Acquisition Transaction;
(g) by PharmaGenics, prior to approval of the Merger by its
stockholders, if PharmaGenics's Board of Directors shall, as a result of a
possible Acquisition Transaction that does not involve a breach of
PharmaGenics's covenant under Section 4.14, determines in good faith that the
fiduciary obligations of such Board under applicable law require that such
Acquisition Transaction be accepted; provided, however, that PharmaGenics may
not effect such termination pursuant to this Section 8.1(g) unless and until:
(i) PharmaGenics gives Genzyme at least seven (7) days' prior
written notice of its intention to effect such termination pursuant to
this Section 8.1(g);
(ii) during such period, PharmaGenics shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with
Genzyme to make adjustments in the terms and conditions of this Agreement
as would enable Genzyme to proceed with the transactions contemplated
herein; and
33
(iii) PharmaGenics's Board of Directors shall have been advised in
writing by outside counsel that, notwithstanding a binding commitment to
consummate this Agreement entered into in proper exercise of their
fiduciary obligations, such fiduciary obligations would also require such
Board to reconsider and terminate such commitment as a result of such
Acquisition Transaction; or
(h) At any time with the written consent of Genzyme and PharmaGenics.
8.2 Effect of Termination. If this Agreement is terminated as provided
in Section 8.1, this Agreement shall forthwith become void and have no
effect, without liability on the part of Genzyme, PharmaGenics and their
respective directors, officers or stockholders, except that (i) the
provisions of this Section 8.2, Section 4.3 relating to expenses, Section
4.11 relating to publicity and confidentiality, and Section 8.3 to the extent
provided therein, shall survive; and (ii) no such termination shall relieve
any party from liability by reason of any willful breach by such party of any
of its representations, warranties, covenants or agreements contained in this
Agreement.
8.3 Termination Fee. In the event of a termination of this Agreement
by Genzyme other than pursuant to Section 8.1(c) or (f) and other than
pursuant to Section 8.1(e) as a result of a failure to obtain the requisite
approval of the PharmaGenics stockholders of this Agreement, Genzyme will
loan PharmaGenics up to $1,500,000 (the "Termination Payment"), payable in
three equal monthly advances, the first such monthly advance to be made
within 10 days of termination. In the event that a draw has already been
made that month under the Credit Facility, the first advance shall be reduced
by the amount of funds from such draw still available to PharmaGenics on the
date of termination as evidenced by the balance on deposit in PharmaGenics's
bank account at First Union as of such date, which evidence shall be
dispositive in the absence of manifest error or demonstrated fraud. The
second and third advances of the Termination Payment will be made 30 and 60
days, respectively, after the first advance. The Termination Payment shall
be reduced by 60% of the cumulative gross revenues received by PharmaGenics
beginning with the month prior to the first advance and by the amount of any
revenues carried forward pursuant to the fourth sentence of Section 4.17 and
not previously utilized to reduce a draw under the Credit Facility. No
advance of a Termination Payment will be made absent a certification from
PharmaGenics as to the proper offset to be made for its gross revenues. The
Termination Payment will be increased by $250,000 if the SAGE patent issues
within three months following a termination which requires a Termination
Payment under this Section 8.3. The Termination Payment shall be evidenced
by the Promissory Note.
8.4 Amendment. This Agreement may not be amended except by an
instrument signed by each of the parties hereto; provided, however, that
after adoption of this Agreement by the stockholders of Genzyme or
PharmaGenics and prior to the Effective Time, (a) without the further
approval of the stockholders of PharmaGenics no amendment may be made that
alters or changes the amount or kind of consideration to be received as
provided in Section 1.8 and (b) without the further approval of the
stockholders of Genzyme or PharmaGenics, as applicable, no amendment may be
made that alters or changes any of the terms and conditions of this Agreement
if such alteration or change would materially adversely affect the
stockholders of Genzyme or PharmaGenics.
34
8.5 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or
other acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit; provided that any such extension or waiver shall be
binding upon a party only if such extension or waiver is set forth in a
writing executed by such party.
SECTION 9 - MISCELLANEOUS
9.1 No Survival. None of the representations, warranties, covenants
and agreements of any party in this Agreement or in any certificate delivered
by any party pursuant hereto shall survive the Merger, except the provisions
of Sections 1, 4.15 and paragraph 7 of Exhibit F.
9.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered in
person, by overnight courier which provides evidence of delivery, by
facsimile transmission (with receipt confirmed by telephone or by automatic
transmission report) or two business days after being sent by registered or
certified mail (postage prepaid, return receipt requested), as follows:
(i) If to Genzyme, to:
Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Legal Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to PharmaGenics, to:
PharmaGenics, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
35
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section 9.2 designate
another address or person for receipt of notices hereunder.
9.3 Entire Agreement. This Agreement, including the exhibits, the
PharmaGenics Disclosure Schedule, the Genzyme Disclosure Schedule and the
other documents referred to herein contains the entire agreement among the
parties with respect to the Merger and related transactions, and supersedes
all prior agreements, written or oral, with respect thereto, including the
letter agreement between the parties dated October 29, 1996.
9.4 No Third Party Beneficiaries. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement, except that the provisions of Sections 1, 4.15
and 8.3 and paragraph 7 of Exhibit F shall be enforceable by, and shall inure
to the benefit of, the persons entitled to the benefit thereof.
9.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard
to its conflict of law provisions, except to the extent that the laws of the
State of Delaware apply to the Merger and the rights of PharmaGenics
stockholders relative to the Merger.
9.6 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns. This Agreement is not assignable by either party
without the prior written consent of the other.
9.7 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
36
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first stated above.
GENZYME CORPORATION
By
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President, Finance
By
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PHARMAGENICS, INC.
By
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
By
----------------------------
A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Treasurer
37