EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER
Dated as of July 24, 2003,
Among
ROCHE HOLDING LTD,
66 ACQUISITION CORPORATION II,
IGEN INTERNATIONAL, INC.
And
IGEN INTEGRATED HEALTHCARE, LLC
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TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
SECTION 1.01. The Merger ................................................................................ 3
SECTION 1.02. Closing ................................................................................... 4
SECTION 1.03. Effective Time............................................................................. 4
SECTION 1.04. Effects ................................................................................... 5
SECTION 1.05. Certificate of Incorporation and By-laws................................................... 5
SECTION 1.06. Directors ................................................................................. 5
SECTION 1.07. Officers .................................................................................. 5
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.................................................................... 5
SECTION 2.02. Exchange of Certificates................................................................... 8
SECTION 2.03. Company Convertible Debentures............................................................. 15
SECTION 2.04. Company Warrants........................................................................... 15
ARTICLE III
Related Transactions
SECTION 3.01. Restructuring of Assets and Assumption of Liabilities...................................... 15
SECTION 3.02. Ongoing Litigation Agreement............................................................... 16
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization, Standing and Power........................................................... 17
SECTION 4.02. Capital Structure; Subsidiaries............................................................ 17
SECTION 4.03. Newco ..................................................................................... 20
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SECTION 4.04. Authority; Execution and Delivery; Enforceability.......................................... 20
SECTION 4.05. No Conflicts; Consents..................................................................... 22
SECTION 4.06. Intellectual Property...................................................................... 24
SECTION 4.07. Brokers; Schedule of Fees and Expenses..................................................... 27
SECTION 4.08. Opinion of Financial Advisor............................................................... 27
SECTION 4.09. SEC Filings ............................................................................... 27
SECTION 4.10. Financial Statements....................................................................... 28
SECTION 4.11. Disclosure Documents....................................................................... 29
SECTION 4.12. Litigation ................................................................................ 29
SECTION 4.13. Absence of Certain Changes................................................................. 30
SECTION 4.14. Employee Matters Generally; Company Benefit Plans.......................................... 32
SECTION 4.15. No Undisclosed Material Liabilities........................................................ 33
SECTION 4.16. Transactions with Related Persons.......................................................... 33
SECTION 4.17. Compliance with Law and Judgments.......................................................... 35
SECTION 4.18. Environmental Matters...................................................................... 35
SECTION 4.19. Tax Matters ............................................................................... 35
SECTION 4.20. Newco Solvency............................................................................. 37
SECTION 4.21. Limitation ................................................................................ 37
ARTICLE V
Representations and Warranties of Parent and Sub
SECTION 5.01. Organization, Standing and Power........................................................... 38
SECTION 5.02. Sub ....................................................................................... 38
SECTION 5.03. Authority; Execution and Delivery; Enforceability.......................................... 39
SECTION 5.04. No Conflicts; Consents..................................................................... 39
SECTION 5.05. Brokers ................................................................................... 41
SECTION 5.06. Financing .. .............................................................................. 41
SECTION 5.07. Financial Statements....................................................................... 41
SECTION 5.08. Stock Ownership; Interested Stockholders................................................... 41
ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01. Conduct of Business........................................................................ 41
SECTION 6.02. No Solicitation............................................................................ 46
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ARTICLE VII
Additional Agreements
SECTION 7.01. Preparation of the Proxy Statement, the Newco Form S-4 and the Newco Form 8-A; Company
Stockholders Meeting .................................................................... 50
SECTION 7.02. Access to Information; Confidentiality..................................................... 52
SECTION 7.03. Reasonable Best Efforts; Notification...................................................... 53
SECTION 7.04. Stock Options.............................................................................. 54
SECTION 7.05. Certain Claims............................................................................. 55
SECTION 7.06. Fees and Expenses.......................................................................... 57
SECTION 7.07. Public Announcements....................................................................... 59
SECTION 7.08. Transfer Taxes............................................................................. 59
SECTION 7.09. Rights Agreement; Consequences if Rights Triggered......................................... 59
SECTION 7.10. Listing of Newco Common Stock.............................................................. 60
SECTION 7.11. Modifications to the License Agreement..................................................... 60
SECTION 7.12. Standstill ................................................................................ 60
SECTION 7.13. Pending Litigation......................................................................... 61
SECTION 7.14. Company Secured Notes...................................................................... 61
SECTION 7.15. Restructuring.............................................................................. 62
SECTION 7.16. Notices of Certain Events.................................................................. 62
SECTION 7.17. Company Financing Transaction.............................................................. 63
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions to Each Party's Obligation to Effect the Merger................................. 63
SECTION 8.02. Conditions to Obligations of Parent and Sub................................................ 64
SECTION 8.03. Conditions to Obligations of the Company and Newco......................................... 66
SECTION 8.04. Frustration of Closing Conditions.......................................................... 67
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination ............................................................................... 67
SECTION 9.02. Effect of Termination...................................................................... 69
SECTION 9.03. Amendment ................................................................................. 69
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SECTION 9.04. Extension; Waiver.......................................................................... 70
SECTION 9.05. Procedure for Termination, Amendment, Extension or Waiver.................................. 70
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and Warranties............................................. 71
SECTION 10.02. Notices .................................................................................. 71
SECTION 10.03. Definitions .............................................................................. 72
SECTION 10.04. Interpretation............................................................................ 78
SECTION 10.05. Severability.............................................................................. 78
SECTION 10.06. Counterparts.............................................................................. 79
SECTION 10.07. Entire Agreement; No Third-Party Beneficiaries............................................ 79
SECTION 10.08. Governing Law............................................................................. 79
SECTION 10.09. Assignment ............................................................................... 79
SECTION 10.10. Enforcement; Consent to Service of Process................................................ 80
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Index of Defined Terms
Acquiring Person................................................................ Company Rights Agreement
affiliate....................................................................... Section 10.03
Agreement....................................................................... Preamble
Appraisal Shares................................................................ Section 2.01(d)
Assumed Liabilities............................................................. Restructuring Agreement
Authorized Agent................................................................ Section 10.10(b)
Cash Amount..................................................................... Section 7.17
Certificates.................................................................... Section 2.02(b)
Certificate of Merger........................................................... Section 1.03
Closing......................................................................... Section 1.02
Closing Date.................................................................... Section 1.02
Code............................................................................ Recitals
Commercial Agreements........................................................... Section 10.03
Company......................................................................... Preamble
Company Benefit Plan............................................................ Section 4.14(c)
Company Board................................................................... Section 4.04(b)
Company By-laws................................................................. Section 4.01
Company Capital Stock........................................................... Section 4.02(a)
Company Charter................................................................. Section 4.01
Company Common Stock............................................................ Recitals
Company Convertible Debentures.................................................. Section 4.02(a)
Company Derivative Securities................................................... Section 4.02(a)
Company Disclosure Letter....................................................... Article IV
Company Records................................................................. Restructuring Agreement
Company Rights.................................................................. Section 4.02(a)
Company Rights Agreement........................................................ Section 4.02(a)
Company SEC Filings............................................................. Section 4.09(a)
Company Secured Notes........................................................... Section 7.14
Company Series A Preferred Stock................................................ Section 4.02(a)
Company Series B Preferred Stock................................................ Section 4.02(a)
Company Stockholder Approval.................................................... Section 4.04(c)
Company Stockholders Meeting.................................................... Section 7.01(b)
Company Stock Option............................................................ Section 7.04(c)
Company Stock Plans............................................................. Section 7.04(c)
Company Subsidiaries............................................................ Section 4.02(b)
Company Takeover Proposal....................................................... Section 6.02(h)
Company Warrants................................................................ Section 4.02(a)
Confidentiality Agreement....................................................... Section 7.02
Consent......................................................................... Section 4.05(b)
Continuing Licensee Subsidiary.................................................. Restructuring Agreement
Contract........................................................................ Section 4.05(a)
Court of Appeals Opinion........................................................ Section 10.03
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Covenants Not To ▇▇▇............................................................ Section 10.03
Covenant Payment................................................................ Recitals
Covered ECL Technology.......................................................... Section 10.03
Cut-Off Date.................................................................... Section 7.17
Damages Payment................................................................. Recitals
DGCL............................................................................ Section 1.01
Distribution Date............................................................... Company Rights Agreement
Effective Time.................................................................. Section 1.03
Environmental Law............................................................... Section 10.03
ERISA........................................................................... Section 4.14(a)
ERISA Affiliate................................................................. Section 4.14(a)
Excess Shares................................................................... Section 2.02(e)
Exchange Act.................................................................... Section 4.05(b)
Exchange Agent.................................................................. Section 2.02(a)
Exchange Fund................................................................... Section 2.02(a)
Exchange Ratio.................................................................. Section 2.01(c)
FHLR............................................................................ Section 10.03
Final Judgment.................................................................. Section 3.02(b)
GAAP............................................................................ Section 4.10
Governmental Entity............................................................. Section 4.05(b)
Hazardous Material.............................................................. Section 10.03
HSR Act......................................................................... Section 4.05(b)
Hyperion........................................................................ Section 4.16(e)
ICS............................................................................. Section 4.16(e)
Improvements License Agreement.................................................. Section 10.03
Insolvent....................................................................... Section 10.03
Intellectual Property Rights.................................................... Section 10.03
Intended Treatment.............................................................. Recitals
I/R Agreements.................................................................. Restructuring Agreement
Judgment........................................................................ Section 4.05(a)
June 30 Royalty Payment......................................................... Recitals
JW.............................................................................. Section 10.03
JW Consulting................................................................... Section 10.03
Law............................................................................. Section 4.05(a)
Letter Agreement................................................................ Section 7.02
Liabilities..................................................................... Section 10.03
License Agreement............................................................... Restructuring Agreement
Licensed Intellectual Property Rights........................................... Section 10.03
License Litigation.............................................................. Section 10.03
Liens........................................................................... Section 4.02(b)
Limited Mutual Release and Agreement............................................ Section 10.03
Loan............................................................................ Section 7.17
Merger.......................................................................... Recitals
Merger Consideration............................................................ Section 2.01(c)
MSD............................................................................. Section 10.03
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MSD Agreements.......................................................... Section 10.03
MSD Consent............................................................. Section 10.03
MST..................................................................... Section 10.03
Nasdaq.................................................................. Section 2.02(e)
Newco................................................................... Preamble
Newco Common Stock...................................................... Recitals
Newco Company........................................................... Restructuring Agreement
Newco Form 8-A.......................................................... Section 4.05(b)
Newco Form S-4.......................................................... Section 4.05(b)
Newco Information....................................................... Post-Closing Covenants Agreement
Newco I/R Agreement..................................................... Restructuring Agreement
Newco Rights............................................................ Section 10.03
Newco Shares Trust...................................................... Section 2.02(e)
New Patent Litigation................................................... Section 10.03
1992 License Agreement.................................................. Section 10.03
Ongoing Litigation Agreement............................................ Recitals
Option Shares........................................................... Section 7.04(a)
Outside Date............................................................ Section 9.01(b)
Owned Intellectual Property Rights...................................... Section 10.03
Parent.................................................................. Preamble
Parent Material Adverse Effect.......................................... Section 10.03
Parent Note............................................................. Section 7.17
PCR License Agreement................................................... Section 10.03
PCR Services Agreement.................................................. Section 10.03
Per Share Cash Merger Consideration..................................... Recitals
person.................................................................. Section 10.03
Post-Closing Covenants Agreement........................................ Recitals
Proteinix............................................................... Section 4.16(e)
Proxy Statement......................................................... Section 4.05(b)
R Corp.................................................................. Recitals
R Diagnostics........................................................... Recitals
Related Persons......................................................... Section 4.16
Release................................................................. Section 10.03
Representatives......................................................... Section 6.02(a)
Restructuring........................................................... Restructuring Agreement
Restructuring Agreement................................................. Recitals
RMS..................................................................... Section 10.03
R Party ................................................................ Section 10.03
SEC..................................................................... Section 4.05(b)
Section 262............................................................. Section 2.01(d)
Securities Act.......................................................... Section 4.09(c)
Senior Secured Notes
Purchase Agreement............................................. Section 10.03
Shares Acquisition Date................................................. Company Rights Agreement
Sub..................................................................... Preamble
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subsidiary...................................................................... Section 10.03
Subsidiary Securities........................................................... Section 4.02(b)
Superior Company Proposal....................................................... Section 6.02(h)
Surviving Corporation........................................................... Section 1.01
Tax Allocation Agreement........................................................ Recitals
Taxes........................................................................... Section 4.19(f)
Taxing Authority................................................................ Section 4.19(f)
Tax Return...................................................................... Section 4.19(f)
Transactions.................................................................... Section 1.01
Transaction Agreements.......................................................... Section 10.03
Transaction Material Adverse Effect............................................. Section 10.03
Transfer Taxes.................................................................. Section 7.08
Voting Company Debt............................................................. Section 4.02(a)
Wellstat Biologics.............................................................. Section 4.16(e)
Wellstat Therapeutics........................................................... Section 4.16(e)
AGREEMENT AND PLAN OF MERGER dated as of
July 24, 2003 (this "Agreement"), among ROCHE HOLDING
LTD, a joint stock company organized under the laws
of Switzerland ("Parent"), 66 ACQUISITION CORPORATION
II, a Delaware corporation ("Sub") and a wholly owned
subsidiary of Parent, IGEN INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and IGEN
INTEGRATED HEALTHCARE, LLC, a Delaware limited
liability company ("Newco") and a wholly owned
subsidiary of the Company.
WHEREAS the respective Boards of Directors of Parent, Sub, the
Company and Newco have approved and declared advisable this Agreement and the
transactions contemplated hereby on the terms and subject to the conditions set
forth in this Agreement and the sole stockholder of Sub has adopted this
Agreement;
WHEREAS simultaneously with the execution and delivery of this
Agreement, the Company, Roche Diagnostics GmbH, a German limited liability
company ("R Diagnostics"), Roche Diagnostics Corporation, an Indiana corporation
("R Corp"), MSD (as defined in Section 10.03) and MST (as defined in Section
10.03) are entering into an agreement (the "Ongoing Litigation Agreement")
pursuant to which, among other things, R Diagnostics and R Corp shall (a)
deliver to the Company payment not later than two business days after the date
of this Agreement, by wire transfer to a bank account designated by the Company,
(i) $18,600,000 in immediately available funds (the "Damages Payment") in
respect of damages arising out of the License Litigation (as defined in Section
10.03), and (ii) $10,620,000 in immediately available funds for the royalties
payment due and payable under the 1992 License Agreement (as defined in Section
10.03) for the quarter ended June 30, 2003 (the "June 30 Royalty Payment"), (b)
be entitled to rely on the covenant not to ▇▇▇ with respect to the Licensed ECL
Technology (as defined in the 1992 License Agreement (as defined in Section
10.03)) in accordance with the terms of the Ongoing Litigation Agreement until
the earlier to occur of the Effective Time (as defined in Section 1.03) and the
termination of this Agreement for any reason and (c) deliver to the Company
payment, by wire transfer to a bank account designated by the Company,
$5,000,000 in
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immediately available funds (i) not later than two business days after the date
of this Agreement and (ii) on the last day of each month ending after August 1,
2003, and prior to the earlier to occur of the Effective Time and the date of
termination of this Agreement for any reason (each such payment, a "Covenant
Payment" and collectively, the "Covenant Payments"); provided that R Diagnostics
shall be obligated in accordance with the Ongoing Litigation Agreement to make a
Covenant Payment immediately prior to the Effective Time or not later than two
business days after the Merger Agreement is terminated;
WHEREAS simultaneously with the execution and delivery of this
Agreement, the Company and Newco are entering into an agreement (the
"Restructuring Agreement") pursuant to which, prior to the Effective Time, the
Restructuring (as defined in the Restructuring Agreement) will be effected, as
part of which (a) certain of the assets of the Company will be transferred to
Newco or one or more of Newco's subsidiaries and (b) Newco or one or more of its
subsidiaries will assume the Assumed Liabilities (as defined in the
Restructuring Agreement);
WHEREAS on the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, Sub will merge with and into the
Company (the "Merger") as a result of which (a) a portion of each issued share
of common stock, par value $0.001 per share, of the Company (including, except
as the context otherwise requires, the associated Company Rights (as defined in
Section 4.02(a)), the "Company Common Stock"), not owned by the Company, Parent,
Sub or Parent's other subsidiaries shall be converted into the right to receive
a number of fully paid and non-assessable shares of common stock, par value
$0.001 per share, of Newco (including, except as the context otherwise requires,
the associated Newco Rights (as defined in Section 10.03), the "Newco Common
Stock"), equal to the Exchange Ratio (as defined in Section 2.01(c)), in
exchange for such portion of each share of Company Common Stock that is equal in
value to the Newco Common Stock received and (b) the remaining portion of each
share of Company Common Stock shall be converted into the right to receive cash
in an amount equal to $47.25 (the "Per Share Cash Merger Consideration"), each
as herein provided;
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WHEREAS the Company and Parent intend to treat the exchange of
Company Common Stock for cash and the exchange of Company Common Stock for Newco
Common Stock as a single integrated transaction comprising a taxable sale or
exchange of Company Common Stock as described in Section 1001 of the Internal
Revenue Code of 1986, as amended (the "Code"), and a complete redemption of the
remaining Company Common Stock owned by the relevant shareholders within the
meaning of Section 302(b)(3) of the Code, respectively (the "Intended
Treatment");
WHEREAS simultaneously with the execution and delivery of this
Agreement, Parent, the Company and Newco are entering into an agreement (the
"Post-Closing Covenants Agreement") that sets forth certain agreements that will
govern certain matters that may arise following the Effective Time;
WHEREAS simultaneously with the execution and delivery of this
Agreement, Parent, Sub, the Company and Newco are entering into an agreement
(the "Tax Allocation Agreement") relating to certain Tax (as defined in Section
4.19(f)) matters;
WHEREAS simultaneously with the execution and delivery of this
Agreement, the parties hereto and their applicable affiliates are entering into
certain other agreements relating to the Transactions (as defined in Section
1.01) and certain other commercial arrangements; and
WHEREAS Parent, Sub, the Company and Newco desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to establish various conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. On the terms and subject to the
conditions set forth in this Agreement, and
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in accordance with the Delaware General Corporation Law (the "DGCL"), Sub shall
be merged with and into the Company at the Effective Time. At the Effective
Time, the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). The Merger
and the other transactions contemplated by this Agreement and the other
Transaction Agreements (as defined in Section 10.03) are referred to in this
Agreement collectively as the "Transactions".
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted by Law (as defined in
Section 4.05(a)), waiver by the applicable party or parties) of the conditions
set forth in Article VIII (other than those conditions that by their terms
cannot be satisfied until the time of the Closing but subject to the
satisfaction (or, to the extent permitted by Law, waiver by the applicable party
or parties) of such conditions); provided, however, that if all the conditions
set forth in Article VIII shall not have been satisfied (or, to the extent
permitted by Law, waived by the applicable party or parties) on such second
business day, then the Closing shall take place on the first business day on
which all such conditions shall have been satisfied (or, to the extent permitted
by Law, waived by the applicable party or parties). The date on which the
Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Prior to the Closing, the
Company shall prepare, and, as soon as practicable on the Closing Date, the
Company shall file with the Secretary of State of the State of Delaware, a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL. Parent or the Surviving Corporation shall
make all other filings or recordings required under the DGCL as soon as
practicable on or after the Closing Date. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with such Secretary of
State, or at such other time as Parent and the Company shall agree and specify
in the Certificate of Merger (the time at which the Merger becomes effective
being the "Effective Time").
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SECTION 1.04. Effects. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a)
The certificate of incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be amended at the Effective Time so that Article IV
of such certificate of incorporation is amended to read in its entirety as
follows: "The total number of shares of all classes of stock which the
corporation shall have authority to issue is 100,000 shares of Common Stock, par
value $0.001 per share", and, as so amended, such certificate of incorporation
shall be the certificate of incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
(b) The by-laws of Sub as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
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(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent- Owned Stock.
Each share of Company Common Stock that is owned by the Company, Parent or Sub
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or deliverable
in exchange therefor. Each share of Company Common Stock that is owned by any
subsidiary of the Company or Parent (other than Sub) shall automatically be
converted into one fully paid and nonassessable share of common stock, par value
$0.001 per share, of the Surviving Corporation.
(c) Conversion of Company Common Stock.(i) Subject to Sections
2.01(b), 2.01(d) and 2.02(e), (A) a portion of each issued and outstanding share
of Company Common Stock shall be converted into the right to receive, from the
Company, one (the "Exchange Ratio") fully paid and nonassessable share of Newco
Common Stock in exchange for such portion of each share of Company Common Stock
that is equal in value to the Newco Common Stock received and (B) the remaining
portion of each issued and outstanding share of Company Common Stock shall be
converted into the right to receive, from Parent or Sub, an amount in cash equal
to the Per Share Cash Merger Consideration.
(ii) The shares of Newco Common Stock and the cash amount
payable upon the conversion of shares of Company Common Stock pursuant
to this Section 2.01(c) and cash in lieu of fractional shares of Newco
Common Stock as contemplated by Section 2.02(e) are referred to
collectively as the "Merger Consideration". As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive Merger Consideration and any
dividends or other distributions to which such
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holder is entitled pursuant to Section 2.02(c) upon surrender of such
certificate in accordance with Section 2.02, without interest, and
except for the right to receive payments to which such holder is
entitled pursuant to Section 2.02(d), without interest.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares ("Appraisal Shares") of Company Common Stock
that are outstanding immediately prior to the Effective Time and that are held
by any person who is entitled to demand and properly demands appraisal of such
Shares pursuant to, and who complies in all respects with, Section 262 of the
DGCL ("Section 262") shall not be converted into Merger Consideration as
provided in Section 2.01(c), but rather the holders of Appraisal Shares shall be
entitled to payment of the fair value of such Appraisal Shares in accordance
with Section 262; provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to appraisal under
Section 262, then the right of such holder to be paid the fair value of such
holder's Appraisal Shares shall cease and such Appraisal Shares shall be deemed
to have been converted as of the Effective Time into, and to have become
exchangeable solely for the right to receive, Merger Consideration as provided
in Section 2.01(c). The Company shall serve prompt notice to Parent of any
demands received by the Company for appraisal of any shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
(e) Adjustments. If, during the period between the date of
this Agreement and the Effective Time, the number of shares of Company Common
Stock issued and outstanding changes (or there is established a record date for
changing) as a result of a reclassification, recapitalization, stock split or
combination, stock dividend, exchange or readjustment of the Company Common
Stock, the Per Share Cash Merger Consideration and the
8
Exchange Ratio shall be appropriately adjusted to reflect such reclassification,
recapitalization, stock split or combination, stock dividend, exchange or
readjustment.
(f) Withholding Rights. Any of Parent, the Surviving
Corporation, Newco or the Exchange Agent (as defined in Section 2.02(a)) shall
be entitled to deduct and withhold from the consideration otherwise payable to
any person pursuant to this Article II such amounts as it may be required to
deduct and withhold with respect to the making of such payment in accordance
with the Intended Treatment under any provision of Federal, state, local or
foreign Tax law. To the extent that amounts so deducted or withheld and paid
over to the appropriate Taxing Authority (as defined in Section 4.19(f)) are
attributable to the portion of the consideration consisting of Newco Common
Stock, then the Surviving Corporation, Newco or the Exchange Agent, as the case
may be, will be treated as though the applicable payor withheld an appropriate
amount of such consideration otherwise payable to a holder of Company Common
Stock pursuant to this Agreement and then sold such consideration for an amount
of cash equal to its fair market value at the time of such deemed sale and paid
such cash proceeds to the appropriate Taxing Authority. All deducted or withheld
amounts described in this Section 2.01(f) shall, for all purposes of this
Agreement, be treated as having been paid to the applicable holder of the
Company Common Stock, Company Convertible Debentures or Company Warrants
(Company Convertible Debentures and Company Warrants, each as defined in Section
4.02(a)), as the case may be, in respect of which the Surviving Corporation,
Parent or the Exchange Agent, as the case may be, made such deduction and
withholding.
SECTION 2.02. Exchange of Certificates.(a) Exchange Agent. (i)
As of the Effective Time, the Company shall, or Newco shall, on behalf of the
Company, deposit in trust with a bank or trust company as may be designated by
Parent and reasonably acceptable to the Company (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock outstanding immediately
prior to the Effective Time, certificates representing the shares of Newco
Common Stock (including all shares of Newco Common Stock owned by the Company at
the Effective Time, whether as a result of the
9
Restructuring or otherwise) issuable pursuant to Section 2.01 in exchange for
shares of Company Common Stock converted pursuant to this Article II and (ii)
Parent shall from time to time as needed deposit in trust with the Exchange
Agent for the benefit of holders of shares of Company Common Stock, cash
necessary to pay the cash amount of the Merger Consideration payable pursuant to
Section 2.01 in exchange for the shares of Company Common Stock converted
pursuant to this Article II (such shares of Newco Common Stock and cash,
together with any dividends or other distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Newco Common Stock and cash
contemplated to be issued or paid pursuant to Section 2.01 out of the Exchange
Fund. The Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates (the "Certificates") that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify prior to the
Effective Time) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for Merger Consideration. Upon surrender of a
Certificate for cancelation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Newco Common Stock (together with cash in lieu of fractional shares)
and the amount of cash that such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. Until such time as a certificate representing Newco
Common Stock is issued to or at the direction of the holder of a surrendered
Certificate, such Newco Common Stock shall be deemed not outstanding and shall
not be entitled to vote on any
10
matter. In the event of a transfer of ownership of Company Common Stock that is
not registered in the transfer records of the Company, a certificate
representing the appropriate number of whole shares of Newco Common Stock
(together with cash in lieu of fractional shares) and the appropriate amount of
cash may be issued and paid to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other Taxes required by reason of the
issuance of shares of Newco Common Stock and the payment of cash to a person
other than the registered holder of such Certificate or establish to the
reasonable satisfaction of Parent and Newco that such Taxes have been paid or
are not applicable. No interest shall be paid or accrue on any cash payable upon
surrender of any Certificate.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Newco Common Stock with a
record date after the Effective Time shall be paid to the holder of any
Certificate with respect to the shares of Newco Common Stock issuable upon
surrender thereof, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.02(e), until the surrender of such
Certificate in accordance with this Article II. Subject to applicable Law,
following surrender of any such Certificate, there shall be paid to the holder
of the certificate representing whole shares of Newco Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Newco Common Stock
to which such holder is entitled pursuant to Section 2.02(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Newco Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such whole shares of Newco Common Stock.
(d) No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid upon the
11
surrender for exchange of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Company Common Stock, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have been
declared or made by the Company on such shares of Company Common Stock in
accordance with the terms of this Agreement or prior to the date of this
Agreement and that remain unpaid at the Effective Time, and after the Effective
Time there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, any Certificates formerly representing shares of Company Common Stock are
presented to the Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Newco Common Stock shall be issued upon the
conversion of Company Common Stock pursuant to Section 2.01, and such fractional
share interests shall not entitle the owner thereof to vote or to any rights of
a holder of Newco Common Stock. For purposes of this Section 2.02(e), all
fractional shares to which a single record holder would be entitled as a result
of the conversion of all shares of Company Common Stock held by such holder as
of the Effective Time under all Certificates shall be aggregated and
calculations shall be rounded to three decimal places.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number
of shares of Newco Common Stock delivered to the Exchange Agent by the
Company or Newco pursuant to Section 2.02(a) over (B) the aggregate
number of whole shares of Newco Common Stock to be issued to holders of
Company Common Stock pursuant to Section 2.02(b) (such excess being
herein called the "Excess Shares"). As soon after the Effective Time as
practicable, the Exchange Agent, as agent for the holders of Company
Common Stock, shall sell the Excess Shares at then prevailing prices on
12
the Nasdaq Stock Market ("Nasdaq"), if the shares of Newco Common Stock
are quoted on Nasdaq, or otherwise on the national securities exchange
on which the shares of Newco Common Stock are listed, all in the manner
provided in Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the Nasdaq or such national securities exchange,
as the case may be, and shall be executed in round lots to the extent
practicable. The proceeds from such sale or sales available for
distribution to the holders of Company Common Stock shall be reduced by
the compensation payable to the Exchange Agent and the expenses
incurred by the Exchange Agent, in each case, in connection with such
sale or sales of the Excess Shares, including all related commissions,
Transfer Taxes (as defined in Section 7.08) and other out-of-pocket
transaction costs. Until the net proceeds of such sale or sales have
been distributed to the holders of Company Common Stock entitled
thereto, the Exchange Agent shall hold such proceeds in trust for such
holders of Company Common Stock (the "Newco Shares Trust"). The
Exchange Agent shall determine the portion of the Newco Shares Trust to
which each holder of a Certificate shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the
Newco Shares Trust by a fraction, the numerator of which is the amount
of the fractional share interest in a share of Newco Common Stock to
which such holder is entitled under Section 2.01(c) (or would be
entitled but for this Section 2.02(e)) and the denominator of which is
the aggregate amount of fractional interests in a share of Newco Common
Stock to which all holders of Company Common Stock are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock
in lieu of any fractional share interests in Newco Common Stock, the
Exchange Agent shall in accordance with this Article II, make available
such amounts, without interest, to the former holders of Company Common
Stock entitled to receive such cash.
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(f) Termination of Exchange Fund and Newco Shares Trust. Any
portion of the Exchange Fund that remains undistributed to the holders of the
Certificates for 9 months after the Effective Time shall be delivered (i) in the
case of shares of Newco Common Stock deposited in the Exchange Fund by the
Company or Newco and cash deposited in the Exchange Fund by Newco, to Newco and
(ii) in the case of cash deposited in the Exchange Fund by Parent or the
Surviving Corporation, to Parent or the Surviving Corporation, as applicable, in
each case upon demand, and any holders of the Certificates who have not
theretofore complied with this Article II shall thereafter (x) look only to
Newco for, and Newco shall remain liable for, payment of their claim for Newco
Common Stock and any dividends or distributions with respect to Newco Common
Stock and (y) look only to Parent for, and Parent shall remain liable for,
payment of their claim for cash payable pursuant to Section 2.01(c)(i)(B), in
each case in accordance with this Article II. Any portion of the Newco Shares
Trust that remains undistributed to the holders of the Certificates for 9 months
after the Effective Time shall be delivered to Newco, upon demand, and any
holder of the Certificates who has not theretofore complied with this Article II
shall thereafter look only to Newco for payment of its claim for such cash.
(g) No Liability. None of Parent, Sub, the Company, Newco or
the Exchange Agent shall be liable to any person in respect of any shares of
Newco Common Stock or cash from the Exchange Fund or the Newco Shares Trust
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been surrendered prior to the
date on which Merger Consideration in respect of such Certificate (or any
dividends or other distributions with respect thereto) would otherwise escheat
to or become the property of any Governmental Entity (as defined in Section
4.05(b))), any such shares or cash in respect of such Certificate shall, to the
extent permitted by applicable Law, become the property of the Surviving
Corporation (with respect to any remaining cash payable pursuant to Section
2.01(c)(i)(B)) and the property of Newco (with respect to any remaining shares
of Newco Common Stock and cash related thereto), free and clear of all
14
claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund and the Newco Shares Trust.
The Exchange Agent shall invest any cash included in the Exchange Fund and
payable pursuant to Section 2.01(c)(i)(B) as directed by Parent, and any other
cash included in the Exchange Fund as directed by Newco, in each case on a daily
basis. Pending payment of such funds to the holders of Certificates for shares
of Company Common Stock, such funds will be held and shall be invested by the
Exchange Agent as directed in accordance with the previous sentence (so long as
such directions do not impair the rights of holders of Company Common Stock) in
the direct obligations of the United States, obligations for which the full
faith and credit of the United States is pledged to provide for the payment of
principal and interest or commercial paper rated of the highest quality by
▇▇▇▇▇'▇ Investors Services, Inc. or Standard & Poor's Corporation. Parent or
Newco, as applicable, will promptly replace any monies lost through any
investment made in accordance with its instructions pursuant to this Section
2.02(h). If for any reason (including losses) the Exchange Fund or the Newco
Shares Trust is inadequate to pay the amounts to which holders of the Company
Common Stock shall be entitled under this Article II, Parent and the Surviving
Corporation shall in any event be liable for payment thereof (with respect to
cash payable pursuant to Section 2.01(c)(i)(B)) and Newco shall in any event be
liable for payment thereof (with respect to shares of Newco Common Stock and
cash related thereto). The Exchange Fund and the Newco Shares Trust shall not be
used except as provided in this Agreement. Any interest and other income
resulting from such investments shall be paid to Parent or the Surviving
Corporation, as Parent directs (with respect to cash payable pursuant to Section
2.01(c)(i)(B)) and to Newco (with respect to any other cash).
(i) Lost, Stolen or Destroyed Certificates. If any Certificate
has been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by Parent or Newco, the posting by such person of a bond in
such reasonable amount as Parent or Newco may direct as indemnity against any
claim
15
that may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration (and any dividends or other distributions with respect
thereto) pursuant to this Article II.
SECTION 2.03. Company Convertible Debentures. As of and after
the Effective Time, from time to time and at any time upon the conversion of any
Company Convertible Debentures by any holder thereof, (a) Newco shall deliver to
such holder the number of shares of Newco Common Stock and cash in lieu of
fractional shares of Newco Common Stock such holder would have been entitled to
receive as if such holder had converted the Company Convertible Debentures into
shares of Company Common Stock immediately prior to the Effective Time and (b)
Parent shall, or shall cause the Company to, deliver to such holder the amount
of cash such holder would have been entitled to receive as if such holder had
converted the Company Convertible Debentures into shares of Company Common Stock
immediately prior to the Effective Time.
SECTION 2.04. Company Warrants. As of and after the Effective
Time, from time to time and at any time upon the exercise of any Company
Warrants by any holder thereof, (a) Newco shall deliver to such holder the
number of shares of Newco Common Stock and cash in lieu of fractional shares of
Newco Common Stock as if such holder had exercised the Company Warrant for the
shares of Company Common Stock issuable upon exercise of the Company Warrant
immediately prior to the Effective Time and (b) Parent shall, or shall cause the
Company to, deliver to such holder the amount of cash as if such holder had
exercised the Company Warrant for the shares of Company Common Stock issuable
upon exercise of the Company Warrant immediately prior to the Effective Time.
ARTICLE III
Related Transactions
SECTION 3.01. Restructuring of Assets and Assumption of
Liabilities. Prior to the Effective Time and pursuant to the terms of the
Restructuring Agreement, the Company and the Company Subsidiaries (as defined in
16
Section 4.02(b)), including Newco, shall consummate the Restructuring upon the
terms and subject to the conditions set forth in the Restructuring Agreement.
SECTION 3.02. Ongoing Litigation Agreement. (a) Simultaneously
with the execution and delivery of the Ongoing Litigation Agreement, Parent
shall cause R Diagnostics to pay to the Company the Damages Payment and the June
30 Royalty Payment. The Damages Payment and the June 30 Royalty Payment are
non-refundable and irrevocable in all circumstances.
(b) Notwithstanding any provision in this Agreement to the
contrary, the parties agree that the Damages Payment is made solely with respect
to the monetary damages awarded in the License Litigation as set forth in the
Court of Appeals Opinion (as defined in Section 10.03) and that, except as
provided in the Ongoing Litigation Agreement, neither the Company nor R
Diagnostics shall be deemed to have (i) made a settlement with respect to,
waived, given-up, compromised, prejudiced or qualified in any manner (A) the
right of such person to fully prosecute the New Patent Litigation (as defined in
Section 10.03), (B) any rights or interests of such person which are the subject
of the New Patent Litigation or (C) any claim made or to be made by such person,
whether for damages or otherwise, in the New Patent Litigation or (ii) made a
settlement with respect to, waived, given up, compromised, prejudiced or
qualified in any manner any of its other rights or interests under the final
judgment entered by the United States District Court for the District of
Maryland in the License Litigation on February 15, 2002 (the "Final
Judgment")(as modified by the Court of Appeals Opinion) or any final judgment
entered by the United States District Court for the District of Maryland not
inconsistent with the mandate to be returned by the United States Court of
Appeals for the Fourth Circuit in connection with the Court of Appeals Opinion.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub that,
except (a) as disclosed or set forth in the
17
Company SEC Filings (as defined in Section 4.09(a)) filed and publicly available
prior to the date of this Agreement or (b) as set forth in the letter (with
specific reference to the Section of this Agreement to which the information
stated in such letter relates and such other Sections to the extent a matter is
disclosed in such a way as to make its relevance to the information called for
by such other Section reasonably apparent) dated the date of this Agreement,
from the Company to Parent and Sub (the "Company Disclosure Letter"), and, in
each case subject to Section 4.21:
SECTION 4.01. Organization, Standing and Power. Each of the
Company, Newco and the Continuing Licensee Subsidiary (as defined in the
Restructuring Agreement) is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all corporate or
limited liability company powers, as applicable, governmental licenses and
Consents (as defined in Section 4.05(b)) required to carry on its business as
now conducted, except for any such licenses and Consents the failure of which to
have or obtain that, individually or in the aggregate, does not have a
Transaction Material Adverse Effect (as defined in Section 10.03). The Company
has made available to Parent true and complete copies of the certificate of
incorporation of the Company, as amended through the date of this Agreement (as
so amended, the "Company Charter"), the by-laws of the Company, as amended
through the date of this Agreement (as so amended, the "Company By-laws"), and
the certificate of formation and the limited liability company agreement of each
of Newco and the Continuing Licensee Subsidiary, in each case, as amended
through the date of this Agreement.
SECTION 4.02. Capital Structure; Subsidiaries. (a) The
authorized capital stock of the Company consists of 50,000,000 shares of Company
Common Stock and 10,000,000 shares of Preferred Stock, par value $0.001 per
share, of which (x) 600,000 shares are designated as Series A Junior
Participating Preferred Stock (the "Company Series A Preferred Stock") and (y)
25,000 shares are designated as Series B Convertible Preferred Stock, par value
$0.001 per share (the "Company Series B Preferred Stock" and, together with the
Company Common Stock and the Company Series A Preferred Stock, the "Company
Capital Stock"). At the
18
close of business on July 17, 2003, (i) 23,775,277 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Capital Stock were
held by the Company in its treasury, (iii) 1,550,509 shares of Company Common
Stock were subject to outstanding Company Stock Options (as defined in Section
7.04(c)) and 742,256 additional shares of Company Common Stock were reserved for
and subject to issuance pursuant to the Company Stock Plans (as defined in
Section 7.04(c)), (iv) 600,000 shares of Company Series A Preferred Stock were
reserved for and subject to issuance in connection with the rights (the "Company
Rights") issued pursuant to the Rights Agreement dated as of November 6, 1996
(as amended from time to time, the "Company Rights Agreement"), between the
Company and The First National Bank of Boston, as Rights Agent, (v) 1,129,032
shares of Company Common Stock were reserved for and subject to issuance upon
conversion of the Subordinated Convertible Debentures of the Company (the
"Company Convertible Debentures") at a conversion price of $31.00 per share and
(vi) warrants to purchase 282,258 shares of Company Common Stock with an
exercise price of $31.00 per share were outstanding (the "Company Warrants").
Except as set forth above, at the close of business on July 17, 2003, no shares
of capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. There are no outstanding stock appreciation rights
linked to the price of Company Common Stock and granted under any Company Stock
Plan. Section 4.02(a) of the Company Disclosure Letter sets forth a true and
complete list, as of the close of business on July 17, 2003, of all outstanding
Company Stock Options, Company Convertible Debentures, Company Warrants and all
other rights, if any (collectively, the "Company Derivative Securities"), to
purchase or receive Company Common Stock issued or granted by the Company or any
Company Subsidiary, the number of shares subject thereto, the grant dates and
exercise prices thereof. All outstanding shares of Company Common Stock are, and
all such shares that may be issued prior to the Effective Time will be when
issued, duly authorized, validly issued, fully paid and nonassessable. Except as
set forth above, there are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company Common
19
Stock may vote ("Voting Company Debt"). Except as set forth above and except for
changes since July 17, 2003, resulting from the exercise or conversion of the
Company Derivative Securities outstanding on such date or permitted to be issued
pursuant to this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts (as
defined in Section 4.05(a)), arrangements or undertakings of any kind to which
the Company or any Company Subsidiary is a party or by which any of them is
bound (i) obligating the Company or any Company Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in, the
Company or of any Company Subsidiary or any Voting Company Debt or (ii)
obligating the Company or any Company Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any Company Subsidiary. No Company Subsidiary owns any
shares of Company Common Stock.
(b) Section 4.02(b) of the Company Disclosure Letter lists
each subsidiary of the Company (the "Company Subsidiaries"). Each Company
Subsidiary (other than Newco and the Continuing Licensee Subsidiary) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction in which it is organized (in the case of good standing,
to the extent such jurisdiction recognizes such concept) and has all corporate
powers, governmental licenses and Consents required to carry on its business as
now conducted, except for any such licenses and Consents the failure of which to
have or obtain that, individually or in the aggregate, does not have a
Transaction Material Adverse Effect. All of the outstanding capital stock of, or
other voting securities or ownership interests in, each Company Subsidiary, is
owned by the Company, directly or indirectly, free and clear of all pledges,
claims, liens, charges, encumbrances,
20
mortgages, security interests and other adverse claims of any kind or nature
whatsoever (collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such stock or other securities or ownership interests). There are no
outstanding (i) securities of the Company or any Company Subsidiary convertible
into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Company Subsidiary or (ii) options or other rights to
acquire from the Company or any Company Subsidiary or other obligation of the
Company or any Company Subsidiary to issue, any capital stock, voting securities
or other ownership interests in, or any securities convertible into or
exchangeable for, any capital stock, voting securities or ownership interests
in, any Company Subsidiary (the items in clauses (i) and (ii) being referred to
collectively as the "Subsidiary Securities"). There are no outstanding
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any Subsidiary Securities.
SECTION 4.03. Newco. Since the date of its formation, Newco
has not carried on any business or conducted any operation other than the
execution of this Agreement, the other Transaction Agreements to which it is a
party and the Commercial Agreements (as defined in Section 10.03) to which it is
party, the performance of its obligations hereunder and thereunder and matters
ancillary thereto.
SECTION 4.04. Authority; Execution and Delivery;
Enforceability. (a) Each of the Company and Newco has all requisite corporate or
limited liability company power and authority, as applicable, to execute and
deliver (i) each Transaction Agreement to which it is a party and to consummate
the Transactions contemplated thereby and (ii) each Commercial Agreement to
which it is a party and to perform its obligations thereunder. The execution and
delivery by each of the Company and Newco of (A) each Transaction Agreement to
which it is a party and the consummation by each of the Company and Newco of the
Transactions contemplated thereby and (B) each Commercial Agreement to which it
is a party, and the performance by each of the Company and Newco of its
obligations thereunder, in each case have been duly authorized by all
21
necessary corporate action on the part of the Company and by all limited
liability company action on the part of Newco, subject, in the case of the
Merger, to receipt of the Company Stockholder Approval (as defined in Section
4.04(c)). Each of the Company and Newco has duly executed and delivered this
Agreement, each other Transaction Agreement to which it is a party and each
Commercial Agreement to which it is a party, and, assuming due execution and
delivery hereof and thereof by each party hereto and thereto that is not an
affiliate of the Company, this Agreement, each such Transaction Agreement and
each such Commercial Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(b) The Board of Directors of the Company (the "Company
Board"), at a meeting duly called and held, duly and unanimously adopted
resolutions (i) approving this Agreement, each other Transaction Agreement, the
Merger and the other Transactions, (ii) approving each Commercial Agreement and
the performance by the Company of its obligations thereunder, (iii) determining
that the terms of the Merger and the other Transactions are fair to and in the
best interests of the Company and its stockholders, (iv) recommending that the
Company's stockholders adopt this Agreement and (v) declaring that this
Agreement is advisable. Assuming the accuracy of Parent's and Sub's
representations and warranties in Section 5.08, such resolutions are sufficient
to render inapplicable to this Agreement and the Merger the provisions of
Section 203 of the DGCL, and to the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Company with respect to this Agreement or the Merger. The Company as the sole
member of Newco, has approved (A) each other Transaction Agreement, the Merger
and the other Transactions and (B) each Commercial Agreement to which Newco is a
party and the performance by Newco of its obligations thereunder. The Company as
the sole member of Newco will adopt this Agreement.
(c) Assuming the accuracy of Parent's and Sub's
representations and warranties in Section 5.08, the only vote of holders of any
class or series of Company Capital Stock that is necessary to approve and adopt
this Agreement
22
and the Merger is the adoption of this Agreement by the holders of a majority of
the outstanding shares of Company Common Stock (the "Company Stockholder
Approval"). The affirmative vote of the holders of Company Capital Stock, or any
of them, is not necessary to consummate any Transaction other than the Merger.
SECTION 4.05. No Conflicts; Consents. (a) The execution and
delivery by each of the Company and Newco of this Agreement and the other
Transaction Agreements to which it is a party and each Commercial Agreement to
which it is a party do not, and the consummation of the Merger and the other
Transactions and the performance by the Company or Newco of its obligations
under the Commercial Agreements and compliance with the terms hereof and thereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter, organizational or formation documents of any Company Subsidiary, (ii)
any contract, lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument (other than a Company Benefit Plan (as
defined in Section 4.14(c))) (a "Contract") to which the Company or any Company
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) subject to the filings and other matters referred to in
Section 4.05(b), any judgment, order or decree ("Judgment") or statute, law,
ordinance, rule or regulation whether foreign or domestic ("Law") applicable to
the Company or any Company Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, do not have a Transaction Material Adverse
Effect and do not materially impair the ability of the Company or any Company
Subsidiary to perform its obligations under this Agreement, any other
Transaction Agreement or any Commercial Agreement or to consummate the
Transactions.
23
(b) No consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
permit from, any domestic or foreign (whether national, Federal, state,
provincial, local or otherwise) government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (each, a "Governmental
Entity"), is required to be obtained or made by the Company or any Company
Subsidiary in connection with the execution, delivery and performance of this
Agreement, any other Transaction Agreement or any Commercial Agreement by the
Company or any Company Subsidiary or the consummation of the Transactions or the
performance by the Company or any Company Subsidiary of its obligations under
the Commercial Agreements, other than (i) compliance with and filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the Securities and Exchange Commission (the "SEC")
of (A) a proxy statement relating to the adoption of this Agreement by the
Company's stockholders (as amended or supplemented from time to time, the "Proxy
Statement"), (B) a registration statement on Form S-4 to be filed with the SEC
by the Company in connection with the distribution of Newco Common Stock in the
Merger (as amended or supplemented from time to time, the "Newco Form S-4"), (C)
a registration statement on Form 8-A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in connection with the distribution of Newco
Common Stock in the Merger (the "Newco Form 8-A") and (D) such reports under
Sections 13 and 16 of the Exchange Act as may be required in connection with
this Agreement, the other Transaction Agreements, the Merger and the other
Transactions, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business, (iv) such filings with and approvals of a national securities exchange
or Nasdaq to permit the shares of Newco Common Stock that are to be distributed
in the Merger to be approved for listing on such national securities exchange,
or approved for quotation on Nasdaq, as the case may be, in either case subject
to official notice of issuance, (v) compliance with and such filings as may be
required under applicable Environmental Law (as defined in Section 10.03), (vi)
such
24
filings as may be required in connection with Transfer Taxes, (vii) filings
under any applicable state takeover Law and (viii) such other items (A) that may
be required under the applicable Law of Switzerland, Germany or Italy, (B)
required solely by reason of the participation of Parent (as opposed to any
third party) in the Transactions or (C) that the failure of which to obtain or
make, individually or in the aggregate, does not have a Transaction Material
Adverse Effect and does not materially impair the ability of the Company or any
Company Subsidiary to perform its obligations under this Agreement, any other
Transaction Agreement or any Commercial Agreement or to consummate the
Transactions.
(c) Assuming the accuracy of Parent's and Sub's
representations and warranties in Section 5.08, the Company and the Company
Board have taken all action necessary to (i) render the Company Rights
inapplicable to this Agreement, the Merger and the other Transactions and (ii)
ensure that (A) neither Parent nor any of its affiliates or associates is or
will become an "Acquiring Person" (as defined in the Company Rights Agreement)
by reason of this Agreement, the Merger or any other Transaction), (B) a
"Distribution Date" (as defined in the Company Rights Agreement) shall not occur
by reason of this Agreement, the Merger or any other Transaction and (C) the
Company Rights shall expire immediately prior to the Effective Time.
SECTION 4.06. Intellectual Property. (a) The Company and the
Company Subsidiaries own, jointly own, or have been licensed the right to use
pursuant to licenses that remain in full force and effect, all Intellectual
Property Rights (as defined in Section 10.03) that constitute Covered ECL
Technology.
(b) As of the Effective Time, assuming the due authorization,
execution and delivery by each party thereto that is not an affiliate of the
Company as of the Effective Time, the License Agreement (as defined in the
Restructuring Agreement) will constitute Newco's legal, valid and binding
obligation, enforceable against Newco in accordance with its terms.
25
(c) (i) The Company has all requisite corporate power and
authority to enter into the License Agreement and to grant the license to the
Continuing Licensee Subsidiary under the Covered ECL Technology pursuant to the
License Agreement and to fully perform its obligations thereunder, and the grant
of rights and licenses, and the performance of its obligations thereunder, will
not conflict with the Company Charter or any Contract or other arrangement to
which the Company is a party or by which it is bound, (ii) the Company has title
to or license rights in the Covered ECL Technology sufficient to grant such
license rights to the Continuing Licensee Subsidiary and its affiliates, (iii)
the Company has not assigned, transferred, licensed or otherwise disposed of the
Covered ECL Technology in any manner that limits or restricts the Continuing
Licensee Subsidiary's or its affiliates' exploitation of the license granted by
the Company thereunder and (iv) no Consent, notice or waiver, to or from any
person (other than the Consent attached to the License Agreement), including
from any Governmental Entity or third party holder of Intellectual Property
Rights, is required to be obtained or made by the Company in connection with its
execution and delivery, or by Newco in connection with its performance following
the Effective Time, of the License Agreement, other than, in the case of each of
clauses (i), (ii), (iii) and (iv) above, any such items that, individually or in
the aggregate, do not have a Transaction Material Adverse Effect. For purposes
of this Section 4.06(c), the Continuing Licensee Subsidiary shall be deemed not
to be an affiliate or a subsidiary of the Company.
(d) Neither the Company nor any Company Subsidiary has
infringed, misappropriated or otherwise violated any Intellectual Property Right
of any person, except for any such infringement, misappropriation or other
conflict that individually or in the aggregate does not have a Transaction
Material Adverse Effect. There is no action, suit, investigation or proceeding
pending against or affecting, or, to the knowledge of the Company, threatened
against, the Company or any Company Subsidiary or any of their present or former
officers, directors and employees (i) challenging or seeking to deny or
restrict, the rights of the Company or any Company Subsidiary in any of the
Owned Intellectual Property Rights (as defined in
26
Section 10.03) and the Licensed Intellectual Property Rights (as defined in
Section 10.03), (ii) alleging that the use of the Owned Intellectual Property
Rights or any services provided, processes used or products manufactured, used,
imported or sold by the Company or any Company Subsidiary do or may conflict
with, or the Licensed Intellectual Property Rights misappropriate, infringe or
otherwise violate any Intellectual Property Right of any third party or (iii)
alleging that the Company or any Company Subsidiary in the provision of
services, use of processes or manufacture of products has infringed,
misappropriated or otherwise violated any Intellectual Property Right of any
third party, except in the case of each of clauses (i), (ii) and (iii) above,
for such actions, suits, investigations or proceedings the outcome of which
individually or in the aggregate does not have a Transaction Material Adverse
Effect.
(e) The Company and the Company Subsidiaries hold all right,
title and interest in and to all material Owned Intellectual Property Rights and
all of the Company's and the Company Subsidiaries' licenses under material
Licensed Intellectual Property Rights, free and clear of any Lien. In each case
where a patent or patent application, trademark registration or trademark
application, service ▇▇▇▇ registration or service ▇▇▇▇ application, or copyright
registration or copyright application included in the Owned Intellectual
Property is held by assignment, the assignment has been recorded with the
Governmental Entity from which the patent or registration issued or before which
the application or application for registration is pending, except in each case
for failures to record that, individually or in the aggregate, do not have a
Transaction Material Adverse Effect. Each of the Company and the Company
Subsidiaries has taken all reasonable and necessary actions to maintain and
protect its material Owned Intellectual Property Rights and its rights in the
material Licensed Intellectual Property Rights.
(f) To the knowledge of the Company, no person has infringed,
misappropriated or otherwise violated any Owned Intellectual Property Right or
Licensed Intellectual Property Right, except for any such infringement,
misappropriation or other violation that individually or in
27
the aggregate does not have a Transaction Material Adverse Effect. The Company
and the Company Subsidiaries have taken reasonable steps in accordance with
customary industry practice to maintain the confidentiality of all material
confidential Intellectual Property Rights of the Company or any Company
Subsidiary that are material to the business and operations of the Company and
the Company Subsidiaries, taken as a whole, and the value of which to the
Company or any Company Subsidiary is contingent upon the confidentiality
thereof, and to the knowledge of the Company, such confidential information has
not been disclosed other than to employees, consultants, Representatives (as
defined in Section 6.02(a)) and agents of the Company or any Company Subsidiary
or other persons bound to the Company or a Company Subsidiary by a written
obligation of confidentiality.
(g) The Company has not delivered any of the notices
contemplated by Section 3 or 4 of the Extension Agreement dated July 11, 2002,
by and between the Company and Eisai Co., Ltd.
SECTION 4.07. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than as set
forth in Section 4.07 of the Company Disclosure Letter, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Merger and the other Transactions or the execution and
delivery of the Commercial Agreements based upon arrangements made by or on
behalf of the Company.
SECTION 4.08. Opinion of Financial Advisor. The Company has
received the opinion of ▇▇▇▇▇▇ Brothers Inc., dated the date of this Agreement,
to the effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the holders of Company Common Stock. The Company will
deliver a true and complete copy of such opinion to Parent promptly after
receipt thereof.
SECTION 4.09. SEC Filings. (a) The Company has made available
to Parent (i) the Company's annual reports on Form 10-K for its fiscal years
ended March 31, 2003, 2002 and 2001, as amended, (ii) its proxy statement
relating to meetings of, or actions taken without a meeting
28
by, the stockholders of the Company held since March 31, 2000, and (iii) all of
its other reports, forms, statements, schedules, registration statements and
other documents (including exhibits and other information incorporated therein)
filed with the SEC since March 31, 2001 (the documents referred to in this
Section 4.09(a) being referred to collectively as the "Company SEC Filings").
(b) As of its respective filing date, each such Company SEC
Filing filed pursuant to the Exchange Act did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) Each such Company SEC Filing that is a registration
statement, as amended or supplemented, if applicable, filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), as of the date such
statement or amendment became effective, did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) As of its filing date, each Company SEC Filing complied as
to form in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be.
SECTION 4.10. Financial Statements. The audited consolidated
financial statements (including the related notes) and unaudited consolidated
interim financial statements (including the related notes) of the Company
included in the Company SEC Filings comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
29
the notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
SECTION 4.11. Disclosure Documents. (a) Each document required
to be filed by the Company with the SEC or required to be distributed or
otherwise disseminated to the Company's stockholders in connection with the
Merger and the other Transactions, including the Proxy Statement and the Newco
Form S-4, to be filed with the SEC in connection with the Merger and the other
Transactions, and any amendments or supplements thereto, when filed, distributed
or disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the Exchange Act.
(b) (i) At the time the Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, and at the
time such stockholders vote on adoption of this Agreement, the Proxy Statement,
as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) at the time
the Newco Form S-4 or any amendment or supplement thereto becomes effective, the
▇▇▇▇▇ ▇-▇, as amended or supplemented, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or warranty
is made by the Company in this Section 4.11(b) with respect to statements made
or incorporated by reference therein based on information supplied by Parent or
Sub specifically for inclusion or incorporation by reference in such documents.
SECTION 4.12. Litigation. Except with respect to intellectual
property, environmental matters and tax matters, which are the subject of
Sections 4.06, 4.18 and 4.19, respectively, there is no action, suit or
proceeding
30
or, to the knowledge of the Company, investigation, pending against, or to the
knowledge of the Company, threatened against, the Company or any Company
Subsidiary or any of their respective properties or any of their respective
present or former officers or directors, in each case in their capacity as
officers or directors of the Company or any Company Subsidiary, before any court
or arbitrator or before or by any Governmental Entity which, individually or in
the aggregate, has a Transaction Material Adverse Effect.
SECTION 4.13. Absence of Certain Changes. (a) From March 31,
2003 until the date of this Agreement the business of the Company and the
Company Subsidiaries has been conducted in the ordinary course consistent with
past practice.
(b) Since March 31, 2003, there has not been (i) any event,
occurrence or development or state of circumstances or facts which, individually
or in the aggregate, has had or has a Transaction Material Adverse Effect or
(ii) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any Company Subsidiary, which employees were not
subject to a collective bargaining agreement at March 31, 2002, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees.
(c) From March 31, 2003 until the date of this Agreement,
there has not been
(i) (A) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of the Company or any Company Subsidiary other than dividends and
distributions by a direct or indirect wholly owned subsidiary of the
Company to its parent or (B) any repurchase, redemption or other
acquisition by the Company or any Company Subsidiary of any outstanding
shares of capital stock or other securities of the Company or any
Company Subsidiary other than (x) the issuance of Company Common Stock
upon (1) the exercise of Company Stock Options outstanding as of the
date of
31
this Agreement and in accordance with the terms thereof in effect as of
the date of this Agreement, (2) the conversion of Company Convertible
Debentures outstanding as of the date of this Agreement and in
accordance with the terms thereof in effect as of the date of this
Agreement and (3) the exercise of Company Warrants outstanding as of
the date of this Agreement and in accordance with the terms thereof in
effect as of the date of this Agreement and (y) pursuant to the Company
Stock Plans as in effect on the date of this Agreement;
(ii) any amendment of any material term of any outstanding
security of the Company or any Company Subsidiary;
(iii) any incurrence, assumption or guarantee by the
Company or any Company Subsidiary of any indebtedness for borrowed
money in an aggregate principal amount in excess of $10,000,000;
(iv) any change in any method of accounting or accounting
principles or practices materially affecting the reported consolidated
assets, liabilities or results of operations of the Company or any
Company Subsidiary, except for any such change required by a change in
GAAP or applicable Law;
(v) any material Tax election made or changed, any annual
Tax accounting period changed, any method of Tax accounting adopted or
changed, any material amended Tax Returns (as defined in Section
4.19(f)) or claims for material Tax refunds filed, any material closing
agreement entered into, any material Tax claim, audit or assessment
settled, or any right to claim a material Tax refund, offset or other
reduction in Liability (as defined in Section 10.03) for Taxes
surrendered, in each case by the Company or any Company Subsidiary;
(vi) any creation or other incurrence by the Company or any
Company Subsidiary of any Lien on any material asset other than in the
ordinary course consistent with past practice;
32
(vii) any making of any loan, advance or capital
contributions to, or investment in, any person other than (A) loans,
advances or capital contributions to, or investments in, its
wholly-owned subsidiaries, (B) the extension of trade credit in the
ordinary course consistent with past practice or (C) investments in any
person in the ordinary course pursuant to the Company's investment
policy approved by the Company Board as in effect on the date of this
Agreement, a copy of which policy is set forth in Section 4.13(c) of
the Company Disclosure Letter;
(viii) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets
of the Company or any Company Subsidiary that is material to the
Company and the Company Subsidiaries, taken as a whole;
(ix) any sale, lease, license or other disposition of any
Owned Intellectual Property Right other than sales, leases, licenses or
other dispositions that have not had a Transaction Material Adverse
Effect; or
(x) any (A) entry into or amendment of any severance or
termination arrangement or any employment, deferred compensation or
similar agreement with any director or officer of the Company or any
Company Subsidiary or (B) establishment, adoption or amendment (except
as required by applicable Law) of any collective bargaining or material
bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any director, officer or employee
of the Company or any Company Subsidiary.
SECTION 4.14. Employee Matters Generally; Company Benefit
Plans. (a) None of the Company, any Company Subsidiary and any of its ERISA
Affiliates (as defined below) sponsors, maintains, contributes to or is required
to contribute to any employee plan subject to Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 412 of
the Code, and none of the Company, any Company Subsidiary and any of its
33
ERISA Affiliates has in the past maintained, contributed to or been required to
contribute to any employee plan subject to Title IV of ERISA or Section 412 of
the Code. For purposes of this Section, "ERISA Affiliate" of any entity means
any other entity that, together with such entity, would be treated as a single
employer under Section 414 of the Code.
(b) None of the Company, any Company Subsidiary, any of the
Company's ERISA Affiliates and any predecessor thereof contributes to, or has in
the past contributed to, any multiemployer plan, as defined in Section 3(37) of
ERISA.
(c) "Company Benefit Plan" means any agreement, plan, program,
policy or other arrangement, in each case, covering one or more current or
former employees or directors of, or current or former independent contractors
with respect to, the Company or any Company Subsidiary.
SECTION 4.15. No Undisclosed Material Liabilities. Except with
respect to environmental matters and tax matters, which are the subject of
Sections 4.18 and 4.19, respectively, there are no Liabilities of the Company or
any Company Subsidiary other than Liabilities that do not have, individually or
in the aggregate, a Transaction Material Adverse Effect.
SECTION 4.16. Transactions with Related Persons. (a) Section
4.16(a) of the Company Disclosure Letter sets forth a list of all Contracts,
promises, commitments and understandings in effect as of the date of this
Agreement with Related Persons and not required to be disclosed in the Company
SEC Filings pursuant to Item 404 of Regulation S-K and, with respect to any such
oral Contract, promise, commitment or understanding, a true and complete
description thereof. Since March 31, 2003, neither the Company nor any Company
Subsidiary has (i) purchased, leased or otherwise acquired any material property
or assets or obtained any material services from, (ii) sold, leased or otherwise
disposed of any material property or assets or provided any material services to
(except with respect to remuneration for services rendered in the ordinary
course as director, officer or employee of the Company or any Company
Subsidiary), (iii) entered into or
34
modified in any manner any Contract, promise, commitment or understanding with
or (iv) borrowed any money from, or made or forgiven any loan or other advance
to, any officer, director or affiliate of the Company or any Company Subsidiary
or any person who has a family relationship (as defined in Item 401(d) of
Regulation S-K) with any officer, director or affiliate of the Company or any
Company Subsidiary (collectively, "Related Persons"). Prior to the date of this
Agreement, the Company has made available to Parent or its Representatives true
and complete copies of each written Contract, promise, commitment and
understanding between the Company or any Company Subsidiary, on the one hand,
and any Related Person, on the other.
(b) Neither the Company nor any Company Subsidiary has any
Contracts, promises, commitments or understandings that include any material
obligation or commitment between the Company or any Company Subsidiary and any
Related Person.
(c) The assets of the Company or any Company Subsidiary do not
include any receivable or other obligation or commitment from a Related Person
to the Company or any of Company Subsidiary.
(d) The Liabilities of the Company and the Company
Subsidiaries do not include any payable or other obligation or commitment from
the Company or any Company Subsidiary to any Related Person.
(e) Prior to the date of this Agreement, the Company has made
available to Parent or its Representatives true and complete copies of each
Contract, promise, commitment and understanding between the Company, any Company
Subsidiary or any of their respective affiliates, on the one hand, and MSD, MST,
JW, JW Consulting (each of JW and JW Consulting, as defined in Section 10.03),
Hyperion Catalysis International, a California corporation ("Hyperion"),
Wellstat Biologics Corporation, a Delaware corporation ("Wellstat Biologics"),
Wellstat Therapeutics Corporation, a California corporation ("Wellstat
Therapeutics"), Proteinix Corporation, a Delaware corporation ("Proteinix"), and
Integrated Chemical Synthesizers, Inc., a Delaware corporation ("ICS"), or any
35
of their respective affiliates, on the other hand (or, with respect to any such
oral Contract, promise, commitment or understanding, a true and complete
description thereof).
(f) For purposes of the definition of "Related Person", each
of JW, JW Consulting, Hyperion, Wellstat Biologics, Wellstat Therapeutics,
Proteinix and ICS shall be deemed to be an affiliate of the Company.
SECTION 4.17. Compliance with Law and Judgments. Except with
respect to intellectual property, environmental matters and tax matters, which
are the subject of Sections 4.06, 4.18 and 4.19, respectively, from March 31,
2001, (a) each of the Company and the Company Subsidiaries has been in
compliance with all applicable Law and Judgments, except for instances of
possible noncompliance that, individually or in the aggregate, does not have a
Transaction Material Adverse Effect and (b) to the knowledge of the Company, the
Company is not under investigation with respect to and has not been threatened
to be charged with or been given written notice of any violation of, any
applicable Law or Judgment, except in each case for such investigations, charges
or notices that individually or in the aggregate do not have a Transaction
Material Adverse Effect.
SECTION 4.18. Environmental Matters. With such exceptions as
do not have, individually or in the aggregate, a Transaction Material Adverse
Effect:
(a) No written notice, demand, request for information,
citation, summons or order has been received, no penalty has been assessed, and
no investigation, action, claim, suit or proceeding is pending or, to the
knowledge of the Company, is threatened by any Governmental Entity or other
person pursuant to or arising out of any Environmental Law; and
(b) there are no Liabilities of the Company or any Company
Subsidiary arising under or pursuant to any Environmental Law and arising from
actions occurring or conditions existing on or prior to the Effective Time.
SECTION 4.19. Tax Matters. (a) All material Tax Returns
required by applicable Law to be filed with any Taxing Authority by, or on
behalf of, the Company or any
36
Company Subsidiary have been filed when due in accordance with applicable Law,
and all such material Tax Returns are, or will be at the time of filing, true
and complete in all material respects.
(b) The Company and each Company Subsidiary has paid (or has
had paid on its behalf) or has withheld and remitted to the appropriate Taxing
Authority all Taxes due and payable, or, where payment is not yet due, has
established (or has had established on its behalf and for its sole benefit and
recourse) in accordance with GAAP an accrual for all material Taxes through the
end of the most recent taxable period ending prior to the date of this
Agreement.
(c) The income and franchise Tax Returns of the Company and
the Company Subsidiaries through the Tax year ended December 31, 1998 have been
examined and closed or are Tax Returns with respect to which the applicable
period for assessment under applicable Law, after giving effect to extensions or
waivers, has expired.
(d) The Company and each Company Subsidiary have withheld all
material amounts required to have been withheld by them in connection with
amounts paid or owed to any employee, independent contractor, creditor,
shareholder or any other third party; such withheld amounts were either duly
paid to the appropriate Taxing Authority or set aside in accounts for such
purpose. The Company and each Company Subsidiary have reported such withheld
amounts to the appropriate Taxing Authority and to each such employee,
independent contractor, creditor, shareholder or any other third party, as
required under any Law.
(e) As of the date of this Agreement, there is no material
audit, action, suit, investigation or proceeding now pending or, to the
knowledge of the Company, threatened in writing against or with respect to
Company or the Company Subsidiaries in respect of any Tax.
(f) The following terms shall have the meanings set forth
below:
"Taxes" means (i) all forms of taxation or duties imposed, or
required to be collected or withheld, including charges, together with any
related interest, penalties or
37
other additional amounts, (ii) Liability for the payment of any amount of the
type described in the preceding clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group or (iii) Liability for the
payment of any amounts as a result of being party to any Tax sharing agreement
(other than this Agreement or any other Transaction Agreement) or as a result of
any express or implied obligation to indemnify any other person with respect to
the payment of any amount described in the immediately preceding clauses (i) or
(ii) (other than an obligation to indemnify under the Tax Allocation Agreement).
"Taxing Authority" means the United States Internal Revenue
Service and any other national, Federal, state, provincial, local, or other
Governmental Entity, whether domestic or foreign, responsible for the
administration of Taxes.
"Tax Return" means any return, filing, report, questionnaire,
information statement or other document required to be filed, including amended
returns that may be filed, for any taxable period with any Taxing Authority
(whether or not a payment is required to be made with respect to such filing).
SECTION 4.20. Newco Solvency. Immediately following the
Effective Time, and after giving effect to the Restructuring and the other
Transactions and the execution and delivery of the Commercial Agreements, Newco
will not be Insolvent.
SECTION 4.21. Limitation. NOTWITHSTANDING ANY PROVISION IN
THIS AGREEMENT TO THE CONTRARY, (A) NO REPRESENTATION OR WARRANTY IS MADE BY THE
COMPANY WITH RESPECT TO (I) PARENT OR ANY OF ITS AFFILIATES OR THEIR RESPECTIVE
BUSINESSES, PROPERTIES (INCLUDING ANY OR ALL PATENTS, PATENT RIGHTS, TRADEMARKS,
TRADEMARK RIGHTS, TRADE NAMES, TRADE NAME RIGHTS, SERVICE MARKS, SERVICE ▇▇▇▇
RIGHTS AND OTHER INTELLECTUAL PROPERTY OWNED BY PARENT OR ANY OF ITS
AFFILIATES), ASSETS OR OPERATIONS, (II) ANY BUSINESS RELATIONSHIP BETWEEN THE
COMPANY OR ANY OF ITS AFFILIATES, ON THE ONE HAND, AND PARENT OR ANY OF ITS
AFFILIATES, ON THE OTHER HAND, OR (III) ANY ACTION, SUIT, PROCEEDING OR CONTRACT
TO WHICH PARENT OR ANY OF ITS
38
AFFILIATES IS A PARTY (INCLUDING THE LICENSE LITIGATION, THE NEW PATENT
LITIGATION, ANY SUCH CONTRACTS TO WHICH THE COMPANY OR ANY COMPANY SUBSIDIARY IS
OR WAS A PARTY AND IN PARTICULAR THE 1992 LICENSE AGREEMENT AND THE ONGOING
LITIGATION AGREEMENT), AND (B) NO FACT, EVENT, CHANGE, EFFECT OR DEVELOPMENT
RELATING TO ANY OF THE FOREGOING SHALL BE DEEMED TO RESULT IN THE BREACH BY THE
COMPANY OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT IN THIS AGREEMENT
OR OTHERWISE IN A TRANSACTION MATERIAL ADVERSE EFFECT; PROVIDED, HOWEVER, THAT
THIS SECTION 4.21 SHALL IN NO WAY MODIFY THE REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND NEWCO IN SECTION 4.06.
ARTICLE V
Representations and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant
to the Company as follows:
SECTION 5.01. Organization, Standing and Power. Each of Parent
and Sub is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized (in the case of good standing, to
the extent such jurisdiction recognizes such concept) and has all corporate
powers, governmental licenses and Consents required to carry on its business as
now conducted, except for any such licenses and Consents the failure of which to
have or obtain that, individually or in the aggregate, does not have a Parent
Material Adverse Effect (as defined in Section 10.03). Parent has made available
to the Company true and complete copies of the articles of incorporation and
other organizational documents, in each case as amended to the date of this
Agreement, for each of Parent and Sub. Bearer shares and non-voting equity
securities of Parent are listed on the SWX Swiss Exchange.
SECTION 5.02. Sub. (a) Since the date of its incorporation,
Sub has not carried on any business or conducted any operations ---- other than
the execution of this Agreement, the performance of its obligations hereunder
and matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $0.001 per
39
share, all of which have been validly issued, are fully paid and nonassessable
and are owned by Parent free and clear of any Lien.
SECTION 5.03. Authority; Execution and Delivery;
Enforceability. Each R Party (as defined in Section 10.03) has all requisite
power and authority to execute and deliver (a) each Transaction Agreement to
which it is a party and to consummate the Transactions contemplated thereby and
(b) each Commercial Agreement to which it is a party and to perform its
obligations thereunder. The execution and delivery by each R Party of (i) each
Transaction Agreement to which it is a party and the consummation by it of the
Transactions contemplated thereby and (ii) each Commercial Agreement to which it
is a party, and the performance by each R Party of its obligations thereunder,
in each case have been duly authorized by all necessary action on the part of
such R Party. Parent, as sole stockholder of Sub, will adopt this Agreement.
Each of Parent and Sub has duly executed and delivered this Agreement and each
other Transaction Agreement to which it is a party, and, assuming due execution
and delivery hereof and thereof by each party hereto and thereto that is not an
affiliate of Parent, this Agreement and each such Transaction Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms. Each R Party has duly executed and delivered each
Transaction Agreement to which it is a party and each Commercial Agreement to
which it is a party, and, assuming the due authorization, execution and delivery
thereof by each party thereto that is not an affiliate of Parent, each
Transaction Agreement and each Commercial Agreement constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 5.04. No Conflicts; Consents. (a) The execution and
delivery by each R Party of this Agreement and the other Transaction Agreements
to which it is a party and each Commercial Agreement to which it is a party, do
not, and the consummation of the Merger and the other Transactions and the
performance by such R Party of its obligations under the Commercial Agreements
and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without
40
notice or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of any R Party under, any provision of (i) the articles of incorporation
or other organizational documents of any R Party, (ii) any Contract to which any
R Party or any of its affiliates is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 5.04(b), any Judgment or Law applicable to any R Party or
any of their respective properties or assets, other than, in the case of clauses
(ii) and (iii) above, any such items that, individually or in the aggregate, do
not have a Parent Material Adverse Effect and do not materially impair the
ability of any R Party to perform its obligations under this Agreement, any
other Transaction Agreement or any Commercial Agreement or to consummate the
Transactions.
(b) No Consent of, or registration, declaration or filing
with, or permit from, any Governmental Entity is required to be obtained or made
by any R Party in connection with the execution, delivery and performance of
this Agreement, any other Transaction Agreement or Commercial Agreement by any R
Party or the consummation of the Transactions or the performance by any R Party
under the Commercial Agreements, other than (i) compliance with and filings
under the HSR Act, (ii) the filing with the SEC of such reports under Sections
13 and 16 of the Exchange Act, as may be required in connection with this
Agreement, the other Transaction Agreements, the Merger and the other
Transactions, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) compliance with and such filings as may
be required under applicable Environmental Law, (v) such filings as may be
required in connection with Transfer Taxes, (vi) filings under any applicable
state takeover Law and (vii) such other items (A) required solely by reason of
the participation of the Company (as opposed to any third party) in the
Transactions or (B) that the failure of which to obtain or make, individually or
in the aggregate, does not have a Parent Material Adverse Effect and does not
materially impair the ability of any R Party to perform its obligations under
this Agreement, any other Transaction
41
Agreement or any Commercial Agreement or to consummate the Transactions.
SECTION 5.05. Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Merger and
the other Transactions or the execution and delivery of the Commercial
Agreements based upon arrangements made by or on behalf of Parent or any of its
affiliates.
SECTION 5.06. Financing. At the Effective Time, Parent and Sub
will have available all of the funds necessary for the acquisition of all shares
of Company Common Stock pursuant to the Merger and to perform their respective
obligations under this Agreement and the other Transaction Agreements.
SECTION 5.07. Financial Statements. The audited consolidated
financial statements (including the related notes) of Parent for the year ended
December 31, 2002, have been prepared in accordance with international
accounting standards applied on a consistent basis during the period involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the date thereof and the consolidated results of their operations and cash
flows for the period shown.
SECTION 5.08. Stock Ownership; Interested Stockholders.
Neither Parent nor Sub beneficially owns any Company Common Stock and neither
Parent nor Sub is, or at any time during the three years preceding the date of
this Agreement has been, an "interested stockholder" of the Company, as such
term is defined in Section 203(c)(5) of the DGCL.
ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01. Conduct of Business. (a) Conduct of Business by
the Company. Except for matters set forth in the Company Disclosure Letter or
otherwise expressly contemplated by this Agreement, any other Transaction
Agreement or any of the Commercial Agreements, from the
42
date of this Agreement to the Effective Time the Company shall, and shall cause
each Company Subsidiary to, conduct its business in the usual, regular and
ordinary course consistent with past practice and, to the extent consistent
therewith, shall use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties. In addition, and
without limiting the generality of the foregoing, except for matters set forth
in the Company Disclosure Letter or otherwise expressly contemplated by this
Agreement, any other Transaction Agreement or any of the Commercial Agreements,
from the date of this Agreement to the Effective Time, the Company shall not,
and shall not permit any Company Subsidiary to, do any of the following without
the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, its capital stock, other than
dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than (1)
the issuance of Company Common Stock (and associated Company Rights)
upon (x) the exercise of Company Stock Options outstanding as of the
date of this Agreement and in accordance with the terms thereof in
effect as of the date of this Agreement, (y) the conversion of Company
Convertible Debentures outstanding as of the date of this Agreement and
in accordance with the terms thereof in effect as of the date of this
Agreement and (z) the exercise of Company Warrants outstanding as of
the date of this Agreement and in accordance with the terms thereof in
effect as of the date of this Agreement, (2) the issuance of Company
Capital Stock upon the exercise of Company Rights and (3) pursuant to
the Company Stock Plans as in effect on the date of this Agreement;
43
(ii) issue, deliver, sell or grant (A) any shares of its
capital stock, (B) any Voting Company Debt or other voting securities,
(C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, Voting Company
Debt, voting securities or convertible or exchangeable securities or
(D) any "phantom" stock, "phantom" stock rights, stock appreciation
rights or stock-based performance units, in each case other than (1)
the issuance of Company Common Stock (and associated Company Rights)
upon (x) the exercise of Company Stock Options outstanding as of the
date of this Agreement and in accordance with the terms thereof in
effect as of the date of this Agreement, (y) the conversion of Company
Convertible Debentures outstanding as of the date of this Agreement and
in accordance with the terms thereof in effect as of the date of this
Agreement and (z) the exercise of Company Warrants outstanding as of
the date of this Agreement and in accordance with the terms thereof in
effect as of the date of this Agreement, and (2) the issuance of
Company Capital Stock upon the exercise of Company Rights;
(iii) amend or propose any amendment to its certificate of
incorporation, by-laws or other comparable charter or organizational
documents (other than amendments or proposals to the certificate of
incorporation, bylaws or other comparable charter or organizational
documents of Newco, any Company Subsidiary that is contemplated to
become a subsidiary of Newco pursuant to the Restructuring or any other
subsidiary of Newco that do not materially impair the ability of Newco,
any Company Subsidiary that is contemplated to become a subsidiary of
Newco pursuant to the Restructuring or any other subsidiaries of Newco
to perform its obligations under this Agreement, any other Transaction
Agreement or any Commercial Agreement or consummate the Transactions or
perform their obligations under any Commercial Agreement);
(iv) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company or any Company
44
Subsidiary, except for any such change required by GAAP or applicable
Law;
(v) make or change any material Tax election; change any
annual Tax accounting period; file any material amended Tax Returns or
claims for material Tax refunds; enter into any material closing
agreement; settle any material Tax claim, audit or assessment; or
surrender any right to claim a material Tax refund, offset or other
reduction in Liabilities for Taxes;
(vi) amend any material term of any outstanding security of
the Company or any Company Subsidiary;
(vii) merge or consolidate with any other person or acquire
a material amount of stock or assets of any unrelated third person, in
each case other than (A) one or more acquisitions of stock or assets
(including inventory and fixed assets) of any unrelated third person by
any Newco Company (as defined in the Restructuring Agreement) involving
the expenditure in the aggregate of no greater than $20,000,000 (or its
equivalent in any other currency) minus the amount of any loan, advance
or capital contribution to, or investment in, any unrelated third
person made pursuant to Section 6.01(a)(xi)(F) or (B) any acquisition
of inventory or fixed assets in the ordinary course consistent with
past practice;
(viii) sell, lease, license or otherwise dispose of any
material subsidiary or any assets or property, including any
Intellectual Property Right, except in each case for such sales,
leases, licenses or other dispositions to an unrelated third person
that do not have a Transaction Material Adverse Effect;
(ix) incur, assume or guarantee any indebtedness for
borrowed money in an aggregate principal amount in excess of
$10,000,000 (or its equivalent in any other currency), whether pursuant
to one or more transactions, other than any guarantee by
45
the Company or any Company Subsidiary pursuant to any agreement in
effect as of the date of this Agreement;
(x) create or incur any Lien on any material asset of the
Company and the Company Subsidiaries, taken as a whole, other than in
the ordinary course consistent with past practice;
(xi) make any loan, advance or capital contributions to, or
investment in, any person other than (A) to the extent permitted by
Section 6.01(a)(ix), (B) loans, advances or capital contributions to,
or investments in, its wholly-owned subsidiaries, (C) the extension of
trade credit in the ordinary course consistent with past practice, (D)
investments in any person in the ordinary course pursuant to the
Company's investment policy approved by the Company Board as in effect
as of the date of this Agreement, a copy of which policy is set forth
in Section 4.13(c) of the Company Disclosure Letter, (E) loans,
advances or capital contributions to, or investments in, any person as
described in, or pursuant to any agreement listed in Section
6.01(a)(xi)(E) of the Company Disclosure Letter or (F) loans, advances
or capital contributions to, or investments in, any unrelated third
person that are not otherwise permitted by clauses (A) through (E) of
this Section 6.01(a)(xi) and involve the expenditure in the aggregate
of no greater than $20,000,000 minus the amount of any expenditure made
pursuant to Section 6.01(a)(vii)(A);
(xii) any establishment, adoption or amendment (except as
required by applicable Law) of any collective bargaining or material
bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other
benefit plan covering any director, officer or employee of the Company
or any Company Subsidiary (other than Newco, any Company Subsidiary
that is contemplated to become a subsidiary of Newco pursuant to the
Restructuring or any other subsidiaries of Newco); for the avoidance of
doubt this clause (xii) shall not be construed to prohibit any award or
payment of any bonus or other
46
compensation to any director, officer or other employee on an
individual basis in a manner consistent with past practice; or
(xiii) authorize any of, or commit or agree to take any of,
the foregoing actions; provided, however, that prior to the Effective
Time, Newco may authorize, or commit or agree to take, any such action
after the Effective Time.
(b) Consent. Notwithstanding the second sentence of Section
6.01(a), Parent shall not unreasonably withhold, condition or delay its consent
with respect to any request by the Company with respect to any action prohibited
by Section 6.01(a)(iv), 6.01(a)(v), 6.01(a)(x), 6.01(a)(xi), 6.01(a)(xii) or
6.01(a)(xiii)(solely to the extent relating to actions described in Section
6.01(a)(iv), 6.01(a)(v), 6.01(a)(x), 6.01(a)(xi) or 6.01(a)(xii)).
(c) Actions by Parent and the Company. (i) Parent shall not,
and shall not permit any of its affiliates to, take any action that would, or
that is reasonably likely to, result in any condition to the Merger set forth in
Article VIII, not being satisfied.
(ii) The Company shall not, and shall not permit any of its
affiliates to, take any action that would, or that is reasonably likely
to, result in any condition to the Merger set forth in Article VIII,
not being satisfied.
SECTION 6.02. No Solicitation. (a) The Company shall not, nor
shall it authorize or permit any Company Subsidiary to, nor shall it authorize
or permit any officer, director or employee of, or any investment banker,
attorney or other advisor or representative (collectively, "Representatives")
of, the Company or any Company Subsidiary to, (i) directly or indirectly
solicit, initiate or encourage the submission of any Company Takeover Proposal
(as defined in Section 6.02(h)), (ii) enter into any agreement with respect to
any Company Takeover Proposal (except a confidentiality agreement in accordance
with this Section 6.02(a)), (iii) grant any waiver or release under any
standstill or similar agreement with respect to any
47
class of equity securities of the Company or any Company Subsidiary or (iv)
directly or indirectly (A) participate in any discussions or negotiations with,
or furnish any information with respect to, the Company or any Company
Subsidiary to any person that is seeking to make, or has made, any proposal that
constitutes a Company Takeover Proposal or (B) afford access to the business,
properties, assets, books or records of the Company or any Company Subsidiary
to, otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any person that is seeking to make, or has
made, any proposal that constitutes a Company Takeover Proposal; provided,
however, that prior to obtaining the Company Stockholder Approval the Company
and its Representatives may, in response to a Company Takeover Proposal that was
not solicited by the Company and that did not otherwise result from a breach of
this Section 6.02(a), and subject to compliance with Sections 6.02(c) and
6.02(d), (x) furnish information with respect to the Company and the Company
Subsidiaries to the person making such Company Takeover Proposal and its
Representatives pursuant to a customary confidentiality agreement with terms not
materially less favorable to the Company and not materially less restrictive to
the person making such Company Takeover Proposal than those contained in the
Confidentiality Agreement (as defined in Section 7.02) and Section 7.12 of this
Agreement (a copy of which shall be provided to Parent for informational
purposes only) and (y) participate in discussions or negotiations (including
solicitation of a revised Company Takeover Proposal) with such person and its
Representatives regarding such Company Takeover Proposal, if and only if, in the
case of each of (x) and (y) above, the Company Board determines in good faith,
after receipt of the advice of its financial advisor and outside legal counsel,
that such Company Takeover Proposal is reasonably likely to result in a Superior
Company Proposal (as defined in Section 6.02(h)).
(b) Neither the Company Board nor any committee thereof shall
(i) withdraw or modify in a manner adverse to Parent or Sub, or propose publicly
to withdraw or modify in a manner adverse to Parent or Sub, the approval or
recommendation by the Company Board or any such committee of this Agreement or
the Merger, in each case unless the Company Board determines in good faith,
after consultation
48
with outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties under applicable Law, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Company Takeover Proposal or (iii) approve or recommend, or propose publicly
to approve or recommend, any Company Takeover Proposal.
(c) In addition to the obligations of the Company set forth in
Section 9.05(b)(iii), the Company shall promptly (and in no event later than 1
business day after receipt of the relevant proposal or inquiry) advise Parent
orally and in writing of any Company Takeover Proposal or any inquiry from a
third party to an officer or director of the Company with respect to the making
of a Company Takeover Proposal, the identity of the person making any such
Company Takeover Proposal or inquiry and the material terms of any such Company
Takeover Proposal or inquiry. The Company shall keep Parent promptly informed of
the status (including any change to the material terms) of any such Company
Takeover Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable Law.
(e) Notwithstanding clauses (a) and (b) of this Section 6.02,
if, prior to obtaining the Company Stockholder Approval, the Company Board
receives a Superior Company Proposal, then the Company Board may, in accordance
with Section 9.05(b) (including the notice provisions therein), approve and
recommend such Superior Company Proposal and cause the Company to terminate this
Agreement and concurrently enter into a definitive agreement providing for
implementation of such Superior Company Proposal.
(f) The Company (i) shall, and shall cause the Company
Subsidiaries to, and shall instruct its Representatives to, cease immediately
and cause to be
49
terminated all activities, discussions or negotiations, if any, with any persons
conducted prior to the date of this Agreement with respect to any Company
Takeover Proposal and (ii) shall promptly request each person, if any, that has
executed a confidentiality agreement within the 12 months prior to the date of
this Agreement in connection with such person's consideration of any Company
Takeover Proposal to return or destroy all confidential information heretofore
furnished to such person by or on behalf of the Company or any Company
Subsidiary.
(g) The Company shall promptly inform the Company Subsidiaries
and its Representatives of the obligations undertaken in this Section 6.02.
(h) For purposes of the Transaction Agreements:
"Company Takeover Proposal" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company, (ii) any proposal or offer
to acquire in any manner, directly or indirectly, over 20% of the
equity securities or consolidated total assets of the Company or (iii)
any other transaction the consummation of which would reasonably be
expected to impede, prevent or materially delay the Merger, in each
case other than (A) the Transactions, (B) the performance of
obligations pursuant to the Commercial Agreements or (C) any
transaction involving Newco or its subsidiaries that will be
consummated after the Effective Time.
"Superior Company Proposal" means any bona fide, unsolicited
written proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender or exchange offer, a merger,
a consolidation, a liquidation or dissolution, a recapitalization or
similar transaction, more than 50% of the combined voting power of the
shares of Company Common Stock then outstanding or all or substantially
all of the assets of the Company and the Company Subsidiaries, taken as
a whole, on terms which the Company Board determines in good faith to
be more favorable to the holders of Company Common Stock than the
Transactions
50
(after consultation with a financial advisor of nationally recognized
reputation), taking into account all the terms and conditions of such
proposal, including any break-up fees, expense reimbursement provisions
and conditions to consummation, and this Agreement (including any
proposal by Parent to amend the terms of the Transactions), and for
which financing, to the extent required, is then fully committed or
reasonably determined to be available by the Company Board.
ARTICLE VII
Additional Agreements
SECTION 7.01. Preparation of the Proxy Statement, the Newco
Form S-4 and the Newco Form 8-A; Company Stockholders Meeting. (a) As soon as
practicable following the date of this Agreement, the Company shall (i) prepare
the Proxy Statement, the Newco Form S-4 and the Newco Form 8-A and (ii) file the
Proxy Statement, the Newco Form S-4 and the Newco Form 8-A with the SEC. The
Proxy Statement will be included as a prospectus in the Newco Form S-4. Each of
the Company and Parent shall use its reasonable best efforts to have the Newco
Form S-4 declared effective under the Securities Act as promptly as practicable
after such filing. Each of the Company and Parent shall use its reasonable best
efforts to cause the Proxy Statement to be mailed to the Company's stockholders
as promptly as practicable after the Newco Form S-4 is declared effective under
the Securities Act. Each of Parent and the Company shall also take any action
(other than qualifying to do business in any jurisdiction in which is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
and distribution of Newco Common Stock in the Merger. Parent shall furnish all
information concerning Parent, the Transactions, the Transaction Agreements and
the Commercial Agreements and shall provide all other assistance and cooperation
as may be reasonably requested by the Company in connection with the
preparation, filing and distribution of the Proxy Statement and the Newco Form
S-4 and any other action described in this Section 7.01(a). The parties shall
notify each other promptly of the receipt
51
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement, the Newco Form S-4
or the Newco Form 8-A or for additional information and shall supply each other
with copies of all correspondence between it or any of its Representatives, on
the one hand, and the SEC or its staff on the other hand, with respect to the
Proxy Statement, the Newco Form S-4, the Newco Form 8-A, the Merger, the other
Transactions, the Transaction Agreements or the Commercial Agreements. Each of
the Company and Parent shall use its reasonable best efforts to respond as
promptly as practicable to any such comments or requests of the SEC. If at any
time prior to receipt of the Company Stockholder Approval there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Newco Form S-4 or the Newco Form 8-A, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement, and Parent
shall cooperate in connection therewith. The Company shall not mail any Proxy
Statement, the Newco Form S-4 or the Newco Form 8-A or any amendment or
supplement thereto, to which Parent reasonably objects in a timely manner.
(b) The Company shall, as promptly as practicable following
the date of this Agreement (taking into account any delays reasonably required
as a result of the occurrence of any event described in the last sentence of
this clause (b)), duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") for the purpose of seeking the
Company Stockholder Approval. The Company shall, through the Company Board,
recommend to its stockholders that they give the Company Stockholder Approval,
except to the extent that the Company Board shall have withdrawn or modified its
approval or recommendation of this Agreement, the Restructuring or the Merger as
permitted by Section 6.02(b). Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 7.01(b) shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal or (ii) the withdrawal or modification by the Company Board of its
approval or recommendation of this Agreement, the Restructuring or the Merger.
52
SECTION 7.02. Access to Information; Confidentiality. The
Company shall, and shall cause each Company Subsidiary to, afford to Parent, and
to Parent's affiliates and their respective officers, employees and
Representatives, reasonable access during normal business hours during the
period after the date of this Agreement and prior to the Effective Time to the
Company Records (as defined in the Restructuring Agreement); provided, however,
that such access will not unreasonably interfere with the normal operations of
the Company or any Company Subsidiary and the reasonable out-of-pocket expenses
of the Company and any Company Subsidiary incurred in connection therewith will
be paid by Parent; provided further, however, that the Company or any Company
Subsidiary may withhold (a) any document or information that (i) the disclosure
of which would violate any Contract with a third party or any applicable Law or
Judgment or would result in the waiver of any legal privilege or work-product
protection or (ii) otherwise relates to any litigation (A) between the Company
and any of its affiliates, on the one hand, and Parent and any of its
affiliates, on the other hand (including the License Litigation and the New
Patent Litigation), or (B) in which the party requesting such document or
information or any of its affiliates otherwise has an interest, or (b) such
portions of documents or information that its outside counsel advises should not
be disclosed in order to ensure compliance with antitrust or other similar Laws.
Subject to the next two sentences of this Section 7.02, all information
exchanged pursuant to this Section 7.02 shall be subject to the confidentiality
agreement dated October 8, 2001, between the Company and affiliates of Parent
(the "Confidentiality Agreement"), and the letter agreement dated November 6,
2002, between the Company and R Diagnostics (the "Letter Agreement"). As of and
after the Effective Time, the Confidentiality Agreement shall have no further
force and effect and shall be superseded by Section 3.07 of the Post-Closing
Covenants Agreement. As of and after the Effective Time, Parent shall, and shall
cause its affiliates to, treat all Newco Information (as defined in the
Post-Closing Covenants Agreement), including information exchanged pursuant to
this Section 7.02, as subject to Section 3.07 of the Post-Closing Covenants
Agreement. None of the Company Records provided or received by any party to this
Agreement will affect any of the representations and warranties of the
53
parties hereto contained in this Agreement or the conditions hereunder to the
obligations of the parties hereto.
SECTION 7.03. Reasonable Best Efforts; Notification. Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other Transactions, including (a) the taking of all acts necessary to cause
the conditions to Closing to be satisfied as promptly as practicable, (b) the
obtaining of all necessary actions or nonactions, waivers and Consents from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain a Consent or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (c) the obtaining of
all necessary Consents or waivers from third parties; provided, however, that
the parties shall not be required to pay or commit to pay any amount to (or
incur any obligation in favor of) any person from whom any such Consent or
waiver may be required (other than nominal filing or application fees), (d) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of the
Transactions, including seeking to have any stay, order or injunction entered by
any court or other Governmental Entity preventing consummation of any of the
Transactions vacated or reversed and (e) the execution and delivery of any
additional instruments necessary to consummate the Transactions and to fully
carry out the purposes of this Agreement and the other Transaction Agreements.
In connection with and without limiting the foregoing, (i) the Company and the
Company Board shall (A) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
any Transaction or this Agreement or any other Transaction Agreement and (B) if
any state takeover statute or similar statute or regulation becomes applicable
to any Transaction or this Agreement or any other Transaction Agreement, take
54
all action necessary to ensure that the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other Transactions and (ii) Parent, on behalf of itself and
its subsidiaries and affiliates, is hereby deemed to have granted any consent
with respect to, and waived compliance with any requirements of, any term or
provision of any Contract or arrangement in effect as of the date of this
Agreement, between and among Parent or any of its subsidiaries or affiliates, on
the one hand, and the Company or any Company Subsidiaries or affiliates, on the
other hand, to the extent necessary in order to consummate the Transactions
without resulting in a breach, default or other violation of any such Contract
or arrangement. Notwithstanding the foregoing, the Company and its
Representatives shall not be prohibited under this Section 7.03 from taking any
action permitted by Section 6.02.
SECTION 7.04. Stock Options. (a) As soon as reasonably
practicable following the date of this Agreement (or, in the case of any Company
Stock Plan adopted after the date of this Agreement and prior to the Effective
Time, as soon as reasonably practicable following the date of such Plan's
adoption), the Company Board (or, if appropriate, any committee administering
the Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required in order that each outstanding Company Stock Option, whether
vested or unvested, shall be canceled upon the occurrence of the Effective Time,
and that the holder of such Company Stock Option shall become entitled, within
five business days following the Effective Time, to receive (i) a cash payment
from Parent, in an amount equal to the product of (A) the excess of the Per
Share Cash Merger Consideration over the exercise price of such Company Stock
Option multiplied by (B) the number of shares of Company Common Stock for which
such Company Stock Option shall not theretofore have been exercised (the "Option
Shares") and (ii) a number of shares of Newco Common Stock from the Company
equal to the product of (A) the Exchange Ratio multiplied by (B) the number of
Option Shares. To the extent that the foregoing provisions would otherwise
require the Company to provide to the holder of a Company Stock Option a
fractional share of
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Stock, the Exchange Agent will instead pay cash in lieu of such
fractional share based on the value of a share of Newco Common Stock determined
in accordance with Section 2.02(e). All payments and distributions pursuant to
this Section shall be subject to all appropriate withholding.
(b) Prior to the Effective Time, the Company Board shall adopt
resolutions terminating the Company Stock Plans, and deleting provisions in any
other Company Benefit Plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital stock of
the Company, as of the Effective Time.
(c) In this Agreement:
"Company Stock Option" means any option to purchase Company
Common Stock granted under any Company Stock Plan.
"Company Stock Plans" means the Company's ▇▇▇▇ ▇▇▇▇▇ Based
Option Plan, the Company's 1994 Stock Option Plan, the Company's 1994
Non-Employee Directors Stock Option Plan, the Company's 1985 Stock
Option Plan and any plans permitting the grant of options to purchase
Company Common Stock that are adopted by the Company or any Company
Subsidiary after the date of this Agreement and prior to the Effective
Time in compliance with the terms of this Agreement, in each case as
amended through the date of this Agreement.
SECTION 7.05. Certain Claims. (a) Parent shall not, and shall
not permit any affiliate of Parent or encourage any other person to, either
before or after the Effective Time, assert any rights or pursue any actions or
claims, whether directly or on a derivative basis, against (i) the Company or
any of its affiliates or Newco or any affiliate of Newco or (ii) any of the
current or former directors, officers, members of the board of managers,
members, managers, employees, consultants, advisors, attorneys, trustees or
agents of the Company or any of its affiliates or Newco or any affiliate of
Newco (in each case, solely in their capacities as such), in each case for acts
or omissions occurring (A) prior to the date of this Agreement or (B) after the
date of this Agreement and prior
56
to the Effective Time, whether known or unknown, and Parent shall not, and
Parent shall not permit any affiliate of Parent to, cooperate with any person in
the assertion of any such rights or pursuing any such actions or claims except
(x) as required by subpoena or other judicial or legal process or (y) as
required by any inquiry by a Governmental Entity, but in each case only to the
extent such inquiry or requirement to cooperate has not arisen as a result of a
breach of this Section 7.05(a); provided, however, that this Section 7.05(a)
shall not (1) affect any person's right to enforce any Transaction Agreement,
any Commercial Agreement, any I/R Agreement (as defined in the Restructuring
Agreement), any Newco I/R Agreement (as defined in the Restructuring Agreement),
any agreement entered into between the Company, Newco or any of their respective
affiliates, on the one hand, and any of the R Parties or any of their respective
affiliates, on the other hand, after the date of this Agreement but prior to the
Effective Time or any provision herein or therein in accordance with its terms,
(2) apply to any act or omission which constitutes fraud in the inducement with
respect to any Transaction Agreement or any Commercial Agreement or (3) apply to
any action permitted or required by the Ongoing Litigation Agreement; provided
further, however, that in the event this Agreement is terminated, this Section
7.05(a) shall be null and void and shall not operate as a waiver or release of
any rights, actions, interests or claims that might have been asserted or
pursued but for this Section 7.05(a).
(b) The Company shall not, and shall not permit any affiliate
of the Company or encourage any other person to, either before or after the
Effective Time, assert any rights or pursue any actions or claims, whether
directly or on a derivative basis, against (i) Parent or any of its affiliates
or (ii) any of the current or former directors, officers, members of the board
of managers, members, managers, employees, consultants, advisors, attorneys,
trustees or agents of Parent or any of its affiliates (in each case, solely in
their capacities as such), in each case for acts or omissions occurring (A)
prior to the date of this Agreement or (B) after the date of this Agreement and
prior to the Effective Time, whether known or unknown, and the Company shall
not, and shall not permit any affiliate of the Company to, cooperate with any
person in
57
the assertion of any such rights or pursuing any such actions or claims except
(x) as required by subpoena or other judicial or legal process or (y) as
required by any inquiry by a Governmental Entity, but in each case only to the
extent such inquiry or requirement to cooperate has not arisen as result of a
breach of this Section 7.05(b); provided, however, that this Section 7.05(b)
shall not (1) affect any person's right to enforce any Transaction Agreement,
any Commercial Agreement, any I/R Agreement, any Newco I/R Agreement, any
agreement entered into between the Company, Newco or any of their respective
affiliates, on the one hand, and any of the R Parties or any of their respective
affiliates, on the other hand, after the date of this Agreement but prior to the
Effective Time or any provision herein or therein in accordance with its terms,
(2) apply to any act or omission which constitutes fraud in the inducement with
respect to any Transaction Agreement or any Commercial Agreement or (3) apply to
any action permitted or required by the Ongoing Litigation Agreement; provided
further, however, that prior to the Effective Time, the Company shall be
entitled to take any and all actions necessary to dismiss the New Patent
Litigation; and provided further, however, that in the event this Agreement is
terminated, this Section 7.05(b) shall be null and void and shall not operate as
a waiver or release of any rights, actions, interests or claims that might have
been asserted or pursued but for this Section 7.05(b).
SECTION 7.06. Fees and Expenses. (a) Except as provided in
this Agreement or in any other Transaction Agreement, all fees and expenses
incurred in connection with the Merger and the other Transactions shall be paid
by the party incurring such fees or expenses (it being understood that such fees
and expenses of the Company shall be paid by the Company prior to the Closing or
assumed by Newco pursuant to the Restructuring Agreement) whether or not the
Merger is consummated.
(b) The Company shall pay to Parent a fee of $26,600,000 if:
(i) the Company terminates this Agreement pursuant to Section 9.01(d) and
consummates the transactions contemplated by the applicable Superior Company
Proposal or any other Company Takeover Proposal (solely for the purpose of this
Section 7.06(b), "Company Takeover Proposal" shall have the meaning set forth in
the
58
definition of Company Takeover Proposal in Section 6.02(h), except that the
reference in such definition to "20%" shall be deemed to be a reference to
"50%") received by the Company following such termination, or (ii) (A) either
(1) Parent terminates this Agreement pursuant to Section 9.01(c) or (2) (x)
after the date of this Agreement, any person makes a Company Takeover Proposal,
(y) the Merger shall not have occurred on or before the Outside Date (as defined
in Section 9.01(b)(i)) and (z) this Agreement is thereafter terminated pursuant
to Section 9.01(b)(i) (but only if the Company Stockholders Meeting has not been
held by the date that is two days prior to the date of such termination), and
(B) within 12 months after such termination the Company consummates the
transactions contemplated by a Company Takeover Proposal. For the avoidance of
doubt, the parties expressly agree that in no event will a fee be paid pursuant
to this Section 7.06(b) unless and until the transactions contemplated by a
Company Takeover Proposal (including a Company Takeover Proposal that
constitutes a Superior Company Proposal) are consummated (and the payment of
such fee shall otherwise be subject to the other provisions of this Section
7.06(b)). Any fee due under this Section 7.06(b) shall be paid by wire transfer
of same-day funds on the date of such consummation of transactions referred to
in Section 7.06(b)(i) or 7.06(b)(ii)(B), as the case may be, to an account
designated by Parent.
(c) The Company shall reimburse Parent and Sub for all their
reasonable expenses incurred in connection with this Agreement, the Commercial
Agreements, the Merger, the other Transactions or the execution and delivery of
the Commercial Agreements (i) in the event this Agreement is terminated by the
Company in the circumstances described in Section 7.06(b)(i), no later than the
date of such termination by the Company or (ii) in the event this Agreement is
terminated by Parent pursuant to Section 9.01(c), within two business days after
such termination by Parent; provided that the aggregate amount of such
reimbursement shall not exceed $5,000,000. All payments made pursuant to this
Section 7.06(c) shall be paid by wire transfer of same day funds on the date
such payment is due to an account designated by Parent.
59
(d) The Company acknowledges that the agreements contained in
this Section 7.06 are an integral part of the Transactions and that, without
these agreements, Parent and Sub would not enter into this Agreement.
SECTION 7.07. Public Announcements. Prior to the Effective
Time, Parent and Sub, on the one hand, and the Company and Newco, on the other
hand, shall consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the Merger, the other Transactions, the Commercial
Agreements and the transactions contemplated thereby and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
SECTION 7.08. Transfer Taxes. Subject to Section 2.01(f), all
stock transfer, real estate transfer, documentary, stamp, recording and other
similar Taxes (including interest, penalties and additions to any such Taxes)
("Transfer Taxes") incurred in connection with the Transactions shall be paid as
set forth in the Tax Allocation Agreement.
SECTION 7.09. Rights Agreement; Consequences if Rights
Triggered. Except as approved in writing by Parent, the Company Board shall not
(a) amend the Company Rights Agreement, (b) redeem the Company Rights or (c)
take any action with respect to, or make any determination under, the Company
Rights Agreement, except, in each case, to the extent necessary to comply with
the fiduciary duties of the Company Board as determined by it in good faith
after consultation with outside counsel. If any Distribution Date or Shares
Acquisition Date (as defined in the Company Rights Agreement) occurs under the
Company Rights Agreement at any time during the period from the date of this
Agreement to the Effective Time, the Company and Parent shall make such
adjustment to the Merger Consideration as the Company and Parent shall mutually
agree so as to preserve the economic benefits that the Company and Parent each
reasonably expected on the date of this Agreement to
60
receive as a result of the Merger and the other Transactions.
SECTION 7.10. Listing of Newco Common Stock. The Company shall
use its reasonable best efforts to cause the shares of Newco Common Stock to be
distributed in the Merger to be approved for listing on a national securities
exchange or approved for quotation on Nasdaq, in each case subject to official
notice of issuance, prior to the Closing Date.
SECTION 7.11. Modifications to the License Agreement. The
Company shall not, prior to the Effective Time, amend, waive or fail to enforce
any provision of the License Agreement without the prior written consent of
Parent.
SECTION 7.12. Standstill. From the date of this Agreement to
the earlier of the Effective Time or the fifth anniversary of the termination of
this Agreement in accordance with Section 9.01, Parent shall not, and Parent
shall not permit any of its affiliates to, in any manner, whether publicly or
otherwise, directly or indirectly, other than pursuant to or in furtherance of
the Merger on the terms and subject to the conditions set forth in or as
otherwise permitted by this Agreement, (a) acquire, agree to acquire or make any
proposal to acquire, directly or indirectly, any securities or assets of the
Company or any Company Subsidiary, except at the unsolicited specific written
request of the Company, (b) propose to enter into, directly or indirectly, any
tender or exchange offer, merger or other business combination or similar
transaction involving the Company or any Company Subsidiary, except at the
unsolicited specific written request of the Company, (c) form, join or in any
way participate in a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any securities of the Company or any Company
Subsidiary, (d) enter into any discussions, negotiations, arrangements,
understandings or agreements (whether written or oral) with any other person
(other than its Representatives) regarding any possible purchase or sale of any
securities or assets of the Company or any Company Subsidiary, (e) make, or in
any way participate, directly or indirectly, in any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the SEC) to
61
vote, or seek to advise or influence any person with respect to the voting of,
any securities of the Company or any Company Subsidiary, (f) call, or seek to
call, a meeting of the Company's shareholders or initiate or propose any
shareholder proposal or execute any written consent with respect to the Company,
(g) otherwise act, alone or in concert with others, to seek or attempt to
control or influence the management, Company Board or policies of the Company
(except to the extent conduct or settlement of litigation between R Diagnostics
and the Company might be deemed such an attempt), (h) disclose any intention,
plan or arrangement inconsistent with the foregoing or (i) advise, assist or
encourage any other persons in connection with any of the foregoing. During the
applicable period covered by the preceding sentence of this Section 7.12, Parent
shall not, and Parent shall not permit any of its affiliates to, (i) request,
directly or indirectly, that the Company or any of its Representatives amend or
waive any provisions of this Section 7.12 (including, this sentence) or (ii)
take any action which could reasonably be expected to require the Company to
make a public announcement regarding the possibility of a business combination,
merger or similar transaction other than the Merger, the other Transactions and
the transactions contemplated by the Commercial Agreements.
SECTION 7.13. Pending Litigation. Each of the parties hereto
acknowledges and agrees that their obligations, agreements and covenants under
this Agreement, any other Transaction Agreement or any Commercial Agreement
shall not in any way be diminished or otherwise affected by, and the
consummation of the Merger, any of the other Transactions or the transactions
contemplated by any of the Commercial Agreements and shall not in any way be
conditioned upon or delayed as a result of, the status of or any development
relating to the License Litigation or the New Patent Litigation.
SECTION 7.14. Company Secured Notes. Prior to the Effective
Time, the Company shall give each holder of the 8.50% Senior Secured Notes of
the Company (the "Company Secured Notes") notice of optional prepayment in
accordance with Section 8.2 of the Senior Secured Notes Purchase Agreement (as
defined in Section 10.03) and shall thereafter pay in full the Company Secured
Notes and
62
discharge and satisfy in full all obligations of the Company under the Senior
Secured Notes Purchase Agreement, if any, in accordance with such notice and
otherwise in accordance with the procedures set forth in the Senior Secured
Notes Purchase Agreement.
SECTION 7.15. Restructuring. The parties to this Agreement
acknowledge and agree that the implementation of the Restructuring, any of the
other Transactions or the performance by the relevant parties of their
obligations under the Commercial Agreements, in each case in accordance with
their respective terms, shall not constitute (a) a breach or failure to be true
or correct of any of the representations, warranties, agreements or covenants
set forth in this Agreement or any other Transaction Agreement or (b) otherwise
result in the failure of any condition to the obligations of any party hereto to
effect the Merger or any other Transaction.
SECTION 7.16. Notices of Certain Events.
(a) The Company shall promptly notify Parent of:
(i) any notice or other communication from any person
alleging that the Consent of such person is or may be required in
connection with the Transactions or the execution and delivery of the
Commercial Agreements;
(ii) any notice or other communication from any
Governmental Entity in connection with the Transactions or the
execution and delivery of the Commercial Agreements; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge, threatened against, the
Company or any Company Subsidiary that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.06, 4.12, 4.17, 4.18 or 4.19 or that relate to the
consummation of the Transactions or the execution and delivery of the
Commercial Agreements.
(b) Parent shall promptly notify the Company of:
63
(i) any notice or other communication from any person
alleging that the Consent of such person is or may be required in
connection with the Transactions or the execution and delivery of the
Commercial Agreements;
(ii) any notice or other communication from any
Governmental Entity in connection with the Transactions or the
execution and delivery of the Commercial Agreements; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge, threatened against, any R
Party that relate to the consummation of the Transactions or the
execution and delivery of the Commercial Agreements.
SECTION 7.17. Company Financing Transaction. Prior to the
Effective Time, each of Parent and the Company shall execute and deliver a note
in substantially the form attached hereto as Exhibit A (the "Parent Note")
pursuant to which Parent shall loan (the "Loan") to the Company an amount equal
to $214,000,000 minus the amount (the "Cash Amount") of cash received by the
Company from (a) the exercise of Company Stock Options and (b) the exercise of
Company Warrants, in each case during the period from the date of this Agreement
to 5:00 p.m., New York City time, on the date (the "Cut-Off Date") that is two
business days prior to the Effective Time. The Company shall provide Parent with
written notice of the Cash Amount one day prior to the Effective Time.
Immediately prior to the Effective Time, Parent shall make the Loan.
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company shall have obtained the
Company Stockholder Approval.
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(b) Antitrust. Any waiting period under the HSR Act applicable
to the Merger shall have expired or been terminated.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Law preventing the consummation of the Merger
shall be in effect; provided, however, that prior to asserting this condition
the applicable party shall have used its reasonable best efforts to prevent the
entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered.
(d) Form S-4. The Newco Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) MSD. The MSD Agreements shall be in full force and effect
and shall not have been amended or modified, and no provision thereof shall have
been waived, without the prior written consent of Parent and the Company.
(f) Limited Mutual Release and Agreement. The Limited Mutual
Release and Agreement shall be in full force and effect and shall not have been
amended or modified, and no provision thereof shall have been waived, without
the prior written consent of Parent, the Company and Newco.
SECTION 8.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. (i) The representations
and warranties of the Company contained in Sections 4.06(c), 4.06(g), 4.13(b)(i)
and 4.20 shall be true and correct, (ii) the representations and warranties of
the Company contained in Section 4.02(a) shall be true and correct in all
material respects, (iii) all other representations and warranties of the Company
contained in this Agreement (A) that are qualified by a reference to
65
materiality or a Transaction Material Adverse Effect shall be true and correct
(without regard to such reference), other than for such failures to be true and
correct that, individually or in the aggregate, do not have a Transaction
Material Adverse Effect, and (B) that are not so qualified shall be true and
correct, other than for such failures to be true and correct that, individually
or in the aggregate, do not have a Transaction Material Adverse Effect, in the
case of each of clauses (i), (ii), (iii)(A) and (iii)(B), as of the date of this
Agreement and as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date (in which case as of such
earlier date), and (iv) Parent shall have received a certificate signed by the
chief executive officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. (i) The Company
shall have performed (A) its obligations required to be performed by it under
Sections 6.01(a)(iii), 6.01(a)(viii) and 7.11, (B) in all material respects its
obligations required to be performed by it under Sections 2.01(d), 6.01(a)(i),
6.01(a)(ii), 6.01(a)(vi), 6.01(a)(vii), 6.01(a)(ix), 6.01(a)(xi), 6.01(a)(xii),
6.01(a)(xiii) (solely to the extent relating to actions described in Section
6.01(a)(i), 6.01(a)(ii), 6.01(a)(vi), 6.01(a)(vii), 6.01(a)(ix), 6.01(a)(xi) or
6.01(a)(xii)), 7.04, 7.05 and 7.09, (C) its obligations required to be performed
by it under covenants in this Agreement qualified by a reference to materiality
or a Transaction Material Adverse Effect (without regard to such reference),
other than such failures to perform that, individually or in the aggregate, do
not have a Transaction Material Adverse Effect, and (D) all other obligations
under this Agreement, other than such failures to perform that, individually or
in the aggregate, do not have a Transaction Material Adverse Effect and (ii)
Parent shall have received a certificate signed by the chief executive officer
of the Company to the foregoing effect.
(c) Pre-Merger Transactions. The transactions contemplated by
Section 3.01 shall have been consummated in accordance with the terms of this
Agreement and the Restructuring Agreement in all material respects.
66
(d) Company Secured Notes. The Company shall have paid in full
the Company Secured Notes as contemplated by Section 7.14.
(e) Solvency Opinion. The Company shall have received an
opinion from Duff & ▇▇▇▇▇▇, LLC, American Appraisal Associates, Inc., Valuation
Research, Inc. or other independent solvency firm of nationally recognized
reputation reasonably acceptable to Parent in customary form and subject to
customary qualifications and assumptions addressed to the Company Board
substantially to the effect that Newco will not be Insolvent immediately after
the Effective Time and after giving effect to the Restructuring, the other
Transactions and the execution and delivery of the Commercial Agreements.
SECTION 8.03. Conditions to Obligations of the Company and
Newco. The obligations of the Company and Newco to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of Parent and Sub in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
Parent and Sub in this Agreement that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case on and as of such
earlier date) and (ii) the Company and Newco shall have received a certificate
signed by the chief executive officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent and Sub. (i) Parent
and Sub shall have performed in all material respects their obligations and
complied in all material respects with their agreements and covenants under this
Agreement and (ii) the Company and Newco shall have received a certificate
signed by the chief executive officer of Parent to the foregoing effect.
(c) Pre-Merger Transactions. The payment of the Damages
Payment and the June 30 Royalty Payment shall have
67
been made in accordance with the terms of the Ongoing Litigation Agreement.
(d) Listing of Newco Common Stock. The shares of Newco Common
Stock issuable to the Company's stockholders as contemplated by this Agreement
shall have been approved for listing on a national securities exchange, or
approved for quotation on Nasdaq, in either case subject only to official notice
of issuance.
(e) Financing. The Parent Note shall have been executed and
delivered by the parties thereto and the Company shall have received from Parent
not less than $214,000,000 minus the Cash Amount in immediately available funds.
SECTION 8.04. Frustration of Closing Conditions. Neither the
Company, on the one hand, nor Parent or Sub, on the other hand, may rely on the
failure of any condition set forth in Article VIII to be satisfied if such
failure was caused by the failure of the Company, on the one hand, or Parent or
Sub on the other hand, to use its reasonable best efforts to consummate the
Merger and the other Transactions, as required by and subject to Section 7.03.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub, the Company and
Newco;
(b) by either Parent or the Company:
(i) if the Merger does not occur on or before July 24, 2004
(the "Outside Date"), unless the failure to consummate the Merger is
the result of a material breach of this Agreement by the party seeking
to terminate this Agreement; provided, however, that the passage of
such period shall be tolled for any part thereof during which any party
shall be subject to a
68
non-final order, injunction or action preventing the Merger;
(ii) if any Law preventing the Merger shall come into
effect or if any Governmental Entity issues an order, or injunction, or
takes any other action permanently preventing the consummation of the
Merger and such order, injunction or other action shall have become
final and nonappealable, unless such order, injunction or other action
is the result of a material breach of this Agreement by the party
seeking to terminate; provided, however, that prior to seeking to
terminate, such party shall have used its reasonable best efforts to
prevent such injunction, order or other action and to appeal as
promptly as possible any such injunction, order or other action; or
(iii) if, upon a vote at the Company Stockholders Meeting
or any postponement or adjournment thereof, the Company Stockholder
Approval is not obtained;
(c) by Parent, if the Company Board or any committee thereof
(i)(A) withdraws or modifies, in a manner adverse to Parent or Sub, or (B)
proposes publicly to withdraw or modify, in a manner adverse to Parent or Sub,
in either case, its approval or recommendation of this Agreement or the Merger,
(ii) fails to recommend to the Company's stockholders that they adopt this
Agreement or (iii) approves or recommends, or proposes publicly to approve or
recommend, any Company Takeover Proposal;
(d) by the Company in accordance with Section 9.05(b),
including the notice provisions therein;
(e) by the Company, if Parent breaches or fails to perform in
any material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform, if capable of
being cured, has not been cured within 30 days after the giving of written
notice to Parent of such breach (provided that the Company may not terminate
this Agreement pursuant to this Section 9.01(e) if it is then in material breach
of any of its representations, warranties or covenants in this Agreement); or
69
(f) by the Company if it has not received the Damages Payment,
the June 30 Royalty Payment or any Covenant Payment in immediately available
funds in accordance with the terms of this Agreement and the Ongoing Litigation
Agreement.
SECTION 9.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any Liability on the part of Parent, Sub or the Company, other than
Section 3.02, Section 4.07, Section 5.05, the fourth to last sentence of Section
7.02, Section 7.06, 7.07, 7.12, this Section 9.02 and Article X, which
provisions shall survive such termination, and except for any liability that
results from the material breach by a party of any representation, warranty or
covenant set forth in this Agreement. Notwithstanding any provision in this
Agreement to the contrary, as a result of the termination of this Agreement,
neither Parent (on behalf of R Diagnostics) nor the Company shall be deemed to
have (a) made a settlement with respect to, waived, given-up, compromised,
prejudiced or qualified in any manner (i) its right to fully prosecute the New
Patent Litigation, (ii) any of its rights or interests which are the subject of
the New Patent Litigation or (iii) any claim made or to be made by either Parent
or the Company, whether for damages or otherwise, in the New Patent Litigation
or (b) made a settlement with respect to, waived, given up, compromised,
prejudiced or qualified in any manner any of its rights or interests under the
Final Judgment (as modified by the Court of Appeals Opinion) or any final
judgment entered by the United States District Court for the District of
Maryland consistent with the mandate to be returned by the United States Court
of Appeals for the Fourth Circuit in connection with the Court of Appeals
Opinion. Each of the Confidentiality Agreement and the Letter Agreement shall
survive termination of this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties at any time before or after receipt of the Company Stockholder Approval;
provided, however, that after receipt of the Company Stockholder Approval, there
shall be made no amendment that by applicable Law
70
requires further approval by the stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties. Notwithstanding
the foregoing, at any time prior to receipt of the Company Stockholder Approval,
Newco may, in its sole discretion and with, if necessary, approval of its Board
of Directors, unilaterally change the Exchange Ratio to equal the product of (a)
a number determined by Newco and (b) such ratio prior to such change.
SECTION 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 9.05. Procedure for Termination, Amendment, Extension
or Waiver. (a) A termination of this Agreement pursuant to Section 9.01, an
amendment of this Agreement pursuant to Section 9.03 or an extension or waiver
pursuant to Section 9.04 shall, in order to be effective, require in the case of
Parent, Sub, the Company or Newco, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
(b) The Company may terminate this Agreement pursuant to
Section 9.01(d) only if (i) the Company Board has received a Company Takeover
Proposal, (ii) the Company Board shall have determined in good faith that such
Company Takeover Proposal constitutes a Superior Company Proposal, (iii) the
Company has notified Parent in writing of the determination described in Section
9.05(b)(ii), the identity of the person making the Superior Company Proposal and
the material terms and conditions of the Superior Company Proposal; (iv) at
least three business days
71
following receipt by Parent of the notice referred to in Section 9.05(b)(iii),
and, taking into account any revised proposal made by Parent since receipt of
the notice referred to in Section 9.05(b)(iii), such Superior Company Proposal
remains a Superior Company Proposal and the Company Board has again made the
determinations referred to in Section 9.05(b)(ii) (although no additional time
period shall be required following such determinations, but it being understood
that any amendment to the price or any other material terms of such a Superior
Company Proposal shall require an additional notice and a new three business day
period), (v) the Company is in compliance with Section 6.02 and (vi) the Company
Board concurrently approves and recommends, and the Company concurrently enters
into, a definitive agreement providing for the implementation of such Superior
Company Proposal.
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 10.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice) of a fax
followed by delivery of such notice by overnight courier of an international
reputation:
(a) if to Parent or Sub or, after the Effective Time, the
Company, to
Roche Holding Ltd
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
72
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Newco or, prior to the Effective Time, the Company,
to
IGEN International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.03. Definitions. For purposes of the Transaction
Agreements:
An "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person. For the
avoidance of doubt, (a) none of MSD, MST, JW, JW Consulting, Hyperion Catalysis,
Wellstat Biologics, Wellstat Therapeutics, Proteinix and ICS is an affiliate of
the Company or Newco for purposes of the Transaction Agreements and (b) neither
Genentech, Inc., a Delaware corporation, nor Chugai Pharmaceutical Co., Ltd, a
Japanese company, is an
73
affiliate of Parent or Sub for purposes of the Transaction Agreements.
"Commercial Agreements" means the Covenants Not to ▇▇▇, the
Improvements License Agreement, the License Agreement, the PCR License Agreement
and the PCR Services Agreement.
"Court of Appeals Opinion" means the Opinion of the Court of
Appeals for the Fourth Circuit dated July 9, 2003, with respect to Appeal No.
02-1537 (4th Cir.).
"Covered ECL Technology" shall have the meaning given to the
term Licensed ECL Technology in the License Agreement.
"Covenants Not to ▇▇▇" means that certain agreement entered
into simultaneously with the execution and delivery of this Agreement by Newco,
MSD, MST, R Diagnostics, Parent and the Continuing Licensee Subsidiary providing
for the reciprocal covenants not to ▇▇▇ of each party thereto.
"Environmental Law" means any binding and applicable Law,
code, Judgment, injunction, Consent, or agreement issued, promulgated or entered
into by or with any Governmental Entity, relating in any way to pollution,
preservation or reclamation of natural resources, the presence, management,
Release or threat of Release of, or exposure to, Hazardous Materials or to human
health and safety.
"FHLR" means ▇. ▇▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ Ltd, a Swiss limited
liability company.
"Hazardous Material" means any chemical, material, substance,
waste, pollutant or contaminant that is prohibited or regulated by or pursuant
to any Environmental Law, including petroleum products and byproducts, asbestos,
urea formaldehyde foam insulation, asbestos or asbestos-containing materials,
medical or infectious wastes, polychlorinated biphenyls, radon gas,
chlorofluorocarbons and all other ozone-depleting substances.
74
"Improvements License Agreement" means that certain agreement
entered into simultaneously with the execution and delivery of this Agreement by
the Company and R Diagnostics providing for the license of certain intellectual
property improvements.
"Insolvent" with respect to any person means, on the date of
determination, (a) the fair value of the assets of such person, at a fair
valuation, will not exceed its liabilities, subordinated, contingent or
otherwise, (b) the present fair saleable value of the property of such person
will not exceed the amount that will be required to pay the probable liability
of its debts and other liabilities, subordinated, contingent, or otherwise, as
such liabilities become absolute and matured, or (c) such person will be unable
to pay its liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured. Any determination as to the Insolvency
of any person shall be made in a manner consistent with and assuming the
Intended Treatment.
"Intellectual Property Rights" means (a) trademarks, service
marks, brand names, certification marks, trade dress, assumed names, trade names
and other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, (b) patents, applications for patents (including
divisions, continuations, continuations in part and renewal applications), (c)
non-public information, trade secrets and confidential information and rights in
any jurisdiction to limit the use or disclosure thereof by any person, and (d)
copyrighted works and registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof.
"JW" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, an individual whose business
address is MSD, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"JW Consulting" means JW Consulting Services, L.L.C., a
Delaware limited liability company.
"Liabilities" means any and all debts, liabilities,
commitments and obligations, whether fixed,
75
contingent or absolute, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, known or unknown, whenever or however arising and
whether or not the same would be required by GAAP to be reflected in financial
statements or disclosed in the notes thereto.
"Licensed Intellectual Property Rights" means all Intellectual
Property Rights owned by a third party and licensed or sublicensed to either the
Company or any Company Subsidiary.
"License Litigation" means Civil Action PJM-97-3461 (D. Md.)
and Appeal No. 02-1537 (4th Cir.).
"Limited Mutual Release and Agreement" means the Release and
Agreement dated as of the date of this Agreement, among the Company, Newco,
Hyperion, Wellstat Biologics, Wellstat Therapeutics, Proteinix and ICS.
"MSD" means Meso Scale Diagnostics, LLC., a Delaware limited
liability company.
"MSD Agreements" means the agreements set forth on Schedule A
to this Agreement.
"MSD Consent" means the Global Consent and Agreement dated as
of the date of this Agreement, among Parent, the Company, Newco, MSD, MST, JW
and JW Consulting.
"MST" means Meso Scale Technologies, LLC., a Delaware limited
liability company.
"Newco Rights" mean the rights issued pursuant to a
shareholder rights agreement as contemplated by Section 2.02 of the
Restructuring Agreement.
"New Patent Litigation" means Civil Action Case No. PJM
03CV2000 pending as of the date of this Agreement before the United States
District Court for the District of Maryland and any related actions (other than
the License Litigation) and the Civil Action, Case No. LG Dusseldorf 4b O
258/03, in the regional court of Dusseldorf, Germany, filed on July 9, 2003, and
any related actions (other than the License Litigation).
76
"1992 License Agreement" means the License and Technology
Development Agreement dated as of September 23, 1992, between the Company and R
Diagnostics.
"Owned Intellectual Property Rights" means all Intellectual
Property Rights owned or jointly owned by either the Company or any Company
Subsidiary.
A "Parent Material Adverse Effect" means a material adverse
effect on the business or assets of Parent and its subsidiaries, taken as a
whole, other than facts, events, changes, effects and developments relating to
the economy in general or to Parent's industry in general and not specifically
relating to Parent or any of its subsidiaries.
"PCR License Agreement" means the License Agreement (Human
IVD, Veterinary IVD, HLA Typing, Paternity, DNA Manufacturing and Plasma
Testing) dated as of the date of this Agreement, among Newco, R Diagnostics,
FHLR and RMS (as defined in this Section 10.03).
"PCR Services Agreement" means the License Agreement (Human
IVD Services and Animal Diagnostic Services) dated as of the date of this
Agreement, among Newco, R Diagnostics, FHLR and RMS.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any facility, building
or structure.
"RMS" means Roche Molecular Systems, Inc., a Delaware
corporation.
"R Parties" means R Corp, Parent, Sub, R Diagnostics, FHLR and
RMS.
77
"Senior Secured Notes Purchase Agreement" means the Note
Purchase Agreement, dated as of March 22, 1999, among the Company and the
purchasers party thereto.
A "subsidiary" of any person means another person, an amount
of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person. For the avoidance of doubt, neither Genentech, Inc., a
Delaware corporation, nor Chugai Pharmaceutical Co., Ltd., a Japanese company,
is a subsidiary of Parent or Sub for purposes of the Transaction Agreements.
"Transaction Agreements" means this Agreement, the
Restructuring Agreement, the Post-Closing Covenants Agreement, the Tax
Allocation Agreement, the Limited Mutual Release and Agreement, the Ongoing
Litigation Agreement and the MSD Consent.
A "Transaction Material Adverse Effect" means any change,
effect, occurrence, condition, development or state of facts that (a) renders
the Company Insolvent immediately prior to the Effective Time or (b) after
giving effect to and assuming the consummation of the Restructuring and the
other Transactions, (i) results in or would reasonably be expected to result in
a loss (in whole or in part or for any period of time other than any such loss
that arises out of or results from any action by, or failure to act on the part
of, R Diagnostics or any of its affiliates) (A) by the Company (through the
Continuing Licensee Subsidiary) of its ownership of, rights to and under and
license under the License Agreement or (B) by Newco of, or a failure by Newco to
obtain or retain, its ownership of, rights to and license of the Intellectual
Property Rights that comprise the Covered ECL Technology, in the case of each of
clauses (i)(A) and (i)(B) that materially impairs the legal right of R
Diagnostics and its affiliates, taken as a whole, to make, have made, use, sell,
place or otherwise commercialize products using Covered ECL Technology as
contemplated by the License Agreement or (ii) renders Newco Insolvent at the
Effective Time; provided, however, that no change, effect, occurrence, condition
or development or
78
state of facts (x) arising out of, related to, or in connection with, the
License Litigation or the New Patent Litigation or (y) principally attributable
to the economy in general or Newco's industry in general shall constitute a
Transaction Material Adverse Effect.
SECTION 10.04. Interpretation. When a reference is made in
this Agreement to a Section, Exhibit, Schedule or party, such reference shall be
to a Section of, or an Exhibit, Schedule or party to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein",
"hereby" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The words "date hereof" shall refer to the date of this
Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to
the extent" shall mean the degree to which a subject or other thing extends, and
such phrase shall not mean simply "if". The words "in the ordinary course
consistent with past practice" and words of similar import when used in this
Agreement with respect to Newco or any of its subsidiaries shall be interpreted
to mean in the ordinary course consistent with past practice of the Company and
the Company Subsidiaries. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. For the
avoidance of doubt, all lower case words used in this Agreement shall be
interpreted in accordance with Delaware Law unless such lower case word is
otherwise defined in this Agreement. Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement or instrument as from time to time amended, modified or
supplemented. References to a person are also to its permitted successors and
assigns.
SECTION 10.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
applicable Law, or
79
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 10.06. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Each party
need not sign the same counterpart.
SECTION 10.07. Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Company Disclosure Letter (a) taken together with the
other Transaction Agreements, the Commercial Agreements, the Confidentiality
Agreement and the Letter Agreement, constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the Transactions and the transactions contemplated
by the Commercial Agreements; provided, however, that as of and after the
Effective Time, the Confidentiality Agreement shall have no further force and
effect and shall be superseded by Section 3.07 of the Post-Closing Covenants
Agreement and (b) except for the provisions of Article II, Section 7.04 and
Section 7.05, is not intended to confer upon any person other than the parties
any rights or remedies.
SECTION 10.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 10.09. Assignment. Neither this Agreement nor any of
the rights, interests or obligations
80
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written consent of the
other parties. Any purported assignment without such consent shall be void;
provided, however, the parties acknowledge and agree that the conversion of
Newco in accordance with Section 2.01 of the Restructuring Agreement and the
continuation of Newco as a result thereof shall be deemed not to be an
assignment and shall not require any consent of any party. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 10.10. Enforcement; Consent to Service of Process. (a)
The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Delaware state court or any Federal court of the United States
of America sitting in the State of Delaware, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit itself to the personal jurisdiction of any
Delaware state court or any Federal court of the United States sitting in the
State of Delaware in the event any dispute arises out of this Agreement or any
Transaction, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than in any Delaware state court or any Federal
court of the United States of America sitting in the State of Delaware and (iv)
waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any Transaction.
(b) Parent hereby appoints Roche Holdings, Inc., with offices
on the date of this Agreement at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as its authorized agent (the "Authorized Agent"), upon whom
81
process may be served in any suit, action or proceeding arising out of or
relating to this Agreement or any Transaction that may be instituted in any
court described in Section 10.10(a). Parent agrees to take any and all
reasonable action, including the filing of any and all documents, that may be
necessary to establish and continue such appointment in full force and effect as
aforesaid. Parent agrees that service of process upon the Authorized Agent shall
be, in every respect, effective service of process upon Parent.
82
IN WITNESS WHEREOF, Parent, Sub, the Company and Newco have
duly executed and delivered this Agreement, all as of the date first written
above.
ROCHE HOLDING LTD,
By /s/ D. ▇▇▇▇▇ ▇. ▇▇▇▇▇
_________________________
Name: D. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and
Chairman
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial
Officer
66 ACQUISITION CORPORATION II,
By /s/ ▇. ▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
IGEN INTERNATIONAL, INC.,
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
IGEN INTEGRATED HEALTHCARE,
LLC,
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Operating Officer
SCHEDULE A
MSD AGREEMENTS
MSD Consent
Consent by MSD and MST to the License Agreement in the form attached to the
License Agreement
Covenants Not to ▇▇▇
Joinder of MSD and MST to the Ongoing Litigation Agreement in the form set forth
in the Ongoing Litigation Agreement
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
OR ANY OTHER APPLICABLE SECURITIES LAWS AND,
ACCORDINGLY, MAY NOT BE SOLD OR TRANSFERRED
UNDER CIRCUMSTANCES THAT WOULD RESULT IN A
VIOLATION OF THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR OTHER APPLICABLE LAWS
DEMAND NOTE
Dated:__________________, 200__
FOR VALUE RECEIVED, the undersigned, IGEN INTERNATIONAL, INC., a Delaware
corporation, (the "Borrower"), hereby promises to pay to the order of ROCHE
HOLDING LTD, a joint stock company organized under the laws of Switzerland (the
"Lender"), on demand after the Effective Time (as defined in the Merger
Agreement (as defined below)), the principal sum of US$_____________
(______________ United States Dollars) (such principal sum, together with any
accrued interest added to the principal hereof as hereinafter provided being
referred to herein as the "Principal Amount"), and to pay interest (computed on
the basis of 360-day years of twelve 30-day months) on the unpaid Principal
Amount hereof from the date hereof at the rate of ______% per annum, payable
semi-annually on December 1 and June 1 in each year (each such date, an
"Interest Payment Date"), commencing on _____________, 200_, until the Principal
Amount is paid in full and to pay on demand interest (so computed) on any
overdue principal and, to the extent permitted by applicable law, on any overdue
interest, from the due date thereof at a rate per annum equal to ______% until
the obligation with respect to the payment thereof shall be discharged. The
Borrower shall pay all amounts due hereunder on _______________ (the "Maturity
Date") to the extent that such amount was not paid prior to the Maturity Date.
Notwithstanding anything to the contrary in this Demand Note, the Lender shall
not make any demand for payment hereunder until after the Effective Time.
Payments of principal and interest shall be made in lawful money of the
United States of America at the principal office of the Lender; provided,
however, that the Borrower shall have the option, in lieu of paying accrued
interest in cash
A-1
on any Interest Payment Date, to satisfy its obligation to pay such accrued
interest by adding the amount of such accrued interest to the principal hereof
on such Interest Payment Date. Any amount so added to the principal hereof shall
thereafter accrue interest at the applicable per annum rate set forth above
until paid in full.
The parties hereto agree that (i) no loan hereunder shall be made until
immediately prior to the Effective Time (as defined in the Agreement and Plan of
Merger dated as of July 21, 2003 (the "Merger Agreement") among the Lender, a
wholly-owned subsidiary of the Lender, the Borrower and a wholly-owned
subsidiary of the Borrower), (ii) no obligation to repay such loan shall arise
until such loan is actually made and (iii) no interest shall accrue hereunder
until such loan is actually made.
The Borrower agrees that this Demand Note is and shall remain an
unsubordinated obligation of the Borrower that ranks pari passu with all other
senior unsecured indebtedness of the Borrower.
The Borrower agrees that the account of the Lender shall be prima facie
evidence of the amounts loaned by the Lender to the undersigned and the amounts
repaid by the undersigned to the Lender. The date and amount of the initial
Principal Amount, the date and amount of each addition to the Principal Amount,
and the date and amount of each prepayment of the Principal Amount, may be
endorsed by the Lender on the schedule attached hereto which is part of this
Demand Note. The obligations of the Borrower under this Demand Note shall be
absolute and the Borrower hereby irrevocably waives any right (whether arising
by operation of law or otherwise) to any setoff, counterclaim or reduction of
its obligations with respect to any amounts payable under this Demand Note based
on any claims that the Borrower has against the Lender, its affiliates or any
other person.
Any outstanding amounts hereunder may be paid in full or in part without
prior notice at any time.
The Borrower hereby waives presentment for payment, demands, notice of
dishonor and protest of this Demand Note and further agrees that none of its
terms or provisions may be waived, altered, modified or amended except as the
Lender may consent in a writing duly signed for and on its behalf. No failure or
delay on the part of the Lender in exercising any of its rights, powers or
privileges hereunder shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
A-2
This Demand Note is binding upon the Borrower and its successors and
assigns and is for the benefit of the Lender and its successors and assigns,
except that the Borrower may not assign or otherwise transfer its rights or
obligations under this Demand Note.
THIS DEMAND NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
IGEN INTERNATIONAL, INC.
By:
-------------------------------
Name:
Title:
A-3
ADVANCES AND PAYMENTS OF PRINCIPAL
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Amount of
Initial Additions to Principal Unpaid Notation
Date Principal Principal Amount Principal Made
Amount Amount Prepaid Amount By
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A-4