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AGREEMENT AND PLAN OF MERGER
Dated as of August 23, 1997,
Among
The ▇▇▇▇▇▇-▇▇▇▇▇ Corporation
Seven Acquisition Corp.
And
PerSeptive Biosystems, Inc.
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TABLE OF CONTENTS
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Page
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ARTICLE I
The Merger.................................. 2
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SECTION 1.01. The Merger.................................................... 2
SECTION 1.02. Closing....................................................... 2
SECTION 1.03. Effective Time of the Merger.................................. 2
SECTION 1.04. Effects of the Merger......................................... 2
SECTION 1.05. Certificate of Incorporation; By-Laws; Purposes............... 2
SECTION 1.06. Directors..................................................... 3
SECTION 1.07. Officers...................................................... 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations.......................... 3
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SECTION 2.01. Effect on Capital Stock....................................... 3
SECTION 2.02. Exchange of Certificates...................................... 4
SECTION 2.03. Treatment of Options..................................... 6
SECTION 2.04. Treatment of Debt Securities, Convertible Notes and
Warrants................................................. 7
ARTICLE III
Representations and Warranties....................... 8
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SECTION 3.01. Representations and Warranties of the Company................. 8
SECTION 3.02. Representations and Warranties of Parent and Sub.............. 22
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ARTICLE IV
Covenants Relating to Conduct of Business Prior to Merger......... 27
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SECTION 4.01. Conduct of Business........................................... 27
ARTICLE V
Additional Agreements........................... 31
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SECTION 5.01. Preparation of Form S-4 and Proxy Statement;
Stockholder Meeting........................................... 31
SECTION 5.02. Access to Information; Confidentiality........................ 32
SECTION 5.03. Reasonable Best Efforts....................................... 32
SECTION 5.04. Indemnification............................................... 33
SECTION 5.05. Public Announcements.......................................... 34
SECTION 5.06. Affiliates.................................................... 34
SECTION 5.07. No Solicitation............................................... 35
SECTION 5.08. Benefit Matters............................................... 36
SECTION 5.09. Stock Exchange Listing........................................ 36
SECTION 5.10. Letters of the Company's Accountants.......................... 36
SECTION 5.11. Letters of Parent's Accountants............................... 36
ARTICLE VI
Conditions Precedent............................ 37
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SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger........................................................ 37
SECTION 6.02. Conditions to Obligations of Parent and Sub................... 38
SECTION 6.03. Conditions to Obligation of the Company....................... 39
ARTICLE VII
Termination, Amendment and Waiver..................... 40
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SECTION 7.01. Termination................................................... 40
SECTION 7.02. Effect of Termination......................................... 41
SECTION 7.03. Amendment..................................................... 41
SECTION 7.04. Extension; Waiver............................................. 41
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver...................................................................... 41
ARTICLE VIII
General Provisions............................. 41
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SECTION 8.01. Nonsurvival of Representations and Warranties................. 41
SECTION 8.02. Fees and Expenses............................................. 41
SECTION 8.03. Notices....................................................... 42
SECTION 8.04. Definitions................................................... 43
SECTION 8.05. Interpretation................................................ 45
SECTION 8.06. Counterparts.................................................. 46
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries................ 46
SECTION 8.08. Governing Law................................................. 46
SECTION 8.09. Assignment.................................................... 46
SECTION 8.10. Enforcement................................................... 46
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
EXHIBITS
Exhibit A Stock Option Agreement
Exhibit B-1 Form of Company Affiliate Letter
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Exhibit B-2 Form of Parent Affiliate Letter
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AGREEMENT AND PLAN OF MERGER, dated as of August 23, 1997, among The
▇▇▇▇▇▇-▇▇▇▇▇ Corporation, a New York Corporation ("Parent"), Seven Acquisition
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Corp., a Delaware corporation and a direct wholly owned subsidiary of Parent
("Sub"), and PerSeptive Biosystems, Inc., a Delaware corporation (the
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"Company").
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WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have determined that the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
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Agreement, would be fair and in the best interests of their respective
stockholders;
WHEREAS, such Boards of Directors have approved the Merger, pursuant
to which each share of common stock, par value $.01 per share, of the Company
(the "Company Common Stock", which term also refers to and includes, unless the
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context otherwise requires, the associated Rights (as defined in Section 8.04))
issued and outstanding immediately prior to the Effective Time of the Merger (as
defined in Section 1.03), other than shares owned, directly or indirectly, by
the Company or any subsidiary (as defined in Section 8.04) of the Company or by
Parent, Sub or any subsidiary of Parent, will be converted into the right to
receive the Merger Consideration (as defined in Section 2.01(c));
WHEREAS, the Merger and this Agreement require the vote of the holders
of a majority of the outstanding shares of the Company Common Stock for the
approval thereof (the "Company Stockholder Approval");
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WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition of and inducement to Parent's willingness to enter
into this Agreement, Parent and the Company are entering into a stock option
agreement, dated as of the date hereof, in the Form of Exhibit A hereto (the
"Stock Option Agreement"), pursuant to which the Company is granting Parent an
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option to purchase shares of Company Common Stock;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
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WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and the Stock Option
Agreement, the parties agree as follows:
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ARTICLE I
The Merger
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SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
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Company at the Effective Time of the Merger. Upon the Effective Time of the
Merger, the separate existence of Sub shall cease, and the Company shall
continue as the surviving corporation.
SECTION 1.02. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.01, and subject to the satisfaction or waiver of the
conditions set forth in Article VI, the closing of the Merger (the "Closing")
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will take place at 10:00 a.m. on the second business day after satisfaction of
the conditions set forth in Section 6.01 (or as soon as practicable thereafter
following satisfaction or waiver of the conditions set forth in Sections 6.02
and 6.03) (the "Closing Date"), at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
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▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or
place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time of the Merger. Upon the Closing, the
parties shall file with the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
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the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware, or at such other time as is permissible in accordance
with the DGCL and as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger").
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SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the DGCL. As used herein,
"Surviving Corporation" shall mean and refer to the Company, at and after the
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Effective Time of the Merger, as the surviving corporation in the Merger.
SECTION 1.05. Certificate of Incorporation; By-Laws; Purposes. (a)
At the Effective Time of the Merger, and without any further action on the part
of the Company or Sub, the certificate of incorporation of Sub as in effect at
the Effective Time of the Merger, shall be the certificate of incorporation of
the Surviving Corporation until thereafter amended as provided therein or by
applicable law.
(b) At the Effective Time of the Merger, and without any further
action on the part of the Company or Sub, the By-laws of Sub as in effect at the
Effective Time of the Merger shall be the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
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SECTION 1.06. Directors. The directors of Sub at the Effective Time
of the Merger 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 the Company at the Effective
Time of the Merger 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 of the Merger on the Capital Stock of the
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Constituent Corporations
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SECTION 2.01. Effect on Capital Stock. As of the Effective Time of
the Merger, by virtue of the Merger and without any action on the part of the
Company, Sub or any holder of any shares of Company Common Stock or any shares
of capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock of Sub issued
and outstanding immediately prior to the Effective Time of the Merger shall be
converted into one share of the common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Company Common
Stock. Each share of Company Common Stock and each share of preferred stock,
par value $.01 per share, of the Company ("Company Preferred Stock") that is
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owned by the Company or by any subsidiary of the Company, and each share of
Company Common Stock and Company Preferred Stock that is owned by Parent, Sub or
any other subsidiary of Parent shall automatically be cancelled and retired and
shall cease to exist, and no cash, Parent Common Stock (as defined in Section
2.01(c)) or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.02(e)
each issued and outstanding share of Company Common Stock (other than shares
cancelled pursuant to Section 2.01(b)) shall be converted into a fraction equal
to the Exchange Ratio (as defined in Section 8.04) of a share of Common Stock,
par value $1.00 per share, of Parent (the "Parent Common Stock") (the amount of
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Parent Common Stock into which each such share of Company Common Stock is
converted being referred to herein as the "Merger Consideration").
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(d) Conversion of Series A Preferred Stock. Immediately prior to the
Effective Time of the Merger, pursuant to Section 3(b) of the Certificate of
Designations with respect to the Series A Redeemable Convertible Preferred
Stock, $.01 par value per share, of the Company (the "Series A Preferred
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Stock"), each issued and outstanding share of Series A Preferred Stock shall be
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converted into that number of shares of Company Common Stock determined by
dividing $10,000 by the average Closing Price (as defined in Section 7 of such
Certificate of Designations) of such Company Common Stock for each of the ten
trading days ending on the
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fifth business day immediately prior to the Effective Time of the Merger, and
pursuant to Section 2.01(c) hereof, each such share of Company Common Stock
issued upon such conversion shall be converted in the Merger into the Merger
Consideration (and cash in lieu of fractional shares of Parent Common Stock).
(e) Cancellation and Retirement of Company Common Stock. As of the
Effective Time of the Merger, all shares of Company Common Stock (including
shares of Company Common Stock issued upon conversion of the Series A Preferred
Stock) issued and outstanding immediately prior to the Effective Time of the
Merger shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Common Stock or any such shares of Series A Preferred
Stock so converted (collectively, the "Certificates") shall, to the extent such
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Certificate represents such shares, cease to have any rights with respect
thereto, except the right to receive the Merger Consideration (and cash in lieu
of fractional shares of Parent Common Stock) to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.02.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of
or as soon as reasonably practicable after the Effective Time of the Merger,
Parent shall enter into an agreement with such bank or trust company as may be
designated by Parent (the "Exchange Agent") which shall provide that Parent
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shall deposit with the Exchange Agent, for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Parent Common Stock (such shares of Parent Common
Stock, together with any dividends or distributions with respect thereto with a
record date after the Effective Time of the Merger, and any cash payable in lieu
of any fractional shares of Parent Common Stock being hereinafter referred to as
the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
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outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder of
record of Certificates immediately prior to the Effective Time of the Merger
whose shares were converted into shares of Parent Common Stock pursuant to
Section 2.01, (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 which shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article II (after taking into account all shares of Company Common Stock
(including Company Common Stock issued upon conversion of Series A Preferred
Stock) then held by such holder), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of shares of
Company Common Stock or Series A Preferred Stock which is not registered in the
transfer records of the Company, a
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certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02 each Certificate shall be
deemed at any time after the Effective Time of the Merger to represent only the
Parent Common Stock into which the shares of Company Common Stock (including
Company Common Stock issued upon conversion of Series A Preferred Stock)
represented by such Certificate have been converted as provided in this Article
II and the right to receive upon such surrender cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, 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 the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Parent 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
Parent Common Stock to which such holder is entitled pursuant to Section 2.02(e)
and the amount of any dividends or other distributions with a record date after
the Effective Time of the Merger theretofore paid (but withheld pursuant to the
immediately preceding sentence) with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of any
dividends or other distributions with a record date after the Effective Time of
the Merger but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock or Series A
Preferred Stock. All shares of Parent Common Stock issued upon conversion of
shares of Company Common Stock (including shares of Company Common Stock issued
upon conversion of Series A Preferred Stock) in accordance with the terms
hereof, and all cash paid pursuant to Sections 2.02(c) and 2.02(e), shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock (including with respect to the Rights), and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock or Series A
Preferred Stock which were outstanding prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are presented
to the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In lieu
of such issuance of fractional shares, Parent shall pay each holder of
Certificates an amount in cash equal to the product obtained by multiplying (a)
the fractional
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share interest to which such holder (after taking into account all shares of
Company Common Stock (including Company Common Stock issued upon conversion of
Series A Preferred Stock) held immediately prior to the Effective Time of the
Merger by such holder) would otherwise be entitled by (b) the average of the
closing sale prices for a share of Parent Common Stock on the New York Stock
Exchange ("NYSE") Composite Transaction Tape for the ten trading days
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immediately preceding the Effective Time of the Merger.
(ii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates with respect to any
fractional share interests, the Exchange Agent shall make available such amounts
to such holders of Certificates, subject to and in accordance with the terms of
Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
deposited with the Exchange Agent pursuant to this Section 2.02 which remains
undistributed to the holders of the Certificates for six months after the
Effective Time of the Merger shall be delivered to the Parent, upon demand, and
any holders of Certificates prior to the Merger who have not theretofore
complied with this Article II shall thereafter look only to the Parent and only
as general creditors thereof for payment of their claim for Parent Common Stock,
cash in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock to which such holders may be
entitled.
(g) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any shares of Parent Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to three years after the Effective Time of the Merger, or
immediately prior to such earlier date on which any Merger Consideration, any
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.01(d)),
any such Merger Consideration or cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
SECTION 2.03. Treatment of Options. (a) At the Effective Time of the
Merger, each outstanding option to purchase Company Common Stock (a "Company
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Stock Option") issued pursuant to the Company's 1989 Stock Plan, 1992 Non-
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Employee Director Stock Option Plan, 1992 Stock Plan and 1997 Non-Qualified
Stock Plan (collectively, the "Company Stock Plans"), whether vested or
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unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Company Stock Option (each such
Company Stock Option, other than certain Company Stock Options under the 1992
Non-Employee Director Stock Option Plan, being fully vested and exercisable as
of the Effective
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Time of the Merger, in accordance with its terms), the same number of shares of
Parent Common Stock as the holder of such Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time of the Merger, at a price per
share equal to (y) the aggregate exercise price for the shares of Company Common
Stock otherwise purchasable pursuant to such Company Stock Option divided by (z)
the number of full shares of Parent Common Stock deemed purchasable pursuant to
such Company Stock Option; provided, however, that in the case of any option to
which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code ("incentive stock options"), the option price, the
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number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time of the Merger,
Parent shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the Company Stock Plans and the
agreements evidencing the grants of such Company Stock Options shall continue in
effect on the same terms and conditions (subject to adjustments required by this
Section 2.03 after giving effect to the Merger and the provisions set forth
above and until otherwise determined). If necessary, Parent shall comply with
the terms of the Company Stock Plans and ensure, to the extent required by, and
subject to the provisions of, the Company Stock Plans, that Company Stock
Options that qualified as incentive stock options prior to the Effective Time of
the Merger continue to qualify as incentive stock options after the Effective
Time of the Merger.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Company Stock Options. As soon as practicable after the Effective
Time of the Merger, Parent shall file a registration statement on Form S-3 or
Form S-8, as the case may be (or any successor or other appropriate forms), or
another appropriate form, with respect to the shares of Parent Common Stock
subject to such options and shall use its reasonable best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), where applicable, Parent shall administer the
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Company Stock Plan in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act to the extent the Company Stock Plans complied with such rule
prior to the Merger.
SECTION 2.04. Treatment of Debt Securities, Convertible Notes and
Warrants. (a) All debt securities of the Company which are outstanding as of
the Effective Time of the Merger shall remain outstanding after the Effective
Time of the Merger in accordance with their respective terms and provisions.
Pursuant to Section 4.12 of the Indenture, dated as of August 26, 1994 (the
"Convertible Notes Indenture"), between the Company and State Street Bank and
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Trust Company, as trustee, relating to the Company's 8-1/4% Convertible
Subordinated Notes (the "Convertible Notes"), prior to the Effective Time of the
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Merger, the Company and Parent shall enter into a supplemental indenture
providing that each holder of Convertible Notes
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outstanding at the Effective Time of the Merger shall have the right to convert
such Convertible Notes into the number of shares of Parent Common Stock which
would be receivable at the Effective Time of the Merger by a holder of the
number of shares of Company Common Stock deliverable upon conversion of such
Convertible Notes immediately prior to the Effective Time of the Merger, and
subject to future adjustments of the conversion price of the Convertible Notes
as provided for in Article IV of the Convertible Notes Indenture.
(b) At the Effective Time of the Merger, each Warrant (as defined in
Section 3.01(c)) which is outstanding and unexercised immediately prior thereto
shall, pursuant to the terms of such Warrant, cease to represent a right to
acquire shares of Company Common Stock and shall be converted automatically into
a warrant to purchase such number of shares of Parent Common Stock as the holder
of such Warrant would have been entitled to receive pursuant to the Merger had
such holder exercised such warrant in full immediately prior to the Effective
Time of the Merger, at a price per share equal to (y) the aggregate exercise
price for the shares of Company Common Stock otherwise purchasable pursuant to
such Warrant divided by (z) the number of full shares of Parent Common Stock
deemed purchasable pursuant to such Warrant, and subject to future adjustments
in accordance with the terms of such Warrant. Notwithstanding the foregoing, in
the case of the Class F Warrants, Parent shall issue a new warrant certificate
in exchange for the old warrant certificate.
(c) As soon as practicable after the Effective Time of the Merger,
Parent shall deliver to the holders of Convertible Notes and Warrants
appropriate notices setting forth such holders' rights pursuant to the
Convertible Notes Indenture and the applicable warrant agreements with respect
thereto to the extent required by the terms of the Convertible Notes Indenture
and the warrant agreements with respect thereto.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
conversion of the Convertible Notes and exercise of the Warrants. As soon as
practicable after the Effective Time of the Merger, Parent shall file a
registration statement or registration statements on Form S-3 (or any successor
or other appropriate form), with respect to the shares of Parent Common Stock
issuable upon exercise of the Warrants and shall use its reasonable best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as the Warrants remain outstanding.
ARTICLE III
Representations and Warranties
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SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
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(a) Organization, Standing and Corporate Power. Each of the Company
and each of its Subsidiaries (as defined in Section 3.01(b)) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and each of
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction (domestic or foreign) in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) could not reasonably
be expected to have a Material Adverse Effect (as defined in Section 8.04) with
respect to the Company. Attached as Section 3.01(a) of the disclosure schedule
delivered by the Company to Parent and Sub at the time of execution of this
Agreement (the "Company Disclosure Schedule") are complete and correct copies of
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the Company's Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and the Company's Amended and Restated By-laws,
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as amended (the "By-Laws"), as currently in effect. The Company has made
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available to Parent and Sub complete and correct copies of the certificates of
incorporation and by-laws (or other organizational documents) of each of its
Subsidiaries, in each case as amended to the date of this Agreement.
(b) Subsidiaries. The only direct or indirect subsidiaries (as
defined in Section 8.04) of the Company (other than any subsidiary of the
Company that does not constitute a "Significant Subsidiary" within the meaning
of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC")) are those listed in Section 3.01(b) of the Company Disclosure Schedule
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(the "Subsidiaries"). All of the outstanding shares of capital stock of each
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subsidiary of the Company have been validly issued and are fully paid and
nonassessable and, except as disclosed in Section 3.01(b) of the Company
Disclosure Schedule, are owned (of record and beneficially) by the Company, by
another wholly owned subsidiary of the Company or by the Company and another
such wholly owned subsidiary, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the ownership interests set forth in
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Section 3.01(b) of the Company Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, business association, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock, par value $.01 per
share, and 1,000,000 shares of Company Preferred Stock, par value $.01 per
share. As of the close of business on August 18, 1997, there were: (i)
22,504,061 shares of Company Common Stock issued and outstanding (after giving
effect to the issuance of the 1,019,108 shares issued on August 22, 1997 in
connection with the redemption on August 22, 1997 of 1,000 shares of Series A
Preferred Stock on August 22, 1997); (ii) 28,774 shares of Company Common Stock
held in the treasury of the Company; (iii) 123,690 shares of Company Common
Stock reserved for issuance upon exercise of Company Stock Options available for
grant pursuant to the Company Stock Plans (adjusted for 28,800 Company Stock
Options granted and an increase in the number of shares reserved for issuance
under the 1997 Non-Qualified Stock Option Plan by 300,000 on August 21, 1997),
and no shares of Company Common Stock reserved for issuance pursuant to the
Company Stock
10
Plans (other than upon exercise of Company Stock Options); (iv) 4,921,214 shares
of Company Common Stock issuable upon exercise of awarded but unexercised
Company Stock Options, with an exercise price per each awarded but unexercised
Company Stock Option as is set forth in Section 3.01(c)(iv) of the Company
Disclosure Schedule (after giving effect to the grant of 28,800 Company Stock
Options granted on August 21, 1997); (v) 59,039 shares of Company Common Stock
reserved for issuance pursuant to the Company's 1992 Employee Stock Purchase
Plan (the "Stock Purchase Plan"); (vi) 941,107 shares of Company Common Stock
-------------------
issuable upon exercise of currently outstanding warrants to purchase Company
Common Stock, as more particularly described in Section 3.01(c)(vi) of the
Company Disclosure Schedule (the "Warrants") and with an exercise price for each
--------
such Warrant as is set forth in such Section of the Company Disclosure Schedule;
(vii) 1,973,183 shares of Company Common Stock issuable upon conversion of the
Convertible Notes; (viii) 1,000 shares of Series A Preferred Stock issued and
outstanding (after giving effedt to the redemption of 1,000 shares of Series A
Preferred Stock on August 22, 1997); (ix) no shares of Series B Junior
Participating Preferred Stock, par value $.01 per share, of the Company (the
"Series B Preferred Stock") issued and outstanding; (x) 400,000 of Series B
------------------------
Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated as
of March 1, 1995 (as amended, the "Rights Agreement"), and (xi) no shares of
----------------
Company Preferred Stock in the treasury of the Company. Except as set forth
above, and except for shares of Company Common Stock issuable pursuant to the
Rights Agreement between the Company and American Stock Transfer and Trust
Company, as of the close of business on August 18, 1997 there were no shares of
capital stock or other equity securities of the Company issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans and
the Warrants will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. All securities issued by
the Company were issued in compliance in all material respects with all
applicable federal and state securities laws and all applicable rules and
regulations promulgated thereunder. Except for $27,230,000 principal amount of
Convertible Notes, there are no outstanding bonds, debentures, notes or other
indebtedness or debt securities 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 stockholders of the Company may vote (collectively, "Voting
------
Debt"). Except as set forth above and except pursuant to the Stock Option
----
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party or by which any of them
is bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Other than the Stock Option
Agreement and except as disclosed in Section 3.01(c) of the Company Disclosure
Schedule, (i) there are no outstanding contractual obligations, commitments,
understandings or arrangements of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of the Company or any of its subsidiaries and (ii) to
the knowledge of the Company, there are no irrevocable proxies with respect to
shares of capital stock of the Company or any subsidiary of the Company. Except
as set forth in Section 3.01(c) of the Company Disclosure Schedule, there
11
are no agreements or arrangements pursuant to which the Company is or could be
required to register shares of Company Common Stock or other securities under
the Securities Act of 1933, as amended (the "Securities Act"), or other
--------------
agreements or arrangements with or, to the knowledge of the Company, among any
securityholders of the Company with respect to securities of the Company.
Since August 18, 1997, the Company has not (A) issued or permitted to
be issued any shares of capital stock, or securities exercisable for or
convertible into shares of capital stock, of the Company or any of its
subsidiaries, other than (1) pursuant to the Stock Option Agreement, (2) the
grant of any employee stock options prior to the date of this Agreement pursuant
to the Company Stock Plans, (3) the issuance of Company Common Stock upon
exercise of the options granted pursuant to the Company Stock Plans prior to the
date of this Agreement and (4) upon conversion or exercise of Convertible Notes,
Warrants or Series A Preferred Stock outstanding on the date of this Agreement;
(B) repurchased, redeemed or otherwise acquired, directly or indirectly through
one or more subsidiaries, any shares of capital stock of the Company or any of
its subsidiaries or (C) declared, set aside, made or paid to the stockholders of
the Company dividends or other distributions on the outstanding shares of
capital stock of the Company.
The Company has terminated its Stock Purchase Plan effective as of the
date of this Agreement pursuant to Article 15 thereof; provided, however, that
such termination shall not affect the options issued prior to the date of this
Agreement with respect to the Payment Period (as defined therein) ending
November 30, 1997.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreement and, subject to the Company Stockholder Approval in the case of this
Agreement, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of this Agreement, to the
Company Stockholder Approval. This Agreement and the Stock Option Agreement
have been duly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Parent and Sub) constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing. Except as set forth in Section 3.01(d) of the
Company Disclosure Schedule, the execution and delivery of this Agreement and
the Stock Option Agreement do not, and the consummation by the Company of the
transactions contemplated by this Agreement and the Stock Option Agreement and
compliance by the Company with the provisions hereof and thereof will not,
conflict with, or result in any breach or violation of, or any default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of, or a "put" right with respect to
any obligation under, or to a 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
of its
12
subsidiaries under, (i) the Certificate of Incorporation or By-laws or the
comparable charter or organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, note purchase agreement, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect with respect to the Company or prevent or materially
delay the ability of the Company to consummate the transactions contemplated by
this Agreement or to perform its obligations under the Stock Option Agreement.
No consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
-------------------
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement and the Stock Option Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby and thereby
or the performance by the Company of its obligations hereunder or thereunder,
except for (i) the filing of a premerger notification and report form by the
Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the filing of such applications by the Company as
-------
may be required pursuant to antitrust or similar laws or regulations in effect
in Germany, France, Japan, the United Kingdom or any political subdivision
thereof, (ii) the filing with the SEC and the National Association of Securities
Dealers (the "NASD") of (A) a proxy statement relating to the Company
----
Stockholder Approval (such proxy statement as amended or supplemented from time
to time, the "Proxy Statement") and (B) such reports under the Exchange Act as
---------------
may be required in connection with this Agreement and the Stock Option Agreement
and the transactions contemplated hereby and thereby, (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 other states in which the
Company is qualified to do business, and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or notices the
failure of which to make or obtain, individually or in the aggregate, could not
reasonably be expected to (x) prevent or materially delay consummation of the
Merger or the other transactions contemplated hereby or performance of the
Company's obligations hereunder or under the Stock Option Agreement or (y) have
a Material Adverse Effect with respect to the Company.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed
with the SEC all reports, schedules, forms, statements and other documents
required pursuant to the Securities Act and the Exchange Act since October 1,
1994 (collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "SEC Documents").
-------------
As of their respective dates, the SEC Documents complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents. As of their respective dates, (i)
none of the SEC Documents (including any and all
13
financial statements included therein) filed pursuant to the Securities Act or
any rule or regulation thereunder contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading and (ii) none
of the SEC Documents (including any and all financial statements included
therein) filed pursuant to the Exchange Act or any rule or regulation thereunder
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later filed SEC Document, none of the SEC
Documents (including any and all financial statements included therein) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in all
SEC Documents filed since October 1, 1994 (the "SEC Financial Statements")
------------------------
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 generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly 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 the notes thereto). The SEC
Financial Statements 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 then
ended (subject, in the case of unaudited quarterly statements, to normal
recurring audit adjustments). Except as disclosed in Section 3.01(e) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be recognized or disclosed on a consolidated balance sheet of the Company and
its subsidiaries or in the notes thereto, except (i) liabilities reflected in
the consolidated audited balance sheet of the Company as of September 30, 1996
or the notes thereto (the "1996 Balance Sheet"), (ii) liabilities disclosed in
------------------
any SEC Document filed by the Company prior to the date of this Agreement with
respect to any period ending, or date occurring, after September 30, 1996 and
(iii) liabilities incurred since September 30, 1996 in the ordinary course of
business consistent with past practice.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "Form
----
S-4") will, at the time the Form S-4 is filed with the SEC, at any time it is
---
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting
(as defined in Section 5.01(c)), 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 the light of the circumstances under
which they are made, not misleading. The Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange
14
Act and the rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied in writing by
Parent or Sub specifically for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in
Section 3.01(g) of the Company Disclosure Schedule or in the Recent SEC
Documents (as defined in Section 8.04), since September 30, 1996, the Company
has conducted its business only in the ordinary course consistent with past
practice, and there is not and has not been: (i) since September 30, 1996, any
Material Adverse Change (as defined in Section 8.04) with respect to the
Company; (ii) since September 30, 1996, any condition, event or occurrence which
as of the date of this Agreement, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or give rise to a
Material Adverse Change with respect to the Company; (iii) since June 30, 1997,
any action which, if it had been taken or occurred after the execution of this
Agreement, would have required the consent of Parent pursuant to this Agreement;
or (iv) since September 30, 1996, any condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected to prevent or
materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.
(h) Litigation; Labor Matters; Compliance with Laws. (i) Except as
disclosed in Section 3.01(h)(i) of the Company Disclosure Schedule or in the
Recent SEC Documents, there is (1) no suit, action, arbitration or proceeding
pending, and (2) to the knowledge of the Company, no suit, action, arbitration
or proceeding threatened against or investigation pending with respect to the
Company or any of its subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect with respect to the
Company or prevent or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement or to perform its obligations
hereunder, nor is there any judgment, decree, citation, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the Company
or any of its subsidiaries which, individually or in the aggregate, has or could
reasonably be expected to have, any such effect.
(ii) Except as disclosed in Section 3.01(h)(ii) of the Company
Disclosure Schedule or in the Recent SEC Documents, (1) neither the Company nor
any of its subsidiaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization; (2) to the knowledge of the Company, neither the Company nor
any of its subsidiaries is the subject of any proceeding asserting that it or
any subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment; (3)
there is no strike, work stoppage or other similar labor dispute involving it or
any of its subsidiaries pending or, to its knowledge, threatened; (4) no
grievance is pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect with respect to
the Company; (5) to the knowledge of the Company, the Company and each
subsidiary is in compliance with all applicable laws (domestic and foreign),
agreements, contracts, and policies relating to
15
employment, employment practices, wages, hours, and terms and conditions of
employment except for failures so to comply, if any, that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect
with respect to the Company; (6) the Company has complied in all material
respects with its payment obligations to all employees of the Company and its
subsidiaries in respect of all wages, salaries, commissions, bonuses, benefits
and other compensation due and payable to such employees under any Company
policy, practice, agreement, plan, program or any statute or other law; (7) the
Company is not liable for any severance pay or other payments to any employee or
former employee arising from the termination of employment under any benefit or
severance policy, practice, agreement, plan, or program of the Company, nor to
the knowledge of the Company will the Company have any liability which exists or
arises, or may be deemed to exist or arise, under any applicable law or
otherwise, as a result of or in connection with the transactions contemplated
hereunder or as a result of the termination by the Company of any persons
employed by the Company or any of its subsidiaries on or prior to the Effective
Time of the Merger; and (8) the Company is in compliance with its obligations
pursuant to the Worker Adjustment and Retraining Notification Act of 1988
("WARN"), to the extent applicable, and all other employee notification and
----
bargaining obligations arising under any collective bargaining agreement or
statute.
(iii) The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities which
are material to the operation of the businesses of the Company and its
subsidiaries, taken as a whole (the "Company Permits"). The Company and its
---------------
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply, individually or in the aggregate, would not have
a Material Adverse Effect with respect to the Company. Except as disclosed in
Section 3.01(h)(iii) of the Company Disclosure Schedule, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law
(domestic or foreign), ordinance or regulation of any Governmental Entity,
except for possible violations which, individually or in the aggregate, do not
and could not reasonably be expected to have a Material Adverse Effect with
respect to the Company.
(i) Employee Benefit Plans. (i) Section 3.01(i) of the Company
Disclosure Schedule contains a true and complete list of each "employee benefit
plan" (within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (including, without limitation,
-----
multiemployer plans within the meaning of Section 3(37) of ERISA)), stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements relating to employment, benefits or entitlements, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, legally
binding or not under which any employee or former employee of the Company or any
of its subsidiaries has any present or future right to benefits or under which
the Company or any of its subsidiaries has any present or future liability. All
such plans, agreements, programs, policies and arrangements are herein
collectively referred to as the "Company Plans".
-------------
16
(ii) Except as set forth in Schedule 3.01(i)(ii), with respect to
each Company Plan, the Company has delivered to Parent a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description)
thereof and, to the extent applicable, (A) any related trust agreement, annuity
contract or other funding instrument; (B) the most recent determination letter;
(C) the current summary plan description and other written communications (or a
description of any oral communications) by the Company to its employees
concerning the extent of the benefits provided under a Company Plan; and (D) for
the three most recent years (I) the Form 5500 and attached schedules; (II)
audited financial statements; (III) actuarial valuation reports; and (IV)
attorney's response to an auditor's request for information.
(iii) Except as disclosed in Section 3.01(i) of the Company
Disclosure Schedule: (A) Each Company Plan has been established and
administered in material compliance with its terms and with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations
(including the applicable laws, rules and regulations of any foreign
jurisdiction), in each case, in all material respects; (B) each Company Plan
which is intended to be qualified within the meaning of Code Section 401(a) is
so qualified and has received a favorable determination letter as to its
qualification and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification; (C) with respect to any
Company Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the best knowledge of the
Company, threatened; no facts or circumstances exist which could give rise to
any such actions, suits or claims and the Company will promptly notify Parent in
writing of any pending claims or, to the knowledge of the Company, any
threatened claims arising between the date hereof and the Effective Time of the
Merger; (D) neither the Company nor, to the knowledge of the Company, any other
party has engaged in a prohibited transaction, as such term is defined under
Code Section 4975 or ERISA Section 406, which would subject the Company or
Parent or its subsidiaries to any material taxes, penalties or other liabilities
under the Code or ERISA; (E) no event has occurred and no condition exists that
would subject the Company, either directly or by reason of its affiliation with
any member of its "Controlled Group" (defined as any organization which is a
----------------
member of a controlled group of organizations within the meaning of Code
Sections 414(b), (c), (m) or (o)), to any material tax, fine or penalty imposed
by ERISA, the Code or other applicable laws, rules and regulations (including
the applicable laws, rules and regulations of any foreign jurisdiction); (F) all
insurance premiums required to be paid and all contributions required to be made
under the terms of any Company Plan, the Code, ERISA or other applicable laws,
rules and regulations (including the applicable laws, rules and regulations of
any foreign jurisdiction) as of the Effective Time of the Merger have been or
will be timely paid or made prior thereto and adequate reserves have been
provided for on the Company's balance sheet for any premiums (or portions
thereof) and for all benefits attributable to service on or prior to the
Effective Time of the Merger; (G) for each Company Plan with respect to which a
Form 5500 has been filed, no material change has occurred with respect to the
matters covered by the most recent Form since the date thereof; and (H) no
Company Plan provides for an increase in benefits on or after the Effective Time
of the Merger.
(iv) No Company Plan is subject to Title IV of ERISA, and no Company
Plan is a multiemployer plan as defined in Section 4001(A)(3) of ERISA. The
Company has never
17
contributed to or sponsored any multiemployer plan or any plan subject to Title
IV of ERISA. No Company Plan or related trust is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Code or Code Section 501(c)(9).
(v) Section 3.01(i)(v) of the Company Disclosure Schedule sets forth,
on a plan by plan basis, the present value of benefits payable presently or in
the future to present or former employees of the Company under each unfunded
Company Plan that must be accounted for in accordance with SFAS No. 87, 106 or
112.
(vi) Except as set forth in Section 3.01(i)(vi) of the Company
Disclosure Schedule, no Company Plan exists which could result in the payment to
any Company employee of any money or other property or rights or accelerate or
provide any other rights or benefits to any Company employee as a result of the
transaction contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
(j) Taxes. Except as disclosed in Section 3.01(j) of the Company
Disclosure Schedule: (i) the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group of which the Company or any
of its subsidiaries is or has been a member has timely filed all Tax Returns
required to be filed by it, or requests for extensions to file such Tax Returns
have been timely filed, granted and have not expired; (ii) the Company and each
of its subsidiaries, and any consolidated, combined, unitary or aggregate group
of which the Company or any of it subsidiaries is or has been a member has paid
all Taxes shown as due on such returns, and has provided adequate reserves in
its financial statements for any Taxes that have not been paid, whether or not
shown as being due on such Tax Returns; (iii) no material claim for unpaid Taxes
has been asserted by a Tax authority or has become a lien against the property
of the Company or any of its subsidiaries (other than with respect to Taxes not
yet due and payable) or is being asserted against the Company or any of its
subsidiaries; (iv) no audit or other proceeding with respect to any Taxes due
from or with respect to the Company or any of its subsidiaries or any Tax Return
filed by the Company or any of its subsidiaries is being conducted by any
governmental or Tax authority and the Company and its subsidiaries have not
received notification in writing that any such audit or other proceeding with
respect to Taxes or any Tax Return is pending; (v) no extension of the statute
of limitations on the assessment of any Taxes has been granted by the Company or
any of its subsidiaries; and (vi) neither the Company nor any of its
subsidiaries is subject to liability for Taxes of any Person (other than the
Company or its subsidiaries), including, without limitation, liability arising
from the application of Treasury Regulation section 1.1502-6 or any analogous
provision of state, local or foreign law, or as a transferee or successor, by
contract, or otherwise. As used herein, "Taxes" shall mean all taxes of any
-----
kind, including, without limitation, those on or measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Tax Return" shall
----------
mean any
18
return, report or statement required to be filed with any governmental authority
with respect to Taxes.
(k) Properties. Except as disclosed in Section 3.01(k) of the
Company Disclosure Schedule, the Company or one of its subsidiaries (i) has good
and marketable title to all the properties and assets (A) reflected in the 1996
Balance Sheet as being owned by the Company or one of its subsidiaries (other
than any such properties or assets sold or disposed of since such date in the
ordinary course of business consistent with past practice) or (B) acquired after
September 30, 1996 which are material to the Company's business on a
consolidated basis, free and clear of all Liens, except statutory Liens securing
payments not yet due and such Liens as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties and (ii) is the lessee of all
leasehold estates (x) reflected in the 1996 Balance Sheet or (y) acquired after
September 30, 1996 which are material to its business on a consolidated basis
(except for leases that have expired by their terms since the date thereof) and
is in possession of the properties purported to be leased thereunder, and each
such lease is in full force and effect and constitutes a legal, valid and
binding obligation of, and is legally enforceable against, the respective
parties thereto (except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing), and there is no default thereunder by the lessee or, to
the Company's knowledge, as of the date hereof, the lessor that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
with respect to the Company. The Company has not received written notice and
does not otherwise have knowledge of any pending, threatened or contemplated
condemnation proceeding affecting any premises owned or leased by the Company or
any of its subsidiaries or any part thereof or of any sale or other disposition
of any such owned or leased premises or any part thereof in lieu of
condemnation.
(l) Environmental Matters. Except as could not reasonably be
expected to result in any liability under Environmental Laws (as defined in
Section 8.04) to the Company or any of its subsidiaries which, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
with respect to the Company:
(i) the Company and its subsidiaries hold and are in compliance with
all Environmental Permits (as defined in Section 8.04), and the Company and
its subsidiaries are, and have been, otherwise in compliance with all
Environmental Laws and, to the knowledge of the Company, there are no
conditions that might prevent or interfere with such compliance in the
future;
(ii) neither the Company nor any of its subsidiaries has received any
written Environmental Claim or has knowledge of any other Environmental
Claim or threatened Environmental Claim;
(iii) neither the Company nor any of its subsidiaries has entered into
any consent decree, order or agreement under any Environmental Law;
19
(iv) there are no (A) underground storage tanks, (B) polychlorinated
biphenyls, (C) friable asbestos or asbestos-containing materials, (D)
sumps, (E) surface impoundments, (F) landfills, or (G) sewers or septic
systems present at any facility currently owned, leased, operated or
otherwise used by the Company or any of its subsidiaries that could
reasonably be expected to give rise to liability of the Company or any of
its subsidiaries under any Environmental Laws;
(v) there are no past (including, without limitation, with respect to
assets or businesses formerly owned, leased or operated by the Company or
any of its subsidiaries) or present actions, activities, events, conditions
or circumstances, including without limitation the release, threatened
release, emission, discharge, generation, treatment, storage or disposal of
Hazardous Materials, that could reasonably be expected to give rise to
liability of the Company or any of its subsidiaries under any Environmental
Laws;
(vi) no modification, revocation, reissuance, alteration, transfer, or
amendment of the Environmental Permits, or any review by, or approval of,
any third party of the Environmental Permits is required in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby or the continuation of the business of the
Company or its subsidiaries following such consummation;
(vii) Hazardous Materials (as defined in Section 8.04) have not been
generated, transported, treated, stored, disposed of, arranged to be
disposed of, released or threatened to be released at, on, from or under
any of the properties or facilities currently owned, leased or otherwise
used by the Company or any of its subsidiaries, in violation of, or so as
could result in liability under, any Environmental Laws; and
(viii) neither the Company nor any of its subsidiaries has
contractually assumed any liabilities or obligations under any
Environmental Laws.
(m) Contracts; Debt Instruments. (i) Neither the Company nor any of
its subsidiaries is, or has received any notice or has any knowledge that any
other party is, in default in any respect under any contract, agreement,
commitment, arrangement, lease, policy or other instrument to which it or any of
its subsidiaries is a party or by which it or any such subsidiary is bound,
except for those defaults which could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with respect
to the Company; and, to the knowledge of the Company, there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default.
(ii) The Company has made available to Parent (x) true and correct
copies (or accurate English translations) of all loan or credit agreements,
notes, bonds, mortgages, indentures and other agreements and instruments
pursuant to which any indebtedness (as defined in section 8.04) of the Company
or any of its subsidiaries in an aggregate principal amount in
20
excess of $200,000 is outstanding or may be incurred and (y) accurate
information regarding the respective principal amounts currently outstanding
thereunder.
(iii) Except as set forth in Section 3.01(m) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to or bound
by any agreement which, pursuant to the requirements of Form 10-K under the
Exchange Act, would be required to be filed as an exhibit to an Annual Report on
Form 10-K of the Company, except agreements included or incorporated by
reference as exhibits to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996 or any other Recent SEC Document.
(n) Brokers. Except as disclosed in Section 3.01(n) of the Company
Disclosure Schedule, no broker, investment banker, financial advisor or other
person, other than PaineWebber Incorporated ("PaineWebber"), the fees and
-----------
expenses of which will be paid by the Company (pursuant to fee agreements,
copies of which have been provided to Parent), is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company agrees to indemnify Parent and
Sub and to hold Parent and Sub harmless from and against any and all claims,
liabilities or obligations with respect to any other fee, commission or expense
asserted by any person on the basis of any act or statement alleged to have been
made by the Company or its affiliates.
(o) Opinion of Financial Advisor. The Company has received as of the
date of this Agreement the opinion of PaineWebber 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 (other than Parent and its affiliates).
(p) Board Recommendation; State Antitakeover Law. The Board of
Directors of the Company, at a meeting duly called and held, has by unanimous
vote of those directors present (i) determined that this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby, including
the Merger, taken together, are fair to and in the best interests of the
stockholders of the Company and has taken all actions necessary on the part of
the Company to render the restrictions on business combinations contained in
Section 203 of the DGCL inapplicable to this Agreement, and the Merger and the
Stock Option Agreement, and (ii) resolved to recommend that the holders of the
shares of Company Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger.
(q) Required Company Vote. The Company Stockholder Approval, being
the affirmative vote of a majority of the outstanding shares of the Company
Common Stock, is the only vote of the holders of any class or series of the
Company's securities necessary to approve this Agreement, the Merger and the
other transactions contemplated hereby. There is no vote of the holders of any
class or series of the Company's securities necessary to approve the Stock
Option Agreement.
(r) Rights Agreement. The Rights Agreement has been amended so as to
provide that neither Parent nor Sub will become an "Acquiring Person" or an
"Adverse Person" and that
21
no "Triggering Event", "Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the Rights Agreement) will occur as a result of the
approval, execution or delivery of this Agreement or the Stock Option Agreement
or the consummation of the Merger or the acquisition of shares of Company Common
Stock by Parent pursuant to the Stock Option Agreement.
(s) Intellectual Property. (i) Section 3.01(s)(i) of the Company
Disclosure Schedule sets forth all Intellectual Property (as defined in Section
8.04) owned by the Company or its subsidiaries that is registered or filed with
any Governmental Entity (the "Registered Intellectual Property"), all licenses
--------------------------------
of patented Intellectual Property to or from third parties (the "Licensed Patent
---------------
Intellectual Property") and all other licenses of Intellectual Property to or
---------------------
from third parties by the Company or any of its subsidiaries that are material
to the business of the Company and its subsidiaries (together with the
Registered Intellectual Property and the Licensed Patent Intellectual Property,
the "Material Intellectual Property").
------------------------------
(ii) The Company and its subsidiaries own or have the right to use
all Intellectual Property necessary for the Company and its subsidiaries to
conduct their business substantially as it is currently conducted and consistent
with past practice.
(iii) Except as set forth on Section 3.01(s)(iii) of the Company
Disclosure Schedule: (1) all of the Registered Intellectual Property owned or
used by the Company or any of its subsidiaries is subsisting and unexpired, has
not been abandoned and, to the knowledge of the Company, does not infringe or
otherwise impair the intellectual property rights of any third party; (2) none
of the Material Intellectual Property owned or used by the Company or any of its
subsidiaries is the subject of any license, security interest, Lien or other
agreement granting rights therein to any third party other than licenses listed
on Schedule 3.01(s)(i) and except for rights reserved by the U.S. Government
pursuant research funding laws and regulations; (3) the Company has not
misappropriated the trade secrets, technology, know-how, inventions or the like
of any third party; (4) no judgment, decree, injunction, rule or order has been
rendered by any U.S. federal or state or foreign Governmental Entity which would
limit, cancel or question the validity of, or the Company's or its subsidiaries'
rights in and to any Intellectual Property in any respect that could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to the Company; (5) the Company has not received written notice,
and does not otherwise have knowledge, of any pending or threatened suit, action
or proceeding that seeks to limit, cancel or question the validity of, or the
Company's or its subsidiaries' rights in and to any Intellectual Property,
which, if adversely determined, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to the
Company; and (6) the Company and its subsidiaries have taken reasonable steps to
protect, maintain and safeguard their material Intellectual Property, including
any material Intellectual Property for which improper or unauthorized disclosure
would impair its value or validity, and have executed appropriate nondisclosure
agreements and made appropriate filings and registrations in connection with the
foregoing.
(t) Ownership of Parent Common Stock. Neither the Company nor, to
its best knowledge, any of its affiliates or associates (as such terms are
defined under the Exchange Act),
22
(i) beneficially owns, directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of Parent, which
in the aggregate represent 5% or more of the outstanding shares of such capital
stock.
(u) Accounting Matters. To the Company's knowledge, neither the
Company nor any of its affiliates has through the date hereof taken or agreed to
take any action that would prevent the Parent from accounting for the business
combination to be effected by the Merger as a "pooling of interests".
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
and each of Parent's "significant subsidiaries" (within the meaning of Rule 1-02
of Regulation S-X of the SEC) (collectively, the "Parent Subsidiaries") is duly
-------------------
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent, Sub
and each of the Parent Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction (domestic or foreign) in which the
nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) could
not reasonably be expected to have a Material Adverse Effect with respect to
Parent. Parent has made available to the Company complete and correct copies of
its articles of incorporation and by-laws and the certificate of incorporation
and by-laws of Sub.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists of 90,000,000 shares of Parent
Common Stock and 1,000,000 shares of preferred stock of Parent (the "Parent
------
Preferred Stock"). As of the close of business on July 25, 1997, there were: (i)
---------------
45,599,755 shares of Parent Common Stock issued and outstanding; (ii) 1,773,597
shares of Parent Common Stock held in the treasury of Parent; (iii) 5,233,411
shares of Parent Common Stock reserved for issuance pursuant to Parent's stock
option plans, Parent's employee stock purchase plans and Parent's Director Stock
Purchase and Deferred Compensation Plan (such plans, collectively with the 1997
Stock Incentive Plan approved on August 21, 1997 subject to stockholder
approval, the "Parent Stock Plans"); (iv) 3,356,441 shares of Parent Common
------------------
Stock issuable upon exercise of awarded but unexercised stock options; and (v)
no shares of Parent Preferred Stock outstanding. Except as set forth above and
except for shares of junior participating preferred stock issuable pursuant to
the Shareholder Protection Rights Agreement, dated as of April 30, 1989, between
Parent and The First National Bank of Boston, as of the close of business on
July 25, 1997 there were no shares of capital stock or other equity securities
of Parent issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of Parent are, and all shares which may be issued as described
above will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There is no outstanding
Voting Debt of Parent. Except as set forth above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements
23
or undertakings of any kind to which Parent is a party or by which it is bound
obligating Parent to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity or voting securities of
Parent or obligating Parent to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding contractual obligations, commitments,
understandings or arrangements of Parent to repurchase, redeem or otherwise
acquire or make any payment in respect of any shares of capital stock of Parent.
During the period from July 25, 1997 through the date of this
Agreement, except as set forth in Section 3.02(b) of the Parent Disclosure
Schedule, Parent did not (A) issue or permit to be issued any shares of capital
stock, or securities exercisable for or convertible into shares of capital
stock, of Parent, other than pursuant to or as permitted by the terms of the
Parent Stock Plans; (B) repurchase, redeem or otherwise acquire, directly or
indirectly through one or more subsidiaries, any shares of capital stock of
Parent; or (C) declare, set aside, make or pay to the stockholders of Parent
dividends or other distributions on the outstanding shares of capital stock of
Parent (other than regular quarterly cash dividends on the Parent Common Stock).
As of the date hereof, the authorized capital stock of Sub consists of
1,000 shares of common stock, par value $.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent, free
and clear of any Lien, and as of the Closing Date, all the issued and
outstanding shares of the common stock of Sub will be owned by Parent free and
clear of any Lien.
(c) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement and the Stock
Option Agreement have been duly executed and delivered by each of Parent and Sub
and (assuming due authorization, execution and delivery by the Company)
constitute valid and binding obligations of Parent and Sub, enforceable against
them in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing. The execution and delivery of this Agreement
and the Stock Option Agreement do not, and the consummation by Parent and Sub of
the transactions contemplated by this Agreement and compliance by Sub with the
provisions of this Agreement and the Stock Option Agreement will not, conflict
with, or result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of, or a "put" right with respect to any obligation
under, or to a loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent, Sub or any of Parent's
other subsidiaries under, (i) the certificate of incorporation or by-laws of
Parent, Sub or such other subsidiary, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
24
concession, franchise or license applicable to Parent, Sub, such other
subsidiaries or any of their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule, regulation
or arbitration award applicable to Parent, Sub any of Parent's other
subsidiaries or their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect with respect to Parent
or prevent or materially delay the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement and the Stock Option Agreement or
perform their respective obligations hereunder or thereunder. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any Governmental Entity is required by or with respect to
Parent or Sub in connection with the execution and delivery of this Agreement or
the Stock Option Agreement by Parent and Sub or the consummation by Parent and
Sub of any of the transactions contemplated hereby or thereby, except for (i)
the filing of a premerger notification and report form under the HSR Act and the
filing of such applications by Parent and Sub as may be required pursuant to
antitrust or similar laws or regulations in effect in Germany, France, Japan,
the United Kingdom or any political subdivision thereof, (ii) the filing with
the SEC, the NYSE and the Pacific Stock Exchange of (A) the Form S-4 and (B)
such reports under the Exchange Act as may be required in connection with this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby, (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 other states in which the Company is qualified to do business,
(iv) such other consents, approvals, orders, authorizations, registrations,
declarations, filings or notices as may be required under the "takeover" or
"blue sky" laws of various states and (v) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or notices the
failure of which to make or obtain, individually or in the aggregate, could not
reasonably be expected to (x) prevent or materially delay consummation of the
Merger or the other transactions contemplated hereby or performance of Parent's
and Sub's obligations hereunder and under the Stock Option Agreement or (y) have
a Material Adverse Effect with respect to Parent.
(d) Parent SEC Documents; Undisclosed Liabilities. Parent has filed
with the SEC all reports, schedules, forms, statements and other documents
required pursuant to the Securities Act and the Exchange Act since July 1, 1994
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "Parent SEC Documents").
--------------------
Except as set forth in Section 3.02(d) of the disclosure schedule delivered by
Parent and Sub to the Company at the time of the execution of this Agreement
(the "Parent Disclosure Schedule"), as of their respective dates, the Parent SEC
--------------------------
Documents complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents (including any and all financial
statements included therein) as of such dates contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Except as set
forth in Section 3.02(d) of the Parent Disclosure Schedule, except to
25
the extent that information contained in any Parent SEC Document has been
revised or superseded by a later filed Parent SEC Document, none of the Parent
SEC Documents (including any and all financial statements included therein)
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of Parent included in all
Parent SEC Documents filed since July 1, 1994 (the "Parent SEC Financial
--------------------
Statements") 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 generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
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 the notes thereto)
and fairly present the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited quarterly statements, to normal recurring year-end audit
adjustments). Except as disclosed in Section 3.02(d) of the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of Parent and its subsidiaries or in
the notes thereto, except (i) liabilities reflected in the audited consolidated
balance sheet of the Parent as of June 30, 1996, (ii) liabilities disclosed in
any SEC Document filed by Parent prior to the date of this Agreement with
respect to any period ending, or date occurring, after June 30, 1996 and (iii)
liabilities incurred since June 30, 1996, in the ordinary course of business
consistent with past practice.
(e) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in (i) the
Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting,
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 the light of the circumstances under which they are made, not
misleading. The Form S-4 will comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations promulgated
thereunder, except that no representation is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on information
supplied in writing by the Company specifically for inclusion or incorporation
by reference therein.
(f) Absence of Certain Changes or Events. Except as disclosed in
Section 3.02(f) of the Parent Disclosure Schedule, since June 30, 1996, there is
not and has not been: (i) any Material Adverse Change with respect to Parent;
(ii) any condition, event or occurrence which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or give rise to a
Material Adverse Change with respect to Parent; (iii) any action which, if it
had been taken or occurred after the execution of this Agreement, would have
required the consent of
26
the Company pursuant to this Agreement; or (iv) any condition, event or
occurrence which, individually or in the aggregate, could reasonably be expected
to prevent or materially delay the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement or perform its obligations hereunder
or under the Stock Option Agreement.
(g) Litigation; Compliance with Laws. (i) Except as disclosed in
Section 3.02(g)(i) of the Parent Disclosure Schedule, there is (1) no suit,
action, arbitration or proceeding pending, and (2) to the knowledge of Parent,
no suit, action, arbitration or proceeding threatened against or investigation
pending with respect to Parent or any of its subsidiaries that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
with respect to Parent or prevent or materially delay the ability of Parent and
Sub to consummate the transactions contemplated by this Agreement or to perform
their obligations hereunder and under the Stock Option Agreement, nor is there
any judgment, decree, citation, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of its subsidiaries
which, individually or in the aggregate, has or could reasonably be expected to
have, any such effect.
(ii) Except as disclosed in Section 3.02(g)(ii) of the Parent
Disclosure Schedule, the businesses of Parent and its subsidiaries are not being
conducted in violation of any law (domestic or foreign), ordinance or regulation
of any Governmental Entity, except for possible violations which, individually
or in the aggregate, do not and could not reasonably be expected to have a
Material Adverse Effect with respect to Parent.
(h) Brokers. No broker, investment banker, financial advisor or
other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"),
--------------
the fees and expenses of which will be paid by Parent (pursuant to fee
agreements, copies of which have been provided to the Company), is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub. Parent agrees to indemnify
the Company and to hold the Company harmless from and against any and all
claims, liabilities or obligations with respect to any other fee, commission or
expense asserted by any person on the basis of any act or statement alleged to
have been made by Parent or its affiliates.
(i) Opinion of Financial Advisor. Parent has received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated the date of this Agreement, to the effect that, as of such
date, the Merger Consideration is fair to Parent from a financial point of view.
(j) Interim Operations of Sub. Sub was formed on August 18, 1997
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
(k) Ownership of Company Common Stock. Other than pursuant to the
Stock Option Agreement, as of the date hereof, neither Parent nor, to its best
knowledge, any of its affiliates or associates (as such terms are defined under
the Exchange Act), (i) beneficially owns, directly or indirectly, or (ii) is
party to any agreement, arrangement or understanding for the
27
purpose of acquiring, holding, voting or disposing of, in each case, shares of
capital stock of the Company, which in the aggregate represent 5% or more of the
outstanding shares of such capital stock.
(l) Accounting Matters. Neither Parent nor, to its best knowledge,
any of its affiliates, has through the date hereof taken or agreed to take any
action that would prevent Parent from accounting for the business combination to
be effected by the Merger as a "pooling of interests".
(m) Required Vote. This Agreement has been approved by Parent, as
the sole stockholder of Sub. No other vote of holders of any class or series of
securities of Parent or Sub is necessary to approve this Agreement, the Merger,
the Stock Option Agreement and the transactions contemplated hereby and thereby.
ARTICLE IV
Covenants Relating to Conduct of Business Prior to Merger.
---------------------------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time of the Merger (except as otherwise expressly contemplated by the terms of
this Agreement), and except as approved by Parent, which approval shall not be
unreasonably withheld or delayed, the Company shall, and shall cause its
subsidiaries to, act and carry on their respective businesses in the ordinary
course of business consistent with past practice and use its and their
respective reasonable best efforts to preserve substantially intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others having
significant business dealings with them. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time of the Merger, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned domestic subsidiary of the
Company to its parent, (y) split, combine or reclassify any capital stock of the
Company or any subsidiary or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock of the Company or any subsidiary, or (z) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities, except that the Company may redeem shares of
its Series A Preferred Stock to the extent required by the Certificate of
Designations with respect thereto as in effect on the date of this Agreement,
provided that the redemption price for the shares of Series A Preferred Stock so
redeemed shall be paid by the Company solely in shares of Company Common Stock;
28
(ii) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock or the capital stock of
any of its subsidiaries, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities or any other securities
or equity equivalents (including without limitation stock appreciation
rights), other than the issuance of Company Common Stock upon (i) the
exercise of Warrants outstanding on the date of this Agreement in
accordance with their present terms, (ii) the exercise of Company Stock
Options awarded prior to the date of this Agreement but unexercised on the
date of this Agreement in accordance with their present terms, (iii) the
exercise of options awarded pursuant to the Stock Purchase Plan of the
Company prior to the date of this Agreement but unexercised on the date of
this Agreement in accordance with their present terms, (iii) the conversion
of the Convertible Notes in accordance with their present terms or (iv) the
redemption of the Series A Preferred Stock in accordance with the
Certificate of Designations with respect thereto as in effect on the date
of this Agreement;
(iii) amend (A) the Certificate of Incorporation or By-Laws or
comparable charter or organizational documents of any subsidiary of the
Company or (B) the Rights Agreement;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
other than any such properties or assets the value of which do not exceed
$100,000 individually and $1,000,000 in the aggregate, except (A) sales of
inventory and receivables in the ordinary course of business consistent
with past practice, (B) the granting of purchase money security interests
in the ordinary course of business consistent with past practice and (C)
the granting of end-user licenses and the right to grant end-user
sublicenses in the ordinary course of business consistent with past
practice to customers of the Company or its subsidiaries to the extent such
licenses are necessary to permit such customers to use products purchased
from the Company or such subsidiaries;
(vi) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any of its subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business
consistent with past practice and intercompany indebtedness between the
Company and its wholly-owned subsidiaries or between such wholly owned
subsidiaries, or (B) make any loans, advances or capital
29
contributions to, or investments in, any other person, other than to the
Company or any direct or indirect wholly owned subsidiary of the Company;
(vii) acquire or agree to acquire any assets, other than
inventory in the ordinary course of business consistent with past practice,
or make or agree to make any capital expenditures, except capital
expenditures which, individually or in the aggregate, do not exceed
$1,000,000;
(viii) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of (x) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof or (y) claims settled or compromised to the
extent permitted by Section 4.01(a)(xii), or waive, release, grant, or
transfer any rights of material value or modify or change in any material
respect any existing material license, lease, contract or other document,
other than in the ordinary course of business consistent with past
practice;
(ix) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(x) enter into or amend any collective bargaining agreement;
(xi) change any material accounting principle used by it,
except as required by generally accepted accounting principles;
(xii) settle or compromise any litigation or claim (whether or
not commenced prior to the date of this Agreement), other than settlements
or compromises of litigation or claims that do not provide for injunctive
or similar relief and where the amount paid (after giving effect to
insurance proceeds actually received or reasonably believed by management
of the Company to be receivable) in settlement or compromise does not
exceed $150,000 provided that the aggregate amount paid in connection with
the settlement or compromise of all such litigation matters shall not
exceed $500,000;
(xiii) engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly, any
of the Company's affiliates, including, without limitation, any
transactions, agreements, arrangements or understandings with any affiliate
or other Person covered under Item 404 of SEC Regulation S-K that would be
required to be disclosed under such Item 404, other than such transactions
of the same general nature, scope and magnitude as are disclosed in the
Company SEC Documents;
(xiv) sell any shares of common stock of Millenium
Pharmaceuticals, Inc.;
30
(xv) transfer to any person or entity any rights to its
Intellectual Property other than the granting of end-user licenses and the
right to grant end-user sublicenses in the ordinary course of business
consistent with past practice to customers of the Company or its
subsidiaries to the extent such licenses are necessary to permit such
customers to use products purchased from the Company or such subsidiaries;
(xvi) enter into or amend any agreement pursuant to which any
other party is granted exclusive marketing or other exclusive rights of any
type or scope with respect to any of its products or technology; or
(xvii) authorize, or commit or agree to take, any of the
foregoing actions.
(b) Conduct of Business by Parent. During the period from the date
of this Agreement to the Effective Time of the Merger, Parent shall not:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
regular quarterly cash dividends (in an amount determined in a manner
consistent with Parent's past practice) with customary record and payment
dates or (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in lieu of or in
substitution for shares of its capital stock;
(ii) amend Parent's articles of incorporation or by-laws in a
manner that would be materially adverse to the holders of Parent Common
Stock (it being understood that an amendment to the articles of
incorporation of Parent increasing the number of authorized shares of
Parent Common Stock or other capital stock of Parent shall not be deemed to
be materially adverse to the holders of Parent Common Stock); or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
(c) Changes in Employment Arrangements. Neither the Company nor any
of its subsidiaries shall (i) adopt or amend (except as may be required by law)
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement for the benefit or welfare of any employee,
director or former director or employee or (ii) other than increases for
individuals (other than officers and directors) in the ordinary course of
business consistent with past practice, increase the compensation or fringe
benefits of any director, employee or former director or employee or pay any
benefit not required by any existing plan, arrangement or agreement.
(d) Severance. Neither the Company nor any of its subsidiaries shall
grant any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
31
(e) WARN. Neither the Company nor any of its subsidiaries shall
effectuate a "plant closing" or "mass layoff", as those terms are defined in
WARN, affecting in whole or in part any site of employment, facility, operating
unit or employee of the Company or any subsidiary, without notifying Sub or its
affiliates in advance and without complying with the notice requirements and
other provisions of WARN.
(f) Tax Elections. Except in the ordinary course of business and
consistent with past practice, neither the Company nor any of its subsidiaries
shall make any tax election or settle or compromise any federal, state, local or
foreign tax liability.
(g) Pooling and Tax-Free Reorganization Treatment. Neither Company
nor Parent shall, and shall not permit any of their respective subsidiaries to,
intentionally take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code; provided,
however, that nothing hereunder shall limit the ability of Parent to exercise
its rights under the Stock Option Agreement.
(h) Other Actions. Neither the Company nor Parent shall, or shall
permit any of its subsidiaries to, (i) intentionally take any action that, if
taken on or prior to the date of this Agreement, would have resulted in any of
its representations and warranties set forth in this Agreement being untrue in
any material respect, or (ii) intentionally take any action that would or
reasonably might be expected to, result in any of the conditions to the Merger
set forth in Article VI not being satisfied or in a violation of any provision
of the Stock Option Agreement. The Company and Parent shall promptly advise the
other party orally and in writing of (x) any action of the type set forth in
clause (i) above, (y) the failure by such party to comply with any covenant,
condition or agreement hereunder or under the Stock Option Agreement and (z) any
event which could reasonably be expected to cause the conditions set forth in
Article VI not being satisfied; provided, however, that no such notice shall
affect the representations, warranties, covenants and agreement of the parties
or the conditions to their obligations hereunder.
32
ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of Form S-4 and Proxy Statement;
Stockholder Meeting. (a) Promptly following the date of this Agreement, the
Company shall prepare the Proxy Statement, and Parent shall prepare and file
with the SEC the Form S-4, in which the Proxy Statement will be included.
Parent and the Company shall each use its reasonable best efforts to have the
Form S-4 declared effective under the Securities Act as promptly as practicable
after such filing. The Company will use its reasonable best efforts to cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
state in which it is not now so qualified or filing a general consent to service
of process) required to be taken under any applicable state securities laws in
connection with the registration and qualification of the Parent Common Stock to
be issued in the Merger, and the Company shall furnish all information relating
to the Company and its stockholders as may be reasonably requested in connection
with any such action. The information provided and to be provided by Parent,
Sub and the Company, respectively, (i) for use in the Form S-4, at the time the
Form S-4 becomes effective, shall be true and accurate in all material respects
and shall not omit to state a material fact required to be stated therein or
necessary to make such information not misleading and (ii) for use in the Proxy
Statement, on the date the Proxy Statement is mailed to the Company's
stockholders and on the date of the Stockholders Meeting referred to below,
shall be true and correct in all material respects and shall not omit to state
any material fact required to be stated therein or necessary in order to make
such information, in the light of the circumstances under which the statements
therein were made, not misleading, and the Company and Parent each agree to
correct any information provided by it for use in the Form S-4 and the Proxy
Statement which shall have become false or misleading.
(b) All mailings to the Company's stockholders in connection with the
Merger, including the Proxy Statement, shall be subject to the prior review,
comment and approval of Parent (such approval not to be unreasonably withheld or
delayed).
(c) The Company will, as promptly as practicable following the date
of this Agreement and in consultation with Parent, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders Meeting") for
--------------------
the purpose of approving this Agreement and the transactions contemplated by
this Agreement to the extent required by the DGCL. The Company will, through
its Board of Directors, recommend to its stockholders approval of the foregoing
matters, as set forth in Section 3.01(p); provided, however, that the Board of
-------- -------
Directors of the Company may fail to make or withdraw or modify such
recommendation, but only to the extent that the Board of Directors of the
Company shall have concluded in good faith on the basis of written advice (or
advice confirmed in writing) from outside counsel that the failure to take such
action would be contrary to the fiduciary duties of the Board of Directors of
the Company to the stockholders of the Company under applicable law. Any such
recommendation, together with a copy of the opinion referred to in Section
3.01(o) shall be included in the Proxy
33
Statement. The Company will use its best efforts to hold such meeting as soon as
practicable after the Form S-4 shall have been declared effective.
SECTION 5.02. Access to Information; Confidentiality. (a) Each of
the Company and Parent shall, and shall cause its subsidiaries, officers,
employees, counsel, financial advisors and other representatives to, afford to
the other party and its representatives reasonable access during normal business
hours, during the period prior to the Effective Time of the Merger to its
properties, books, contracts, commitments, personnel and records, and, during
such period, each of the Company and Parent shall, and shall cause its
subsidiaries, officers, employees and representatives to, furnish promptly to
the other party (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
Federal or state securities laws and (ii) all other information concerning its
business, properties, financial condition, operations and personnel as such
other party may from time to time reasonably request. Each of the Company and
Parent will hold, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in confidence to the extent
required by, and in accordance with, the provisions of each of the
confidentiality agreements, dated December 13, 1996 and August 8, 1997,
respectively, between Parent and the Company (collectively, the "Confidentiality
---------------
Agreements").
----------
(b) No investigation pursuant to this Section 5.02 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 5.03. Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to 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 under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) obtaining all consents, approvals,
waivers, licenses, permits or authorizations as are required to be obtained (or,
which if not obtained, would result in an event of default, termination or
acceleration of any agreement or any put right under any agreement) under any
applicable law or regulation or from any Governmental Entities or third parties
in connection with the transactions contemplated by this Agreement, (ii) if
required by any Governmental Entity as a condition to the obtaining of any
consent of such Governmental Entity or the agreement of such Governmental Entity
not to raise any objection to the transaction, agreeing to dispose of any
operations of the Company the disposal of which could not reasonably be expected
to have a Material Adverse Effect with respect to the Company, (iii) defending
any lawsuits or other proceedings challenging this Agreement and (iv) accepting
and delivering additional instruments necessary to consummate the transactions
contemplated by this Agreement. The Company agrees that Parent shall have the
opportunity to negotiate and consult directly with all applicable Governmental
Entities in connection with their consideration of the transactions contemplated
by this Agreement, including, without limitation, the opportunity to select (to
the extent permitted by the applicable Governmental Entity), any operations to
be disposed of pursuant to clause (ii) above.
34
SECTION 5.04. Indemnification. (a) From and after the Effective
Time of the Merger, Parent and the Surviving Corporation shall indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time of the Merger eligible
for indemnification pursuant to the Certificate of Incorporation and By-Laws
(the "Indemnified Parties") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in settlement of or
in connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company, pertaining to
any matter existing or occurring at or prior to the Effective Time of the
Merger, whether asserted or claimed prior to, or at or after, the Effective Time
of the Merger ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby, in each
case to the extent the Company would have been permitted under the Certificate
of Incorporation and By-laws to indemnify such person. Nothing contained herein
shall limit any rights to indemnification which any director or officer of the
Company may have under any indemnification agreement or the Certificate of
Incorporation or By-Laws. In the event any such claim, action, suit, proceeding
or investigation is brought against any Indemnified Parties (whether arising
before or after the Effective Time of the Merger), (i) any counsel retained by
the Indemnified Parties for any period after the Effective Time of the Merger
shall be reasonably satisfactory to Parent and the Surviving Corporation (it
being understood that ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP is acceptable to Parent
and the Surviving Corporation); (ii) after the Effective Time of the Merger,
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) after the Effective Time of the Merger, the Surviving
Corporation will cooperate in the defense of any such matter, provided that the
Surviving Corporation shall not be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 5.04, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Parent and the Surviving Corporation
(but the failure so to notify the Surviving Corporation shall not relieve them
from any liability which they may have under this Section 5.04 except to the
extent such failure materially prejudices Parent and the Surviving Corporation),
and shall deliver to Parent and the Surviving Corporation the undertaking, if
any, required by Section 145(e) of the DGCL. Parent and the Surviving
Corporation shall be liable for the fees and expenses hereunder with respect to
only one law firm to represent the Indemnified Parties as a group with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict between the positions of any two or more Indemnified Parties
that would preclude or render inadvisable joint or multiple representation of
such parties.
(b) Parent shall cause to be maintained in effect for six years from
the Effective Time of the Merger directors' and officers' liability insurance
coverage covering persons who are directors and officers of the Company on the
date of this Agreement, with respect to matters occurring prior to the Effective
Time of the Merger, and containing terms and conditions which are not less
advantageous to such persons than the policies of the Company in effect on the
date
35
hereof (the "Company Insurance"); provided that Parent shall not be
----------------- --------
required to spend annually in excess of 150% of the annual premium for the
Company Insurance paid by the Company as of the date of this Agreement (the
"Current Premium"); provided, further, that if Parent would be required to spend
---------------- -------- -------
annually in excess of 150% of the Current Premium to obtain insurance having
terms not less advantageous than the Company Insurance, the Surviving
Corporation will be required to spend up to such amount to maintain or procure
as much insurance coverage as can be procured for such premium.
SECTION 5.05. Public Announcements. Neither Parent and Sub, on the
one hand, nor the Company, on the other hand, will issue any press release or
public statement with respect to the transactions contemplated by this Agreement
and the Stock Option Agreement, including the Merger, without the other party's
prior consent (such consent not to be unreasonably withheld or delayed), except
as may be required by applicable law, court process or by obligations pursuant
to any agreement with any securities exchange or quotation system on which
securities of the disclosing party are listed or quoted. In addition to the
foregoing, Parent, Sub and the Company will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
such press release or other public statements with respect to such transactions.
The parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 5.06. Affiliates. At least 40 days prior to the Closing
Date, (i) the Company shall deliver to Parent a letter identifying all persons
who are, at the time this Agreement is submitted for approval to the
stockholders of the Company, executive officers and directors of the Company and
all other persons that, to the knowledge of the Company, are "affiliates" of the
Company (as that term is used in Rule 145 under the Securities Act or SEC
Accounting Releases 130 and 135) and shall use all reasonable efforts to cause
each person named on the letter delivered by it to deliver to Parent at least 30
days prior to the Closing Date a written agreement, substantially in the form
attached as Exhibit B-1 and (ii) Parent shall deliver to Company a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the stockholders of the Company, executive officers of Parent and
all other persons that, to the knowledge of Parent are "affiliates" of Parent
(as that term is used in SEC Accounting Releases 130 and 135) and shall use all
reasonable efforts to cause each person named on the letter delivered by it to
deliver to the Company at least 30 days prior to the Closing Date a written
agreement, substantially in the form attached as Exhibit B-2.
SECTION 5.07. No Solicitation. Neither the Company nor any of its
subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or subsidiaries to, (a) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or offers
from any person (other than Sub or Parent) relating to (i) any acquisition or
purchase of 15% or more of the consolidated assets of the Company and its
subsidiaries or of over 15% of any class of equity securities of the Company or
any of its subsidiaries, (ii) any tender offer (including a self tender offer)
or exchange offer that if consummated would result in any Person (as defined in
Section 8.02)
36
beneficially owning 15% or more of any class of equity securities of the
Company or any of its subsidiaries, (iii) any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries whose assets, individually or in the aggregate, constitute more
than 15% of the consolidated assets of the Company other than the transactions
contemplated by this Agreement, or (iv) any other transaction the consummation
of which would or could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger (collectively, "Transaction Proposals"),
---------------------
or agree to or endorse any Transaction Proposal, or (b) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or encourage, any effort
or attempt by any other person (other than Sub or Parent) to do or seek any of
the foregoing; provided, however, that the foregoing shall not prohibit the
-------- -------
Company (either directly or indirectly through advisors, agents or other
intermediaries) from (i) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less favorable to the Company
in any material respect than the Confidentiality Agreement, dated as of December
13, 1996, between the Company and Parent, and a copy of which shall be provided
for informational purposes only to Parent) concerning the Company and its
businesses, properties or assets to a third party who has made a bona fide
Transaction Proposal, (ii) engaging in discussions or negotiations with such a
third party who has made a bona fide Transaction Proposal, (iii) following
receipt of a bona fide Transaction Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the
Exchange Act or otherwise making disclosure to its stockholders, (iv) following
receipt of a bona fide Transaction Proposal, failing to make or withdrawing or
modifying its recommendation referred to in Section 3.01(p), and/or (v) taking
any action required to be taken by the Company pursuant to a non-appealable,
final order by any court of competent jurisdiction, but in each case referred to
in the foregoing clauses (i) through (v) only to the extent that the Board of
Directors of the Company shall have concluded in good faith on the basis of
written advice (or advice confirmed in writing) from outside counsel that the
failure to take such action would be contrary to the fiduciary duties of the
Board of Directors of the Company to the stockholders of the Company under
applicable law; provided, further, that, to the extent that it may do so without
acting in a manner contrary to its fiduciary duties under applicable law, the
Board of Directors of the Company shall not take any of the foregoing actions
referred to in clauses (i) through (iv) until after reasonable notice to Parent
with respect to such action and that such Board of Directors shall continue to
advise Parent after taking such action and, in addition, if the Board of
Directors of the Company receives a Transaction Proposal, then the Company shall
promptly inform Parent of the material terms and conditions of such proposal and
the identity of the person making it. The Company will immediately cease and
cause its advisors, agents and other intermediaries to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and shall use its reasonable
best efforts to cause any such parties in possession of confidential information
about the Company that was furnished by or on behalf of the Company to return or
destroy all such information in the possession of any such party or in the
possession of any agent or advisor of any such party.
37
SECTION 5.08. Benefit Matters. (a) During the period from the
Effective Time of the Merger until the first anniversary of the Effective Time
of the Merger, Parent shall cause the Surviving Corporation to maintain employee
benefit plans (as defined in Section 3(3) of ERISA) for the benefit of employees
of the Company or its subsidiaries, which are no less favorable in the aggregate
to those benefits provided under the Company Plans in effect on the date hereof.
(b) Parent will cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the employees
of the Company under any Parent welfare plan that such employees may be eligible
to participate in after the Effective Time of the Merger and (ii) provide each
employee of the Company with credit for any co-payments and deductibles paid
prior to the Effective Time of the Merger in satisfying any applicable
deductible or out-of-pocket requirements under any Parent welfare plans that
such employees are eligible to participate in after the Effective Time of the
Merger.
SECTION 5.09. Stock Exchange Listing. Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and the shares of Parent Common Stock to be reserved for issuance
upon exercise of Company Stock Options, Warrants and the Convertible Notes to be
approved for listing on the NYSE and the Pacific Stock Exchange, subject to
official notice of issuance.
SECTION 5.10. Letters of the Company's Accountants. The Company
shall use its reasonable best efforts to cause to be delivered to Parent a
letter of Coopers & ▇▇▇▇▇▇▇ LLP, the Company's independent public accountants,
dated a date within two business days before the Form S-4 shall become effective
and a letter of Coopers & ▇▇▇▇▇▇▇ LLP dated a date within two business days
before the Closing Date, each addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.11. Letters of Parent's Accountants. Parent shall use its
reasonable best efforts to cause to be delivered to the Company a letter of
Price Waterhouse LLP, Parent's independent public accountants, dated a date
within two business days before the Form S-4 shall become effective and a letter
of Price Waterhouse LLP dated a date within two business days before the Closing
Date, each addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
38
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(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 legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
-------- -------
parties hereto shall use their best efforts to have any such injunction, order,
restraint or prohibition vacated.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any material "blue sky" and other state securities
laws applicable to the registration and qualification of the Parent Common Stock
issuable or required to be reserved for issuance pursuant to this Agreement
shall have been complied with.
(e) Stock Exchange Listing. The shares of Parent Common Stock
issuable to Company stockholders pursuant to this Agreement and such other
shares of Parent Common Stock required to be reserved for issuance in connection
with the Merger shall have been authorized for listing on the NYSE and the
Pacific Stock Exchange upon official notice of issuance.
(f) Pooling. Parent shall have received a letter from Price
Waterhouse LLP to the effect that the Merger qualifies for "pooling of
interests" accounting treatment if consummated in accordance with this
Agreement] and such letter shall not have been withdrawn. The Company shall
have received a letter from Coopers & ▇▇▇▇▇▇▇ LLP to the effect that the Company
is eligible to be acquired in a transaction to be accounted for using "pooling
of interests" accounting treatment and such letter shall not have been
withdrawn.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct,
in each case, as of the date of this Agreement and, if and to the extent such
representations and warranties speak as of a later date,
39
as of such later date, except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Material Adverse Effect" set forth therein) would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect. Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer, the president and the chief financial
officer of the Company to the effect set forth in this paragraph.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date. Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer, the president and the chief financial officer of the Company to the
effect set forth in this paragraph.
(c) Consents, etc. Parent and Sub shall have received evidence, in
form and substance reasonably satisfactory to it, that such licenses, permits,
consents, approvals, authorizations, qualifications and orders of (i) any United
States federal or state governmental authorities and governmental authorities in
Germany, Japan, France, the United Kingdom or any political subdivision thereof
or (ii) any other governmental authorities or third parties as are necessary in
connection with the transactions contemplated hereby have been obtained, except
in the case of clause (ii) where the failure to obtain such licenses, permits,
consents, approvals, authorizations, qualifications and orders could not,
individually or in the aggregate with all other failures, reasonably be expected
to have a Material Adverse Effect with respect to the Company.
(d) No Litigation. There shall not be pending or threatened by any
Governmental Entity, (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or the Stock Option Agreement or seeking to obtain from the Company,
Parent, Sub or any of their affiliates any damages that could reasonably be
expected to have a Material Adverse Effect with respect to the Company, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of their respective subsidiaries of any material portion of the business
or assets of the Company and its subsidiaries taken as a whole or to dispose of
or hold separate any material portion of the business or assets of the Company
and its subsidiaries taken as a whole, as a result of the Merger or any of the
other transactions contemplated by this Agreement or the Stock Option Agreement,
(iii) seeking to impose limitations on the ability of Parent to acquire or hold,
or exercise full rights of ownership of, any shares of the common stock of the
Surviving Corporation, including, without limitation, the right to vote such
common stock on all matters properly presented to the stockholders of the
Surviving Corporation or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company and its subsidiaries taken as a whole. No suit,
action or proceeding by any other person shall be pending that seeks any of the
relief or remedies described in clauses (i) through (iv) of the immediately
preceding sentence as to which there is a reasonable possibility of success or
that otherwise could reasonably be expected to have a Material Adverse Effect
with respect to the Company.
40
(e) Affiliate Letters. Parent shall have received the agreements to
which it is party referred to in Section 5.06.
(f) Tax Opinion. Parent shall have received the opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Parent, dated the Closing Date, to the effect
that (i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) Parent,
Sub and the Company will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. The parties to this Agreement agree to
make reasonable representations as requested by counsel for the purpose of
rendering such opinion.
(g) Rights Agreement. None of the events described in Section
11(a)(ii) or 13 of the Rights Agreement shall have occurred, and the Rights
shall not have become nonredeemable and shall not become nonredeemable upon
consummation of the Merger.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct, in each case, as of the date of this Agreement and, if and to the
extent such representations and warranties speak as of a later date, as of such
later date, except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect with respect to Parent. The Company shall have received a
certificate signed on behalf of Parent and Sub by an authorized officer of
Parent and Sub to the effect set forth in this paragraph.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to be
performed by each of them under this Agreement at or prior to the Closing Date.
The Company shall have received a certificate signed on behalf of Parent and Sub
by an authorized officer of Parent and Sub to the effect set forth in this
paragraph.
(c) Tax Opinion. The Company shall have received the opinion of
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel to the Company, dated the Closing Date,
to the effect that (i) the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
and (ii) Parent, Sub and the Company will each be a party to that reorganization
within the meaning of Section 368(b) of the Code. The parties to this Agreement
agree to make reasonable representations as requested by counsel for the purpose
of rendering such opinion.
(e) Affiliate Letters. The Company shall have received the agreements
to which it is party referred to in Section 5.06.
41
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time of the Merger, whether before
or after the Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; or
(c) by either Parent or the Company if the Merger shall not have been
consummated on or before January 31, 1998 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Time of the
Merger); or
(d) by either Parent or the Company if at the duly held meeting of
the stockholders of the Company (including any adjournment thereof) held for the
purpose of voting on the Merger, this Agreement and the consummation of the
transactions contemplated hereby, the holders of a majority of the outstanding
shares of Company Common Stock shall not have approved the Merger, this
Agreement and the consummation of the transactions contemplated hereby; or
(e) by Parent, if the Company or its Board of Directors shall have
(1) withdrawn, modified or amended in any respect adverse to Parent its approval
or recommendation of this Agreement or any of the transactions contemplated
herein, (2) failed as promptly as practicable after the Form S-4 is declared
effective to mail the Proxy Statement to its stockholders or failed to include
in such statement such recommendation, (3) recommended any Transaction Proposal
from a person other than Parent or any of its affiliates, (4) resolved to do any
of the foregoing or (5) in response to the commencement of any tender offer or
exchange offer for more than 15% of the outstanding shares of Company Common
Stock, not recommended rejection of such tender offer or exchange offer; or
(f) by the Company, if, pursuant to and in compliance with Section
5.07 hereof, the Board of Directors of the Company concludes in good faith,
based on written advice (or advice confirmed in writing) from outside counsel,
that in order to avoid acting in a manner contrary to the fiduciary duties of
the Board of Directors of the Company to the stockholders of the Company under
the DGCL, the Board of Directors must not make or must withdraw or modify its
recommendation referred to in Section 3.01(p) and the Board of Directors does
not make or withdraws or modifies such recommendation.
42
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 3.01(n), Section 3.02(h), the last sentence of Section
5.02(a), this Section 7.02, Section 8.02 and Section 8.07. Nothing contained in
this Section shall relieve any party for any breach of the representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; provided,
--------
however, that after any such approval, there shall be made no amendment that by
-------
law requires further approval by such stockholders 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.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time of the Merger, 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 7.03, 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 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver pursuant to
Section 7.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. 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 of the
Merger and all such representations and warranties will be extinguished on
consummation of the Merger and neither the Company, the Parent, Sub, nor any
officer, director or employee or shareholder of any of them shall be under any
liability whatsoever with respect to any such representation or warranty after
such time. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
43
SECTION 8.02. Fees and Expenses. (a) (i) If this Agreement shall
have been terminated in accordance with its terms (except pursuant to Section
7.01(b)) and either of the following shall have occurred: (A) prior to such
---
termination, any corporation (including the Company or any of its subsidiaries
or affiliates), partnership, person, other entity or "group" (as referred to in
Section 13(d)(3) of the Exchange Act) other than Parent, Sub or any of its
affiliates (collectively, "Persons"), shall have become the beneficial owner of
-------
more than 15% of the outstanding shares of Company Common Stock; or (B)(x) prior
to such termination, any Person shall have made, or proposed, communicated or
disclosed in a manner which is or otherwise becomes public (including being
known by stockholders of the Company owning of record or beneficially in the
aggregate 5% or more of the outstanding shares of Company Common Stock) a bona
fide intention to make a Transaction Proposal (including by making such a
Transaction Proposal) and (y) on or prior to August 23, 1998, the Company either
---
consummates with a Person a transaction the proposal of which would otherwise
qualify as a Transaction Proposal under Section 5.07 or enters into a definitive
agreement with a Person with respect to a transaction the proposal of which
would otherwise qualify as a Transaction Proposal under Section 5.07 (whether or
not such Person is the Person referred to in clause (x) above); or
(ii) if this Agreement is terminated pursuant to Section 7.01(e)
or Section 7.01(f);
then the Company shall, (1) in the case of clause (a)(i)(A) and (a)(ii) above,
promptly, but in no event later than one business day after the termination of
this Agreement and (2) in the case of clause (a)(i)(B) above, promptly, but in
no event later than one business day after an event specified in subclause (y)
thereof shall have occurred, pay Parent a fee of $11,000,000 in cash, which
amount shall be payable in same day funds. No termination of this Agreement at
a time when a fee is reasonably expected to be payable pursuant to this Section
8.02(a) following termination of this Agreement shall be effective until such
fee is paid.
(b) In the event that the Merger is consummated, Parent shall (i) pay
all out-of-pocket costs, fees and expenses otherwise payable by the Surviving
Corporation directly and solely in connection with the transactions contemplated
by this Agreement and the Stock Option Agreement and (ii) pay the Repurchase
Price (as defined in the Convertible Notes Indenture) with respect to any
Convertible Notes required to be repurchased by the Company pursuant to the
terms of the Convertible Notes Indenture.
(c) Except as provided otherwise in paragraphs (a) and (b) above, all
costs and expenses incurred in connection with this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expenses, except that the cost of filing,
printing and distributing the Proxy Statement and the Form S-4 shall be borne
equally by Parent and the Company.
SECTION 8.03. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
44
(a) if to Parent or Sub, to
The ▇▇▇▇▇▇-▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to the Company, to
PerSeptive Biosystems, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
SECTION 8.04. Definitions. For purposes of this Agreement:
(a) 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;
(b) "Environmental Claim" means any written or oral notice, claim,
-------------------
demand, action, suit, complaint, proceeding or other communication by any person
alleging liability or
45
potential liability (including without limitation liability or potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (A) the presence,
discharge, emission, release or threatened release of any Hazardous Materials at
any location, whether or not owned, leased or operated by the Company or any of
its subsidiaries or (B) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or Environmental Permit or (C)
otherwise relating to obligations or liabilities under any Environmental Laws;
(c) "Environmental Permits" means all permits, licenses,
---------------------
registrations and other governmental authorizations required under Environmental
Laws for the Company and its subsidiaries to conduct their operations and
businesses on the date hereof and consistent with past practices;
(d) "Environmental Laws" means all applicable federal, state and
------------------
local statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of the
environment, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Solid Waste Disposal Act, the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Emergency Planning and Community-Right-
to-Know Act, the Safe Drinking Water Act, all as amended, and similar state
laws;
(e) "Exchange Ratio" means $13.00 divided by the Parent Common Stock
--------------
Price, rounded to the nearest 1/10,000, provided that the Exchange Ratio shall
not be less than .1486 nor more than .1926.
(f) "Hazardous Materials" means all hazardous or toxic substances,
-------------------
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, friable asbestos and asbestos-containing
materials, pollutants, contaminants and all other materials, and substances
regulated pursuant to, or that could reasonably be expected to provide the basis
of liability under, any Environmental Law;
(g) "indebtedness" means, with respect to any person, without
------------
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (D) all obligations of
such person issued or assumed as the deferred purchase price of property or
services (excluding obligations of such person to creditors for raw materials,
inventory, services and supplies incurred in the ordinary course of such
person's business), (E) all capitalized lease obligations of such person, (F)
all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (G) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (H) all letters
of credit issued for the account of such person and (I)
46
all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person;
(h) "Intellectual Property" means all rights, privileges and
---------------------
priorities provided under federal, state, foreign and multinational law relating
to intellectual property, including without limitation all (i) (a) inventions,
discoveries, processes, formulae, designs, methods, techniques, procedures,
concepts, developments, technology, new and useful improvements thereof and
know-how relating thereto, whether or not patented or eligible for patent
protection; (b) copyrights and copyrightable works, including computer
applications, programs, software, databases and related items; (c) trademarks,
service marks, trade names, brand names, corporate names, logos and trade dress,
the goodwill of any business symbolized thereby, and all common-law rights
relating thereto; (d) trade secrets and other confidential information; and (ii)
all registrations, applications, recordings, and licenses or other similar
agreements related to the foregoing;
(i) "knowledge" means, with respect to any matter, (i) in the case of
---------
Parent, the knowledge of any director, executive officer or the General Counsel
of Parent after due inquiry into such matter and (ii) in the case of the
Company, the knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇
▇▇▇▇▇▇ after due inquiry into such matter.
(j) "Material Adverse Change" or "Material Adverse Effect" means,
----------------------- -----------------------
when used in connection with the Company or Parent, any change, effect, event or
occurrence that either individually or in the aggregate with all other such
changes, effects, events and occurrences is materially adverse to the business,
properties, financial condition or results of operations of the Company or
Parent, as the case may be, and its subsidiaries taken as a whole.
(k) "Parent Common Stock Price" means the average of the closing
-------------------------
sales prices of Parent Common Stock on the New York Stock Exchange Composite
Transactions Tape on each of the 20 consecutive trading days immediately
preceding the second trading day prior to the Effective Time of the Merger.
(l) "person" means an individual, corporation, partnership, joint
------
venture, association, trust, unincorporated organization or other entity;
(m) "Recent SEC Documents" means any SEC Documents filed by the
--------------------
Company prior to the date of this Agreement with respect to any period ending,
or any date occurring, on or after September 30, 1996.
(n) "Rights" means the rights to acquire one-hundredth of a share of
------
Series B Preferred Stock issued pursuant to the Rights Agreement; and
(o) a "subsidiary" of any person means another person, an amount of
----------
the voting securities, 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
47
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first person.
SECTION 8.05. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule 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".
SECTION 8.06. 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.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement, other than Section 5.04 and Section 5.08, is not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.08. 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.
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations 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. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
SECTION 8.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms 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.
48
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
THE ▇▇▇▇▇▇-▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
SEVEN ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer