EXHIBIT 1
==============================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of March 19, 2002
Among
SCHERING AKTIENGESELLSCHAFT,
EUROPEAN ACQUISITION COMPANY
And
COLLATERAL THERAPEUTICS, INC.
==============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger....................................................2
SECTION 1.02. Closing.......................................................2
SECTION 1.03. Effective Time................................................3
SECTION 1.04. Effects of the Merger.........................................3
SECTION 1.05. Certificate of Incorporation
and By-laws.......................................3
SECTION 1.06. Directors.....................................................3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.......................................3
SECTION 2.02. Exchange of Certificates......................................5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties
of the Company............................................9
SECTION 3.02. Representations and Warranties
of Parent and Sub........................................29
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business...........................................34
SECTION 4.02. No Solicitation...............................................39
(i)
Page
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4
and the Proxy Statement;
Company Stockholders'
Meeting.....................................................42
SECTION 5.02. Letters of the Company's
Accountants.................................................44
SECTION 5.03. Letters of Parent's Accountants...............................44
SECTION 5.04. Access to Information;
Confidentiality.............................................44
SECTION 5.05. Commercially Reasonable Efforts...............................45
SECTION 5.06. Treatment of Equity Awards....................................46
SECTION 5.07. Indemnification, Exculpation
and Insurance...............................................47
SECTION 5.08. Fees and Expenses.............................................48
SECTION 5.09. Public Announcements..........................................50
SECTION 5.10. Affiliates....................................................50
SECTION 5.11. Stock Exchange Listing........................................50
SECTION 5.12. Tax Treatment.................................................51
SECTION 5.13. Stockholder Litigation........................................51
SECTION 5.14. Rights Agreement..............................................51
SECTION 5.15. Stockholders Agreement Legend.................................51
SECTION 5.16. Transfer Taxes................................................51
SECTION 5.17. Further Assurances............................................52
SECTION 5.18. Section 16 Matters............................................52
SECTION 5.19. Parent ADSs...................................................52
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation to Effect the
Merger......................................................52
SECTION 6.02. Conditions to Obligations of
Parent and Sub..............................................53
SECTION 6.03. Conditions to Obligation of
the Company.................................................54
SECTION 6.04. Frustration of Closing Conditions.............................55
(ii)
Page
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination...................................................55
SECTION 7.02. Effect of Termination.........................................57
SECTION 7.03. Amendment.....................................................57
SECTION 7.04. Extension; Waiver.............................................57
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations
and Warranties..............................................57
SECTION 8.02. Notices.......................................................58
SECTION 8.03. Definitions...................................................59
SECTION 8.04. Interpretation................................................60
SECTION 8.05. Counterparts..................................................61
SECTION 8.06. Entire Agreement; No Third-
Party Beneficiaries.........................................61
SECTION 8.07. Governing Law.................................................61
SECTION 8.08. Assignment....................................................61
SECTION 8.09. Enforcement; Consent to
Jurisdiction................................................62
SECTION 8.10. Severability..................................................62
Annex I Index of Defined Terms
Exhibit A Form of Certificate of Incorporation of
the Surviving Corporation
Exhibit B Form of Affiliate Letter
Exhibit C-1 Form of Parent Tax Representation Letter
Exhibit C-2 Form of Company Tax Representation Letter
(iii)
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of March 19, 2002, among
SCHERING AKTIENGESELLSCHAFT, a stock corporation
organized under the laws of the Federal Republic of
Germany ("Parent"), EUROPEAN ACQUISITION COMPANY, a
Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and COLLATERAL THERAPEUTICS,
INC., a Delaware corporation (the "Company").
WHEREAS the Supervisory Board and the Executive Board of Parent and
the respective Boards of Directors of Sub and the Company have each approved
and declared advisable this Agreement and the merger of Sub with and into the
Company, upon the terms and subject to the conditions set forth in this
Agreement (the "Merger"), whereby each issued and outstanding share of common
stock, par value $.001 per share, of the Company ("Company Common Stock"),
other than shares of Company Common Stock owned by Parent, Sub, the Company or
Schering Berlin Inc. ("SBI"), will be converted into the right to receive the
Merger Consideration (as defined in Section 2.01(c));
WHEREAS the Supervisory Board and the Executive Board of Parent and
the respective Boards of Directors of Sub and the Company have each determined
that the Merger and the other transactions contemplated by this Agreement are
consistent with, and in furtherance of, their respective business strategies
and goals;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Sub to enter into this Agreement, Parent and certain stockholders of the
Company (the "Principal Stockholders") are entering into an agreement (the
"Stockholders Agreement") pursuant to which, among other things, the Principal
Stockholders have agreed to vote to adopt this Agreement, to approve the
Merger and to take certain other actions in furtherance of the Merger upon the
terms and subject to the conditions set forth in the Stockholders Agreement;
WHEREAS for U.S. Federal income tax purposes, it is intended that
(a) the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations promulgated thereunder, (b) this
2
Agreement will constitute a plan of reorganization, (c) Parent, Sub and the
Company will each be a party to such reorganization within the meaning of
Section 368(b) of the Code and (d) the Company stockholders who will not be
"five-percent transferee shareholders" as defined in Treasury Regulation
Section 1.367(a)-3(c)(5)(ii) or who enter into five-year gain recognition
agreements in the form provided in Treasury Regulation Section 1.367(a)-8(b)
("Eligible Company Stockholders") and who exchange Company Common Stock solely
for Parent ADSs (as defined in Section 2.01(c)) pursuant to the Merger will
not recognize taxable gain with respect to the Merger pursuant to Section
367(a) of the Code (except with respect to any cash received in lieu of
fractional Parent ADSs); and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agree ments in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged
with and into the Company at the Effective Time. Following the Effective Time,
the Company shall be the surviving corporation in the Merger (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations
of Sub in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties hereto
(the "Closing Date"), which shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Article VI (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions), at the offices
of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed to by the parties
hereto.
3
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
hereto shall file a certificate of merger or other appropriate documents (in
any such case, the "Certificate of Merger") executed in accordance with 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 Parent and the Company shall agree and
specify in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Surviving Corporation shall be amended at
the Effective Time to be in the form of Exhibit A hereto and, as so amended,
such Certificate of Incorporation shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective suc
cessors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of
4
common stock, par value $.001 per share, of the Surviving Corporation
("Surviving Corporation Common Stock").
(b) Cancelation of Treasury Stock and Parent- Owned Stock. Each
share of Company Common Stock that is owned by the Company, Parent or Sub
shall automatically be canceled and shall cease to be outstanding, and no
Parent ADSs or other consideration shall be delivered in exchange therefor;
provided, however, that each share of Company Common Stock that is owned by
SBI shall not be so canceled and shall remain outstanding as one fully paid
and nonassessable share of Surviving Corporation Common Stock.
(c) Conversion of Company Common Stock. Subject to Section 2.02(e),
each issued and outstanding share (other than shares to be canceled or to
remain outstanding in accordance with Section 2.01(b)) of Company Common Stock
shall be converted into the right to receive 0.1847 (the "Exchange Ratio")
American depositary shares (each a "Parent ADS") of Parent (each Parent ADS
representing the right to receive one Ordinary Share, no par value, of Parent
("Parent Ordinary Share") and evidenced by one American depositary receipt
("Parent ADR") issued in accordance with the Deposit Agreement dated as of
October 11, 2000, as amended from time to time (the "Deposit Agreement"),
among Parent, ▇▇▇▇▇▇ Guaranty Trust Company of New York (the "Depositary"), as
depositary, and all holders and beneficial owners from time to time of Parent
ADRs) (the "Merger Consideration"). As of the Effective Time, all such shares
of Company Common Stock shall no longer be outstanding and shall automatically
be canceled and shall cease to be outstanding, and each holder of a
certificate which immediately prior to the Effective Time represented any such
shares of Company Common Stock (each, a "Certificate") shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c) and any cash in lieu of fractional Parent
ADSs to which such holder is entitled pursuant to Section 2.02(e), in each
case to be issued or paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.02(b), without interest.
(d) Anti-Dilution Provisions. Notwithstanding the foregoing, in the
event that Parent changes the number of Parent Ordinary Shares represented by
each Parent ADS issued and outstanding prior to the Effective Time as a result
of a reclassification, stock split, share combination, stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange
offer or other similar transaction, the Exchange
5
Ratio shall be appropriately adjusted to reflect such reclassification, stock
split, share combination, stock dividend or distribution, recapitalization,
merger, subdivision, issuer tender or exchange offer or other similar
transaction. In addition, in the event Parent pays (or establishes a record
date for payment of) any dividend on, or makes any other distribution in
respect of, Parent Ordinary Shares (other than the regular dividend of (U)0.83
per Parent Ordinary Share), the Merger Consideration shall be appropriately
adjusted to reflect such dividend or distribution (other than the regular
dividend of (U)0.83 per Parent Ordinary Share).
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of
the Effective Time, Parent shall deposit with a U.S. bank or trust company as
may be designated by Parent (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with
this Article II, through the Exchange Agent, Parent ADRs representing Parent
ADSs issuable pursuant to Section 2.01 in exchange for outstanding shares of
Company Common Stock. Parent shall make available to the Exchange Agent from
time to time as required after the Effective Time cash necessary to pay
dividends and other distributions in accordance with Section 2.02(c) and to
make payments in lieu of any fractional Parent ADSs in accordance with Section
2.02(e) (such cash, together with Parent ADSs representing the Merger
Consideration, collectively, the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares of Company Common Stock were converted into the right
to receive the Merger Consideration pursuant to Section 2.01(c), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in surrendering the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancelation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor that number
of whole Parent ADSs which such holder has the right to receive pursuant to
the provisions of this Article II, any dividends or other distributions to
which such holder is entitled pursuant to Section 2.02(c) and any
6
cash in lieu of fractional Parent ADSs to which such holder is entitled
pursuant to Section 2.02(e), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the proper amount of cash, if any, may be paid and the proper number
of Parent ADSs may be issued to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment and issuance shall pay any transfer or other taxes
required by reason of the payment of any cash and the issuance of Parent ADSs
to a person other than the registered holder of such Certificate or establish
to the reasonable satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, any
dividends or other distributions to which the holder of such Certificate is
entitled pursuant to Section 2.02(c) and any cash in lieu of fractional Parent
ADSs to which such holder is entitled pursuant to Section 2.02(e). No interest
shall be paid or shall accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. Any dividends
or other distributions with respect to Parent ADSs with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Parent ADSs represented thereby, and any cash
payment in lieu of fractional Parent ADSs shall be paid to any such holder
pursuant to Section 2.02(e), in each case only upon the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable abandoned property, escheat or similar laws, following surrender of
any such Certificate there shall be paid to the holder of the whole Parent
ADSs issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole Parent
ADSs and the amount of any cash payable in lieu of a fractional Parent ADSs to
which such holder is entitled pursuant to Section 2.02(e) and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to such surrender and with a
payment date subsequent to such surrender payable with respect to such whole
Parent ADSs.
7
(d) No Further Ownership Rights in Company Common Stock. All Parent
ADSs issued upon the surrender for exchange of Certificates in accordance with
the terms of this Article II (including any cash paid pursuant to this Article
II) shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock previously represented
by such Certificates, 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 that were outstanding immediately prior to the Effective
Time. If, at any time after the Effective Time, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional Parent ADSs shall be issued upon the surrender for exchange of
Certificates, no dividend or other distribution of Parent shall relate to such
fractional share interests and such fractional share interests shall not
entitle the owner thereof to vote or to exercise any rights of a holder of
Parent ADSs.
(ii) Parent shall cause to be paid to each former holder of shares
of Company Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former holder
(after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the closing
price of a Parent Ordinary Share on the Closing Date, as such price is
reported on the Xetra system, translated into US dollars at the Euro/$
reference exchange rate as of the Closing Date published by the European
Central Bank and reported on Reuters (page ECB37) and at ▇▇▇.▇▇▇.▇▇▇.
(iii) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Certificates formerly representing
Company Common Stock with respect to any fractional share interests, the
Exchange Agent shall make available such amounts to such holders of
Certificates formerly representing Company Common Stock subject to and in
accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Certificates for twelve
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore
8
complied with this Article II shall thereafter look only to Parent for payment
of their claim for the Merger Consideration, any dividends or other
distributions with respect to Parent ADSs and any cash in lieu of fractional
Parent ADSs in accordance with this Article II.
(g) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any Merger Consideration,
any dividends or other distributions with respect thereto or any cash in lieu
of fractional Parent ADSs, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) or any cash payable in lieu of fractional Parent ADSs pursuant
to Section 2.02(e) would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration, dividends or other
distributions in respect thereof or such cash shall, to the extent permitted
by applicable law, become the property of Parent, free and clear of all claims
or interests of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund in investment grade securities, as directed
by Parent, on a daily basis. Any interest and other income resulting from such
investments shall be the property of, and shall be paid to, Parent.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, any unpaid dividends or other distributions in respect thereof
and any cash in lieu of fractional Parent ADSs, in each case pursuant to this
Agreement.
(j) Withholding Rights. The Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
shares of Company Common Stock pursuant to this Agreement such amounts as may
be required to be deducted and withheld with respect to the
9
making of such payment under the Code, or under any provision of state, local
or foreign tax law. To the extent that amounts are so withheld and paid over
to the appropriate taxing authority, the Exchange Agent shall be treated as
though it withheld an appropriate amount of the type of consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock, sold such consideration for an amount of cash equal to
the fair market value of such consideration at the time of such deemed sale
and paid such cash proceeds to the appropriate taxing authority.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth in the disclosure schedule (with specific reference to the
particular section or subsection of this Agreement to which the information
set forth in such disclosure schedule relates and such other sections or
subsections of this Agreement to the extent a matter is disclosed in such a
way as to make its relevance to the information called for by such other
section or subsection reasonably apparent) delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
corporate authority and possesses all governmental licenses, permits,
authorizations and approvals necessary to enable it to use its corporate name
and to own, lease or otherwise hold and operate its properties and other
assets and to carry on its business as presently conducted, except such
governmental licenses, permits, authorizations and approvals as, individually
or in the aggregate, have not had and would not reasonably be expected to have
a Company Material Adverse Effect. The Company is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of its
properties or other assets makes such qualification or licensing necessary,
except for those jurisdictions in which the failure to be so qualified or
licensed or to be in good standing individually or in the aggregate has not
had and would not reasonably be expected to have a Company Material Adverse
Effect. The Company has
10
made available to Parent prior to the execution of this Agreement complete and
correct copies of its Second Restated Certificate of Incorporation (the
"Company Certificate") and Restated By-laws (the "Company By-laws"), in each
case as amended to the date of this Agreement. The minute books of the Company
contain a complete and correct set of the minutes of all meetings and
accurately reflect all other actions taken by the stockholders of the Company,
the Board of Directors of the Company and all committees of the Board of
Directors of the Company. Complete and correct copies of all such minute books
have been provided by the Company to Parent prior to the execution of this
Agreement.
(b) Subsidiaries. The Company does not own any capital stock or
other ownership interest in any person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 40,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Stock"). At the close
of business on March 18, 2002, (i) 13,357,492 shares of Company Common Stock
were issued and outstanding (including no restricted shares of Company Common
Stock the restrictions in respect of which lapse solely on the basis of
service of a Participant (as defined in Section 3.01(g)) to the Company), (ii)
no shares of Company Common Stock were held by the Company in its treasury,
(iii) 3,404,352 shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans (as defined in Section 5.06(a)) (of which
2,678,759 shares of Company Common Stock were subject to outstanding stock
options or other rights to purchase or receive shares of Company Common Stock
granted under the Company Stock Plans (collectively, "Company Stock
Options")), (iv) no shares of Preferred Stock were issued or outstanding and
(v) 40,000 shares of Series A Junior Participating Preferred Stock were
reserved for issuance in connection with the Rights (as defined in Section
5.14) issued pursuant to the Rights Agreement (as defined in Section 3.01(t)).
Except as set forth above in this Section 3.01(c), at the close of business on
March 18, 2002, no shares of capital stock or other voting securities of the
Company were issued, reserved for issuance or outstanding. Except as set forth
above in this Section 3.01(c), there are no outstanding stock appreciation
rights, restricted shares, stock options, rights to receive shares of Company
Common Stock on a deferred basis or other rights that are linked to the value
of Company Common Stock granted under the Company Stock Plans or otherwise.
Section 3.01(c) of the Company Disclosure Schedule sets forth a complete and
accurate list, as of March 18, 2002, of all outstanding Company Stock Options
granted under the Company Stock Plans or otherwise,
11
the number of shares of Company Common Stock subject thereto, the grant dates,
expiration dates, exercise prices and vesting schedules thereof and the names
of the holders thereof. All outstanding shares of capital stock of the Company
are, and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and, to the Knowledge of the
Company, will be delivered free and clear of all Liens (other than Liens
created by or imposed upon the holders thereof) and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
the Company may vote. Except as set forth above in this Section 3.01(c)
(including pursuant to the conversion or exercise of the securities referred
to above), (i) there are not issued, reserved for issuance or outstanding (A)
any shares of capital stock or other voting securities of the Company, (B) any
securities of the Company convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of, or other ownership
interest in, the Company and (C) any warrants, calls, options, "phantom"
shares, stock appreciation rights, restricted shares, stock-based performance
units, commitments, contracts, arrangements or undertakings or other rights to
acquire from the Company, and no obligation of the Company to issue, any
capital stock or other voting securities of, or other ownership interest in,
or securities convertible into or exchangeable or exercisable for capital
stock or other voting securities of, the Company, (ii) there are not any
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities and (iii) the Company is not a
party to any voting agreement with respect to the voting of any such
securities.
(d) Authority; Noncontravention. (i) The Company has all requisite
corporate power and corporate authority to enter into this Agreement and,
subject to receipt of the Company Stockholder Approval (as defined in Section
3.01(p)), to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of the Company
subject, in the case of the Merger, to the receipt of the Company Stockholder
Approval, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement,
12
subject, in the case of the Merger, to receipt of the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by each of the
other parties hereto, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
Board of Directors of the Company, at a meeting duly called and held at which
all directors of the Company were present, duly and unanimously adopted
resolutions (A) approving this Agreement and the Stockholders Agreement, the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement, (B) directing that the adoption of this Agreement be
submitted to a vote at a meeting of the stockholders of the Company, (C)
recommending that the stockholders of the Company adopt this Agreement and (D)
declaring that this Agreement is advisable.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of,
or result in, termination, cancelation or acceleration of any obligation or to
the loss of a benefit under, or result in the creation of any pledge, claim,
lien, charge, encumbrance or security interest of any kind or nature
whatsoever (collectively, "Liens") in or upon any of the properties or other
assets of the Company under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of (A)
the Company Certificate or Company By-laws, (B) any loan or credit agreement,
bond, debenture, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit, concession, franchise, license or similar authorization applicable to
the Company or any of its properties or other assets or (C) subject to the
governmental filings and other matters referred to in Section 3.01(d)(iii),
any (1) statute, law, ordinance, rule or regulation or (2) order, writ,
injunction, decree, judgment or stipulation, in each case applicable to the
Company or any of its properties or other assets, other than, in the case of
clauses (B) and (C), any such conflicts, violations, breaches, defaults,
rights, losses, Liens or entitlements that individually or in the aggregate
have not had and would not reasonably be expected to (x) have a Company
Material Adverse Effect, (y) impair the ability of the Company to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions
13
contemplated by this Agreement or the Stockholders
Agreement.
(iii) No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filing with, any Federal,
state, local or foreign government, any court, administrative, regulatory or
other governmental agency, commission or authority or any non- governmental
self-regulatory agency, commission or authority (each, a "Governmental
Entity") is required by or with respect to the Company in connection with the
execution and delivery of this Agreement, the Stockholders Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement and the Stockholders Agreement, except for (A) 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 any applicable filings and approvals under similar foreign antitrust or
competition laws and regulations, (B) the filing with the Securities and
Exchange Commission (the "SEC") of (1) a proxy statement relating to the
Company Stockholders' Meeting (such proxy statement, as amended or
supplemented from time to time, the "Proxy Statement") and (2) such reports
under Section 13(a), 13(d), 15(d) or 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement, the Stockholders Agreement and the transactions contemplated
by this Agreement or the Stockholders Agreement, (C) 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 jurisdictions in
which the Company is qualified to do business and (D) such other consents,
approvals, orders, authorizations, actions, registrations, declarations and
filings the failure of which to be obtained or made individually or in the
aggregate has not had and would not reasonably be expected to (x) have a
Company Material Adverse Effect, (y) impair the ability of the Company to
perform its obligations under this Agreement or (z) prevent or materially
delay the consummation of the transactions contemplated by this Agreement or
the Stockholders Agreement.
(e) Company SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) with the SEC since January 1,
2000 (collectively, the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the
14
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and none of
the Company SEC Documents at the time it was filed 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
light of the circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC Document filed and
publicly available prior to the date of this Agreement (the "Filed Company SEC
Documents") has been revised or superseded by a later-filed Filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement of
material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including the related notes) included in the Company SEC Documents
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 ("GAAP") (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and its results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments). Except as set forth in the most recent financial
statements included in the Filed Company SEC Documents, the Company has no
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which, individually or in the aggregate, have had or
would reasonably be expected to have a Company Material Adverse Effect. As of
the date of this Agreement, the Company had cash and cash equivalents and
short-term investments, each as defined in the financial statements included
in the Filed Company SEC Documents, in the aggregate amount of at least $4.7
million.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form F-4 to be filed with the
SEC by Parent in connection with the issuance of Parent ADSs in the Merger
(the "Form F-4") will, at the time the Form F-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any
15
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
Company 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 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 Act and
the rules and regulations promulgated thereunder. No representation or
warranty is made by the Company with respect to statements made or
incorporated by reference in the Proxy Statement based on information supplied
by Parent or Sub specifically for inclusion or incorporation by reference in
the Proxy Statement.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with or expressly permitted by this Agreement and
except as disclosed in the Filed Company SEC Documents, since December 31,
2001, the Company has conducted its business only in the ordinary course
consistent with past practice, and since such date there has not been (i) any
Company Material Adverse Change, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of the Company's capital
stock, (iv) (A) any granting by the Company to any current or former director,
officer or other employee of, or current or former independent contractor with
respect to, the Company (each, a "Participant") of any increase in
compensation, bonus or other benefits, except for normal increases in cash
compensation in the ordinary course of business consistent with past practice,
(B) any commitment, contingent or otherwise, by the Company to pay any bonus
to any Participant (other than bonuses which have already been paid (which
bonuses amounted to $256,875 and which bonuses have been specified in Section
3.01(g)(iv)(B) of the Company Disclosure Schedule), (C) any granting by the
Company to any Participant of any severance, change of control or termination
pay or benefits (or any increase in such pay or benefits), (D) any entry by
the Company into, or any adoption or amendment of, (1) any individual
employment, deferred compensation, consulting, severance, termination or
indemnification agreement, arrangement or understanding with any Participant
or (2) any agreement with any Participant
16
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of a
nature contemplated by this Agreement (all such agreements under this clause
(D), collectively, "Benefit Agreements") or (E) any amendment to, or
modification of, any Company Stock Option, (v) any damage, destruction or
loss, whether or not covered by insurance, that individually or in the
aggregate has had or would reasonably be expected to have a Company Material
Adverse Effect, (vi) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities or businesses,
except insofar as may have been required by a change in GAAP, (vii) any
material tax election or any settlement or compromise of any material income
tax liability or (viii) any disclosure by the Company or, to the Knowledge of
the Company, by any of its employees of any confidential know-how (except by
way of application for or issuance of a patent or pursuant to a
confidentiality agreement) or any lapse or abandonment of any patent or patent
application that is owned by the Company or with respect to which the Company
has an obligation to maintain pursuant to a license or other agreement.
(h) Litigation. Except as disclosed in the Filed Company SEC
Documents, there is no investigation, suit, claim, action, proceeding or
grievance pending or, to the Knowledge of the Company, threatened against the
Company or specifically affecting the Company, any of its employees (in
connection with their employment by the Company) or any of its products (it
being understood that the foregoing does not include matters affecting the
pharmaceutical or biotechnical industry in general), by any Governmental
Entity or other person under any Legal Provision (as defined in Section
3.01(j)) or otherwise, that individually or in the aggregate has had or would
reasonably be expected to have a Company Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company that individually or in the
aggregate has had or would reasonably be expected to have a Company Material
Adverse Effect. To the Knowledge of the Company, there are no facts,
circumstances or conditions which could reasonably be expected to give rise to
any liability of, or form the basis of an investigation, suit, claim, action,
proceeding or grievance against, the Company or specifically affecting the
Company, any of its employees (in connection with their employment by the
Company) or any of its products (it being understood that the foregoing does
not include matters affecting the pharmaceutical or biotechnical industry in
general) relating to or arising under any applicable statutes, laws,
ordinances, rules or regulations, which
17
liability, investigation, suit, claim, action, proceeding or grievance,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect; provided, however, that where this
representation entails an evaluation of the validity or enforceability of a
patent or patent application, or of whether any activity constitutes an
infringement of a patent, then any such evaluation by the Company is subject
to the normal risks and uncertainties inherent in such evaluations by patent
counsel.
(i) Contracts. Except as disclosed in the Filed Company SEC
Documents, the Company is not a party to, and none of its properties or other
assets are subject to, any contract or agreement that is of a nature required
to be filed as an exhibit to a report or filing under the Securities Act or
the Exchange Act and the rules and regulations promulgated thereunder. The
Company is not in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any loan or credit agreement,
bond, debenture, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding, instrument,
permit, concession, franchise or license, whether oral or written, to which
the Company is a party or by which it or any of its properties or other assets
is bound, except for violations or defaults that individually or in the
aggregate have not had and would not reasonably be expected to have a Company
Material Adverse Effect. Except as disclosed in the Filed Company SEC
Documents, the Company has not entered into any amendment to or modification
of any license or any other material contract. The Company has not received
written notice, or to its Knowledge, oral notice, of its failure to comply
with the terms of any license or any other material contract to which it is a
party. The Company has not entered into any contract, agreement, obligation,
commitment, arrangement or understanding with any Affiliate of the Company
that is currently in effect other than agreements that are disclosed in the
Filed Company SEC Documents. The Company is not a party to or otherwise bound
by any agreement or covenant not to compete or by any agreement or covenant
restricting in any respect the development, marketing or distribution of the
Company's products or services. To the Knowledge of the Company, the Company
is not party to or otherwise bound by any agreement or covenant which would
purport to limit in any respect the manner in which, or the localities in
which, Parent conducts its business following the Effective Time. Section
3.01(i) of the Company Disclosure Schedule sets forth a complete and accurate
list of all contracts or agreements, to which the
18
Company is a party relating to the research, development, distribution,
supply, license, marketing or manufacturing by third parties of the Company's
products or products licensed by the Company. The Company has made available
to Parent complete and correct copies of all such contracts or agreements.
None of such contracts and agreements grant an exclusive right (whether in the
present or upon happening of an event) to such third parties for the research,
development, distribution, supply, license, marketing or manufacturing of any
such product.
(j) Compliance with Laws. (i) The Company is in compliance with all
statutes, laws, ordinances, rules, regulations, judgments, orders and decrees
of any Governmental Entity applicable to it, its properties or other assets or
its business or operations (collectively, "Legal Provisions"), except for
instances of noncompliance that individually or in the aggregate have not had
and would not reasonably be expected to have a Company Material Adverse
Effect. Except as, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect, the Company
has in effect all approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights of or with all Governmental
Entities, including all authorizations under the Federal Food, Drug, and
Cosmetic Act of 1938, as amended (the "FDCA"), and the regulations of the
Federal Food and Drug Administration (the "FDA") promulgated thereunder, and
under Environmental Laws (collectively, "Permits"), necessary for it to own,
lease or operate its properties and other assets and to carry on its business
and operations as presently conducted. There has occurred no default under, or
violation of, any such Permit, except individually or in the aggregate as has
not had and would not reasonably be expected to have a Company Material
Adverse Effect. The consummation of the Merger, in and of itself, would not
cause the revocation or cancelation of any such Permit that individually or in
the aggregate would reasonably be expected to have a Company Material Adverse
Effect.
(ii) Except for those matters disclosed in the Filed Company SEC
Documents and those matters that individually or in the aggregate have not had
and would not reasonably be expected to have a Company Material Adverse
Effect, (A) the Company is, and has been, in compliance with all Environmental
Laws; (B) during the period of ownership or operation by the Company of any of
its currently or previously owned or operated properties, there have been no
Releases of Hazardous Material in, on, under or affecting such properties or
any surrounding sites; (C) prior to the
19
period of ownership or operation by the Company of any of its currently or
previously owned or operated properties, to the Knowledge of the Company,
there were no Releases of Hazardous Material in, on, under or affecting any
such properties or any surrounding sites; (D) there is no investigation, suit,
claim, action, proceeding or grievance pending, or to the Knowledge of the
Company, threatened against the Company or specifically affecting the Company,
any of its employees (in connection with their employment by the Company), any
of its products or any of its owned or leased real property (it being
understood that the foregoing does not include matters affecting the
pharmaceutical or biotechnical industry in general) relating to or arising
under Environmental Laws, and the Company has not received any notice of, or
entered into or assumed by contract or operation of law, any obligation,
liability, order, settlement, judgment, injunction or decree relating to or
arising under Environmental Laws; and (E) to the Knowledge of the Company,
there are no facts, circumstances or conditions which could reasonably be
expected to give rise to any liability of, or form the basis of an
investigation, suit, claim, action, proceeding or grievance against the
Company or specifically affecting the Company, any of its employees (in
connection with their employment by the Company), any of its products or any
of its owned or leased real property (it being understood that the foregoing
does not include matters affecting the pharmaceutical or biotechnical industry
in general) relating to or arising under any Environmental Law which
liability, investigation, suit, claim, action, proceeding or grievance,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect. The term "Environmental Laws" means
all Legal Provisions relating in any way to the environment, preservation or
reclamation of natural resources, the presence, management, Release or threat
of Release of, or exposure to, Hazardous Materials, or to human health and
safety. The term "Hazardous Material" means any chemical, material, substance,
waste, pollutant or contaminant that is prohibited, limited or regulated by or
pursuant to any Environmental Law. The term "Release" means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, disposing or migrating into or through the
environment or any natural or man-made structure.
(k) Absence of Changes in Benefit Plans; Labor Relations. Except as
disclosed in the Filed Company SEC Documents, since the date of the most
recent audited financial statements included in the Filed Company SEC
Documents, there has not been any adoption or amendment (other than an
amendment required by law) by the Company of
20
any Benefit Plan (as defined in Section 3.01(l)) or any plan or arrangement
which would constitute a Benefit Plan if adopted or any material change in any
actuarial or other assumption used to calculate funding obligations with
respect to any Benefit Plan, or any change in the manner in which
contributions to any Benefit Plan are made or the basis on which such
contributions are determined. Except as disclosed in the Filed Company SEC
Documents, there exist no currently binding Benefit Agreements. Since January
1, 2000, the Company has not encountered any labor union organizing activity
or had any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and correct list of each benefit,
employment, personal services, collective bargaining (or other similar labor),
compensation, incentive, stock option, restricted stock, stock appreciation
right, phantom equity, change of control, severance, vacation, time-off,
perquisite or other similar agreement, plan, policy or other arrangement (and
any amendments thereto), excluding any Benefit Agreement, (A) covering one or
more Participants, and maintained by the Company or (B) with respect to which
the Company has or could have any liability (each, a "Benefit Plan"). The
Company has made available to Parent complete and correct copies of (A) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof) and each Benefit Agreement, (B) the two most recent annual reports on
Form 5500 required to be filed with the Internal Revenue Service (the "IRS")
with respect to each Benefit Plan (if any such report was required), (C) the
most recent summary plan description for each Benefit Plan for which such
summary plan description is required and (D) each trust agreement and
insurance or group annuity contract relating to any Benefit Plan.
(ii) Each Benefit Plan, the Company, its officers and those with
discretion relating to any Benefit Plan's assets or administration have at all
times complied with the applicable requirements of all applicable laws,
including the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations promulgated thereunder, except where the
failure to comply, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect, and, each
Benefit Plan has, at all times in order to obtain pension related taxation
advantages, complied, in all material respects, with the Code, and the
regulations promulgated thereunder. To the Knowledge of the Company, neither
the Company nor any Affiliate of the Company has, or
21
could reasonably be expected to incur, any unfunded liabilities in relation to
any Benefit Plan or any Participant (other than liabilities relating to claims
for welfare benefits in the normal course), and all payments, benefits,
contributions and premiums relating to each Benefit Plan have been timely paid
or made in accordance with the terms of such Benefit Plan and the terms of all
applicable laws.
(iii) (A) No Benefit Agreement or Benefit Plan (1) provides for
defined benefit pension benefits, or deferred compensation, (2) provides any
benefits (other than on a self-pay basis or pursuant to the terms of a Benefit
Agreement) following termination of service or employment, (3) is a "multiple
employer welfare arrangement" (as defined in Section 3(40) of ERISA), is
subject to Title IV of ERISA, or is a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA or other applicable employee benefit
legislation), (4) is a collective bargaining or similar labor agreement, (5)
covers any Participant who resides or works outside the United States and (B)
no Participant (1) is represented by any union, (2) is currently receiving any
disability benefits, (3) has entered into or is covered by any Benefit
Agreement or any other individual agreement or arrangement with the Company or
any of its Affiliates or stockholders, (4) has received any loan from the
Company or any Affiliate of the Company which has an outstanding balance, (5)
has a right (x) to take more than four weeks of vacation per year or (y) to
receive from the Company or any Affiliate of the Company base annual salary in
excess of $80,000, a guaranteed bonus, or a target or discretionary bonus
(with respect to any single year) in excess of $25,000, (6) has received from
the Company or any Affiliate of the Company, and neither the Company nor any
Affiliate of the Company has agreed to provide to any Participant, any
discretionary severance or any severance under any formal or informal policy
or practice, (7) has received or could reasonably be expected to receive any
payment or benefit from the Company or any Affiliate of the Company which
would not be deductible to such entity or (8) is, or at any time will become,
entitled to any payment, benefit or right, or any increased and/or accelerated
payment, benefit or right, as a result of (x) such Participant's termination
of employment with, or services to, the Company or any Affiliate of the
Company or any successor to the Company or (y) the execution of this Agreement
or the consummation of the transactions contemplated by this Agreement.
(m) Taxes. (i) The Company has filed or has caused to be filed all
tax returns and reports required to
22
be filed by it and all such returns and reports are complete and accurate in
all material respects. The Company has paid or caused to be paid all taxes
shown to be due on such returns and reports, and the most recent financial
state ments contained in the Filed Company SEC Documents reflect an adequate
reserve (excluding any reserves for deferred taxes) for all taxes payable by
the Company for all taxable periods and portions thereof accrued through the
date of such financial statements.
(ii) No deficiencies, audit examinations, refund litigation,
proposed adjustments or matters in controversy for any taxes have been
proposed, asserted or assessed in writing against the Company. The Federal
income tax returns of the Company have not been examined by or settled with
the IRS for any taxable years of the Company. All assessments for taxes due
and owing by the Company with respect to completed and settled examinations or
concluded litigation have been paid. There is no currently effective agreement
or other document extending, or having the effect of extending, the period of
assessment or collection of any taxes.
(iii) The Company will not be required to include in a taxable
period ending after the Effective Time taxable income attributable to income
that accrued in a prior taxable period but was not recognized for tax purposes
in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term
contract method of accounting, the cash method of accounting or Section 481 of
the Code or similar provisions of Federal, state, local or other domestic or
foreign tax law.
(iv) The Company has not taken or agreed to take any action and does
not know of any fact, agreement, plan or other circumstance that is reasonably
likely to (A) prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code or (B) cause the Eligible Company
Stockholders who exchange Company Common Stock solely for Parent ADSs pursuant
to the Merger to recognize taxable gain with respect to the Merger pursuant to
Section 367(a) of the Code (except with respect to any cash received in lieu
of fractional Parent ADSs).
(v) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A) in the two
years prior to the date of this Agreement or (B) in a distribution which could
otherwise constitute part of a "plan" or "series of
23
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(vi) As used in this Agreement, "taxes" shall include all (A)
Federal, state, local and foreign income, property, sales, excise, withholding
and other taxes and similar governmental charges, including any interest,
penalties and additions with respect thereto, (B) liability for the payment of
any amounts of the type described in clause (A) as a result of being a member
of a consolidated, combined or similar group and (C) liability as a result of
any tax sharing or similar contractual agreement.
(n) Title to Properties. (i) The Company has good and marketable
title to, or valid leasehold interests in, all real properties owned or leased
by the Company except for such as are no longer used or useful in the conduct
of its business or as have been disposed of in the ordinary course of business
and except for defects in title, easements, restrictive covenants and similar
encumbrances that individually or in the aggregate would not materially
interfere with its ability to conduct its business as presently conducted. All
such properties, other than properties in which the Company has a leasehold
interest, are free and clear of all Liens, except for Liens that individually
or in the aggregate would not materially interfere with the ability of the
Company to conduct its business as presently conducted.
(ii) The Company has complied in all material respects with the
terms of all material leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect, except for such
noncompliance or failure to be in full force and effect that individually or
in the aggregate has not had and would not reasonably be expected to have a
Company Material Adverse Effect. The Company is in occupancy and possession
under all such leases. The Company has not received any notice from any third
party of a fact that could reasonably be expected to be detrimental to the
continued occupancy and possession by the Company under all leases to which it
is a party and under which it is in occupancy.
(o) Intellectual Property. (i) To the Knowledge of the Company, the
Company owns, or is validly licensed or otherwise has the right to use
(without any obligation to make any fixed or contingent payments, including
royalty payments (except as provided in Section 3.01(o)(v) of the Company
Disclosure Schedule)) all patents, patent applications, trademarks, trademark
applications, trademark rights, trade names, trade name rights, domain names,
24
service marks, service ▇▇▇▇ rights, copyrights, copyright applications,
software, technical know-how and other proprietary intellectual property
rights and computer programs (collectively, "Intellectual Property Rights")
which are material (A) to the conduct of the business of the Company as it is
currently conducted and (B) to the research, development, use, manufacture and
sale of any Pharmaceutical Product (as defined in Section 3.01(u)) (but only
to the extent that any Pharmaceutical Product is researched, developed, used
manufactured or sold currently by the Company) free and clear of all Liens. To
the extent that this representation entails an evaluation of the validity or
enforceability of a patent or patent application, or of whether any activity
constitutes an infringement of a patent, then any such evaluation by the
Company is subject to the normal risks and uncertainties inherent in such
evaluations by patent counsel.
(ii) To the Knowledge of the Company, no person or persons are
infringing the rights of the Company with respect to any Intellectual Property
Right in a manner which, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect. To the
extent that this representation entails an evaluation of the validity or
enforceability of a patent or patent application, or of whether any activity
constitutes an infringement of a patent, then any such evaluation by the
Company is subject to the normal risks and uncertainties inherent in such
evaluations by patent counsel.
(iii) Section 3.01(o)(iii) of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, a complete and correct list (by
category) of all patents, trademarks and applications therefor owned by or
licensed to the Company. All such patents, trademarks and applications
therefor listed in Section 3.01(o)(iii) of the Company Disclosure Schedule are
owned by or validly licensed to the Company (without any obligation to make
any fixed or contingent payments, including royalty payments (except as
provided in Section 3.01(o)(v) of the Company Disclosure Schedule)) free and
clear of all Liens. The patent applications listed in Section 3.01(o)(iii) of
the Company Disclosure Schedule are pending and have not been abandoned, and
have been and continue to be prosecuted by registered patent counsel. The
Company has no Knowledge of any fact, circumstance or condition that could
reasonably be expected to prevent any pending patent application from being
granted to the extent such pending patent application is material to the
Company's business; provided, however, that where this statement entails an
evaluation of the validity or enforceability of a patent or patent
application, or of
25
whether any activity constitutes an infringement of a patent, then any such
evaluation by the Company is subject to the normal risks and uncertainties
inherent in such evaluations by patent counsel. All patents, trademarks and
applications therefor owned by or licensed to the Company have been duly
registered and/or filed with or issued by each appropriate Governmental Entity
in the jurisdiction indicated in Section 3.01(o)(iii) of the Company
Disclosure Schedule, all necessary affidavits of continuing use have been
filed and all necessary maintenance fees have been timely paid to continue all
such rights in effect. None of the patents listed in Section 3.01(o)(iii) of
the Company Disclosure Schedule has expired or has been declared invalid, in
whole or in part, by any Governmental Entity. There are no ongoing
interferences, oppositions, reissues, reexaminations or adverse proceedings
involving any of the patents or patent applications listed in Section
3.01(o)(iii) of the Company Disclosure Schedule, including ex parte and
post-grant proceedings, in the United States Patent and Trademark Office or in
any foreign patent office or similar administrative agency. To the Knowledge
of the Company, there are no published patents, patent applications, articles
or other prior art references that could materially affect the validity of any
patent listed in Section 3.01(o)(iii) of the Company Disclosure Schedule;
provided, however, that where this statement entails an evaluation of the
validity or enforceability of a patent or patent application, or of whether
any activity constitutes an infringement of a patent, then any such evaluation
by the Company is subject to the normal risks and uncertainties inherent in
such evaluations by patent counsel. To the Knowledge of the Company, there are
no patents owned by third parties (other than patents licensed by the Company)
that are considered likely to prevent the conduct of the Company's business as
it is currently being conducted; provided, however, that where this statement
entails an evaluation of the validity or enforceability of a patent or patent
application, or of whether any activity constitutes an infringement of a
patent, then any such evaluation by the Company is subject to the normal risks
and uncertainties inherent in such evaluations by patent counsel. The
inventions described in the patents and patent applications listed in Section
3.01(o)(iii) of the Company Disclosure Schedule have been assigned or are
obligated to be assigned to the Company or to a licensor of the Company, and
are subject to no contractual or other obligation that would preclude any such
assignment or otherwise conflict with the obligation to assign such
invention(s) to the Company or to a licensor of the Company.
26
(iv) Section 3.01(o)(iv) of the Company Disclosure Schedule sets
forth a complete and correct list of all options and licenses relating to
Intellectual Property Rights granted to the Company, other than software
licenses for generally available software, or granted by the Company to any
other person.
(v) None of the execution and delivery of this Agreement, the
obtaining of the Company Stockholder Approval or the consummation of the
Merger or any other transaction contemplated by this Agreement will (A)
entitle any third party to any royalty or other payment under any Intellectual
Property Right of the Company or (B) accelerate the time of any royalty or
other payment or trigger any royalty or other payment, increase the amount of
any royalty or other payment or trigger any other material obligation under
any Intellectual Property Right of the Company. Section 3.01(o)(v) of the
Company Disclosure Schedule sets forth a complete and correct list of all
royalty and other payments payable by the Company pursuant to agreements with
third parties, or to the Knowledge of the Company, to any third party in any
other circumstance, for the use of Intellectual Property Rights licensed by or
used by the Company in connection with the research, development, use,
manufacture or sale of any Pharmaceutical Product.
(p) Voting Requirements. The affirmative vote at the Company
Stockholders' Meeting of holders of a majority of the outstanding shares of
Company Common Stock to adopt this Agreement (the "Company Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt this Agreement and approve the
Merger and the other transactions contemplated by this Agreement. Each
Principal Stockholder is the record owner of, or is the trustee of a trust
that is the record holder of, the number of Subject Shares (as such term is
defined in the Stockholders Agreement) set forth beside the name of such
Stockholder on Schedule A to the Stockholders Agreement. As of the date of
this Agreement, the Subject Shares represent in the aggregate not less than
26.67% of the outstanding shares of Company Common Stock.
(q) State Takeover Statutes. The Board of Directors of the Company
has unanimously approved the terms of this Agreement and the Stockholders
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and the Stockholders Agreement, and such
approval constitutes approval of the Merger and the other transactions
contemplated by this Agreement and the Stockholders Agreement by the Board of
Directors of the Company under the provisions of Section 203
27
of the DGCL and represents all the action necessary to ensure that the
restrictions on "business combinations" (as defined in such Section 203)
contained in such Section 203 do not apply to Parent in connection with the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement. No other state takeover statute or similar statute or
regulation applies or purports to apply to this Agreement, the Stockholders
Agreement, the Merger or the other transactions contemplated by this Agreement
and the Stockholders Agreement.
(r) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person, other than Bear, ▇▇▇▇▇▇▇ & Co. Inc., the
fees, commissions and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee
or commission, or the reimbursement of expenses, in connection with the
transactions contemplated by this Agreement and the Stockholders Agreement
based upon arrangements made by or on behalf of the Company. The Company has
delivered to Parent complete and correct copies of all agreements under which
any such fees, commissions or expenses are payable and all indemnification and
other agreements related to the engagement of the persons to whom such fees,
commissions or expenses are payable.
(s) Opinion of Financial Advisor. The Company has received the
opinion of Bear, ▇▇▇▇▇▇▇ & Co. Inc. dated the date of this Agreement, to the
effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the public stockholders of the Company (other than
Parent and its Affiliates), a signed copy of which opinion has been or
promptly will be delivered to Parent.
(t) Rights Agreement. The Company has taken all actions necessary to
cause the Rights Agreement dated as of September 19, 2001, between the Company
and American Stock Transfer & Trust Company, as rights agent (the "Rights
Agreement") to be amended to (i) render the Rights Agreement inapplicable to
this Agreement, the Stockholders Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreement,
(ii) ensure that (A) none of Parent, Sub or any other subsidiary of Parent is
an Acquiring Person (as defined in the Rights Agreement) pursuant to the
Rights Agreement and (B) a Distribution Date, a Triggering Event or a Shares
Acquisition Date (as such terms are defined in the Rights Agreement) does not
occur, in either case of clauses (A) and (B), solely by reason of the
execution of this Agreement or the Stockholders Agreement or the consummation
of the Merger or
28
the other transactions contemplated by this Agreement and the Stockholders
Agreement and (iii) provide that the Final Expiration Date (as defined in the
Rights Agreement) shall occur immediately prior to the Effective Time.
(u) Regulatory Compliance. (i) The Company has never manufactured,
shipped or marketed, and does not currently manufacture, ship or market, any
product subject to the FDCA and the FDA regulations thereunder (each such
product, a "Pharmaceutical Product") for clinical trials or sales. The Company
has not engaged in and is not currently engaging in any activities which are
subject to the FDCA and the FDA regulations thereunder. The Company has not
made any filings with the FDA or equivalent state or foreign regulatory
agency, including any biologics license application, new drug application or
investigational new drug application.
(ii) Neither the Company nor any officer, employee or agent of the
Company has been convicted of any crime or engaged in any conduct for which
debarment is mandated by 21 U.S.C. ss. 335a(a) or any similar Legal Provision
or authorized by 21 U.S.C. ss. 335a(b) or any similar Legal Provision. The
Company has not employed any individual or entity (and, to the Knowledge of
the Company, has not used a contractor or consultant) that has been debarred
by the FDA (or subject to a similar sanction by any foreign regulatory
equivalent of the FDA) or that is the subject of an FDA debarment
investigation or proceeding (or similar proceeding of any foreign regulatory
equivalent of the FDA) in the conduct of the preclinical or clinical studies
of any Pharmaceutical Product.
(v) Insurance. Section 3.01(v) of the Company Disclosure Schedule
sets forth a complete and correct list of all material insurance policies
(including policies providing property, casualty, liability, workers
compensation, theft, bond and surety arrangements) to which the Company is a
party, named insured or otherwise the beneficiary of coverage, and describes
all self-insurance arrangements of the Company, if any. Each such insurance
policy is in full force and effect and the Company is not in violation of or
in default under (nor does, to the Knowledge of the Company, there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under or give rise to a right of
termination or modification under) any such insurance policy, except for such
violations or defaults that individually or in the aggregate have not had and
would not reasonably be expected to have a Company Material Adverse Effect.
29
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 and
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has all
requisite corporate power and corporate authority to carry on its business as
now being conducted. Each of Parent and Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those jurisdictions in
which the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Parent has made available
to the Company prior to the execution of this Agreement complete and correct
copies of its Articles of Association and the Certificate of Incorporation and
By- laws of Sub, in each case as amended to the date of this Agreement.
(b) Capital Structure. (i) At the close of business on March 18,
2002, (A) 198,000,000 Parent Ordinary Shares were issued and outstanding, all
of which were validly issued, fully paid and nonassessable, (B) no Parent
Ordinary Shares were held by Parent in its treasury or by subsidiaries of
Parent, (C) no Parent Ordinary Shares were reserved for issuance upon
conversion of outstanding convertible bonds and option debenture bonds and (D)
less than 3,000,000 Parent Ordinary Shares were subject to outstanding options
to purchase Parent Ordinary Shares or Parent ADSs.
(ii) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $.001 per share, all of which are validly issued,
fully paid and nonassessable and are owned by Parent free and clear of any
Lien.
(c) Authority; Noncontravention. (i) Each of Parent and Sub has all
requisite corporate power and corporate authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. Parent has
the requisite corporate power and corporate authority to enter into the
Stockholders Agreement and to consummate the transactions contemplated by the
Stockholders Agreement. The execution and delivery of this Agreement and the
Stockholders Agreement by Parent and Sub, as applicable,
30
and the consummation by Parent and Sub, as applicable, of the transactions
contemplated by this Agreement and the Stockholders Agreement have been duly
authorized by all necessary corporate action on the respective parts of Parent
and Sub, as applicable, subject, in the case of the issuance by Parent of
Parent ADSs in connection with the Merger, to (A) obtaining the requisite
authorization (x) to repurchase Parent Ordinary Shares and (y) to exclude any
subscription rights of existing holders of Parent Ordinary Shares by the
affirmative vote of holders of not less than a majority of Parent Ordinary
Shares voting in person or by proxy (the "Parent Shareholder Approval") at a
duly convened general meeting of the shareholders of Parent (the "Parent
Shareholders' Meeting"), (B) the absence of a pending lawsuit, filed by a
holder of Parent Ordinary Shares with the requisite Governmental Entity in the
Federal Republic of Germany within the period prescribed therefor in
accordance with applicable law, relating to an objection of record of such
shareholder with respect to the authorization described in clause (A) above
and (C) completing such repurchase of Parent Ordinary Shares through a series
of transactions (the "Parent Share Authorization"). Other than the Parent
Share Authorization, no other corporate proceedings on the part of Parent or
Sub, as applicable, are necessary to authorize this Agreement or the
Stockholders Agreement or to consummate the transactions contemplated by this
Agreement and the Stockholders Agreement. Subject to obtaining the Parent
Share Authorization, the Parent Ordinary Shares represented by the Parent ADSs
to be issued pursuant to this Agreement shall have been duly authorized and
validly issued and shall be fully paid and nonassessable and shall have been,
on or prior to the Closing Date, duly and validly deposited with the
Depositary. Subject to obtaining the Parent Share Authorization, the Parent
ADSs to be issued pursuant to the transactions contemplated by this Agreement
shall, when issued, be duly authorized, validly issued, fully paid and
nonassessable and shall entitle the holder thereof to all rights of a Holder
(as defined in the Deposit Agreement). Each of this Agreement and the
Stockholders Agreement has been duly executed and delivered by Parent and Sub,
as applicable, and, assuming the due authorization, execution and delivery by
each of the other parties thereto, constitutes a legal, valid and binding
obligation of Parent and Sub, as applicable, enforceable against Parent and
Sub, as applicable, in accordance with its terms.
(ii) Subject to obtaining the Parent Share Authorization and to the
making of all notices or submissions to the requisite Governmental Entities in
the Federal Republic of Germany in connection with the Parent Share
Authorization, the execution and delivery of this
31
Agreement and the Stockholders Agreement do not, and the consummation of the
Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement and compliance with the provisions of this Agreement
and the Stockholders Agreement will not, conflict with, or result in any
violation or breach of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to the loss of a benefit
under, or result in the creation of any Lien in or upon any of the properties
or other assets of Parent or Sub under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of (A) the Articles of Association of Parent or the Certificate of
Incorporation or By-laws of Sub, (B) any loan or credit agreement, bond,
debenture, note, mortgage, indenture, lease or other contract, agreement,
obligation, commitment, arrangement, understanding, instrument, permit,
concession, franchise, license or similar authorization applicable to Parent
or Sub or any of their respective properties or other assets or (C) subject to
the governmental filings and other matters referred to in Section
3.02(c)(iii), any (1) statute, law, ordinance, rule or regulation or (2)
order, writ, injunction, decree, judgment or stipulation, in each case
applicable to Parent or Sub or any of their respective properties or other
assets, other than, in the case of clauses (B) and (C), any such conflicts,
violations, breaches, defaults, rights, losses, Liens or entitlements that
individually or in the aggregate have not had and would not reasonably be
expected to (x) have a Parent Material Adverse Effect (y) impair the ability
of Parent to perform its obligations under this Agreement or (z) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Stockholders Agreement.
(iii) No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement and the Stockholders Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement and the Stockholders Agreement, except for (A) the filing of a
premerger notification and report form by Parent under the HSR Act, and any
applicable filings and approvals under similar foreign antitrust or
competition laws and regulations, (B) the filing with the SEC of (1) the Form
F-4 and (2) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Exchange Act as may be required in connection with this Agreement and the
Stockholders Agreement and the
32
transactions contemplated by this Agreement and the Stockholders Agreement,
(C) 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 jurisdictions in which Parent or Sub are qualified to do business and
such filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws, (D) such filings with and approvals of
the New York Stock Exchange, Inc. (the "NYSE") to permit the Parent ADSs
issuable to stockholders of the Company as contemplated by this Agreement to
be listed on the NYSE, (E) the making of all notices or submissions to, and
the obtaining of all registrations of, the requisite Governmental Entities in
the Federal Republic of Germany and the Frankfurt Stock Exchange in connection
with the Parent Share Authorization and (F) such other consents, approvals,
orders, authorizations, actions, registrations, declarations and filings the
failure of which to be obtained or made, individually or in the aggregate, has
not had and would not reasonably be expected to (x) have a Parent Material
Adverse Effect, (y) impair the ability of Parent to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of
the transactions contemplated by this Agreement or the Stockholders Agreement.
(d) Parent SEC Documents. Parent has filed or furnished, as
applicable, all required reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated therein)
with the SEC required to be filed or furnished by it since September 27, 2000
(collectively, the "Parent SEC Documents"). As of their respective dates, the
Parent SEC Documents complied 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 at the time it was filed
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 light of the circumstances under which they were made,
not misleading. Except to 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 contains any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
33
(e) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Form F-4 will, at the time the Form F-4 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 Company 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 light of the
circumstances under which they are made, not misleading. The Form F-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations promulgated thereunder. No
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference in the Form F-4 based on information
supplied by the Company specifically for inclusion or incorporation by
reference in the Form F-4.
(f) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, has engaged in
no other business activities and has conducted its operations only as
contemplated by this Agreement.
(g) Tax Matters. Neither Parent, Sub nor any Affiliate of Parent has
taken or agreed to take any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to (i) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code or (ii) cause the Eligible Company Stockholders who exchange Company
Common Stock solely for Parent ADSs pursuant to the Merger to recognize
taxable gain with respect to the Merger pursuant to Section 367(a) of the Code
(except with respect to any cash received in lieu of fractional Parent ADSs).
(h) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with or expressly permitted by this Agreement and
except as disclosed in the Parent SEC Documents filed and publicly available
prior to the date of this Agreement, since December 31, 2001, there has not
been any Parent Material Adverse Change.
34
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. Except as set forth in Section 4.01(a) of the Company Disclosure
Schedule, as otherwise expressly permitted by this Agreement or as consented
to in writing by Parent, such consent not to be unreasonably withheld or
delayed, during the period from the date of this Agreement to the Effective
Time, the Company shall carry on its business in the ordinary course
consistent with past practice (including in respect of research and
development activities and programs) and in compliance with all applicable
laws and regulations and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, employees
and consultants and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
it. Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, except as set forth in
Section 4.01(a) of the Company Disclosure Schedule, as otherwise expressly
permitted by this Agreement or as consented to in writing by Parent, such
consent not to be unreasonably withheld or delayed, the Company shall not:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock or (C) purchase, redeem or otherwise acquire any shares of its
capital stock or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, 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 "phantom" stock, "phantom" stock rights, stock
appreciation rights, stock options, restricted shares, stock based
performance units or any similar awards (other than the issuance of
shares of Company Common Stock (A) upon the
35
exercise of Company Stock Options outstanding on the date of this
Agreement and (B) pursuant to the Company's Employee Stock Purchase Plan,
in each case in accordance with their terms on the date of this
Agreement);
(iii) amend or propose to amend the Company Certificate or the
Company By-laws;
(iv) directly or indirectly acquire by merging or consolidating
with, or by purchasing assets of, or by any other manner, any person or
division, business or equity interest of any person, except for purchases
of materials or supplies or other routine purchases in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, mortgage, sell and leaseback or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or other assets or any interests therein (including
securitizations);
(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,
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, (B) make any
loans, advances or capital contributions to, or investments in, any other
person or (C) repay, redeem or otherwise retire, or make any other
payment in respect of, any indebtedness for borrowed money, other than as
required by its terms as in effect on the date of this Agreement;
(vii) make or agree to make any new capital expenditure or
expenditures;
(viii) (A) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) or litigation (whether or not commenced prior to the date of
this Agreement), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance
36
with their terms, of liabilities disclosed, reflected or reserved against
in the most recent audited financial statements (or the notes thereto) of
the Company included in the Filed Company SEC Documents (for amounts not
in excess of the amounts so disclosed, reflected or reserved) or incurred
since the date of such financial statements in the ordinary course of
business consistent with past practice but in all cases subject to clause
(vi)(C) above, (B) waive or assign any claims or rights of substantial
value or (C) waive any benefits of, agree to modify in any respect or
terminate any confidentiality, standstill or similar agreement to which
the Company is a party or of which the Company is a beneficiary;
(ix) modify or amend in any material respect or terminate or take
any action which would result in a breach of any material contract or
agreement to which the Company is a party or waive, release or assign any
material rights or claims thereunder; provided that the Company shall not
modify or amend in any respect or terminate or take any action which
would result in a breach of any contract relating to any Intellectual
Property Rights of the Company;
(x) enter into any contracts, agreements, binding arrangements or
understandings relating to the research, development, distribution,
supply, license, marketing or manufacturing by third parties of the
Company's products or products licensed by the Company other than
pursuant to any such contracts, agreements, arrangements or
understandings currently in place (that have been disclosed in writing to
Parent prior to the date of this Agreement) in accordance with their
terms as of the date of this Agreement;
(xi) except as required to comply with applicable law, (A)
establish, adopt, enter into, terminate or amend in any material respect
(1) any Benefit Plan (or any plan or arrangement which would constitute a
Benefit Plan if in effect as of the date of this Agreement) or (2) any
other agreement, plan or policy involving the Company and any
Participants, (B) increase in any manner the compensation, bonus or
fringe or other benefits of, or pay any bonus to, any Participant, (C)
accrue or pay any benefit or amount not required under any Benefit Plan
or Benefit Agreement, (D) accrue or provide any severance, change of
control or termination pay or benefits to any Participant or increase in
any manner any such pay or benefits, (E) enter into, renew, extend, amend
or
37
terminate any Benefit Agreement or any agreement which would constitute a
Benefit Agreement if in effect on the date of this Agreement, (F) grant
any awards under any Benefit Plan (including the grant of stock options,
"phantom" stock, stock appreciation rights, "phantom" stock rights, stock
based or stock related awards, performance units or restricted stock or
the removal of existing restrictions in any Benefit Plans or agreements
or awards made thereunder), (G) amend or modify any Company Stock Option,
(H) take any action to fund or in any other way secure the payment of
compensation or benefits under any Benefit Plan or Benefit Agreement
other than as provided in such Benefit Plan or Benefit Agreement in
accordance with their respective terms as of the date of this Agreement,
provided any such provision has been identified in Section 4.01(a)(xi)(H)
of the Company Disclosure Schedule, (I) take any action to accelerate the
vesting of payment of any compensation or benefit under any Benefit Plan
or Benefit Agreement or (J) materially change any actuarial or other
assumption used to calculate funding obligations with respect to any
Benefit Plan or change the manner in which contributions to any Benefit
Plan are made or the basis on which such contributions are determined;
(xii) enter into any agreement of a nature that would be required to
be filed as an exhibit to Form 10- K under the Exchange Act;
(xiii) form any subsidiary of the Company;
(xiv) revalue any material assets of the Company or, except as
required by GAAP, make any change in accounting methods, principles or
practices;
(xv) call or hold any meeting of stockholders of the Company other
than in connection with the election of members of the Board of Directors
of the Company or other routine matters in the ordinary course of
business consistent with past practice or for the purpose of the adoption
of this Agreement and the approval of the Merger and the other
transactions contemplated by this Agreement; or
(xvi) authorize any of, or commit, propose or agree to take any of,
the foregoing actions.
(b) Other Actions. Except as may be expressly permitted by this
Agreement, the Company, Parent and Sub shall not voluntarily take any action
that would, or that
38
could reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified by
materiality becoming untrue at the Effective Time, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect at the Effective Time or (iii) any of the conditions to
the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect, (ii) the failure of it (and, in the case of Parent, of Sub) to comply
with or satisfy in any material respect any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement and (iii) any
change or event having, or which could reasonably be expected to have, a
material adverse effect on the ability of the conditions set forth in Article
VI to be satisfied; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the parties (or
remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement. The Company and Parent shall promptly provide
the other copies of all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated by
this Agreement, other than the portions of such filings that include
confidential information not directly related to the transactions contemplated
by this Agreement.
(d) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall (i) timely file all tax
returns ("Post-Signing Returns") required to be filed by it, (ii) timely pay
all taxes due and payable in respect of such Post-Signing Returns that are so
filed, (iii) make a provision in the books and records and financial
statements of any such entity in accordance with past practice for all taxes
payable by such entity for which no Post-Signing Return is due prior to the
Effective Time, (iv) not make any material tax election or settle or
compromise any material tax liability, other than in connection with currently
pending proceedings or other than in the ordinary course of business and (v)
cause all existing tax sharing agreements and similar agreements to which the
Company is a party to be
39
terminated as of the Closing Date so that after such date the Company shall
have no further rights or liabilities thereunder.
SECTION 4.02. No Solicitation. (a) From and after the date of this
Agreement, the Company shall not, nor shall it authorize or permit any of its
directors, officers or other employees or any investment banker, financial
advisor, attorney, accountant or other advisor, agent or representative
retained by it (collectively, the "Representatives") to, directly or
indirectly through another person, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action
designed to, or which could reasonably be expected to, facilitate, any
inquiries or the making of any proposal that constitutes or could reasonably
be expected to lead to, a Takeover Proposal or (ii) participate in any
discussions or negotiations regarding any Takeover Proposal, in each case
other than a Takeover Proposal made by Parent; provided, however, that at any
time prior to obtaining the Company Stockholder Approval, the Board of
Directors of the Company may, in response to a bona fide written Takeover
Proposal that the Board of Directors of the Company determines in good faith
constitutes or is reasonably likely to lead to a Superior Proposal (as defined
below), and which was unsolicited and did not otherwise result from a breach
of this Section 4.02, and subject to compliance with Section 4.02 (c) and (d),
(x) furnish information with respect to the Company to the person making such
Takeover Proposal (and its representatives) pursuant to a customary
confidentiality agreement (which confidentiality agreement contains terms that
are in no respect less favorable to the Company than the terms of the
Confidentiality Agreement (as defined in Section 5.04)); provided that all
such information is provided on a prior or substantially concurrent basis to
Parent, and (y) participate in discussions or negotiations with the person
making such Takeover Proposal (and its representatives) regarding such
Takeover Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the first sentence of this Section
4.02(a) by any Representative of the Company, whether or not such person is
purporting to act on behalf of the Company or otherwise, shall be a breach of
this Section 4.02(a) by the Company. As of the date of this Agreement, the
Company shall have, and shall have caused each of its Representatives to have,
(i) terminated all discussions or negotiations with all third parties
regarding any Takeover Proposal and (ii) requested the prompt return or
destruction of all confidential information relating to the Company previously
furnished to any such third parties. For purposes of this Agreement, "Takeover
Proposal" means any
40
bona fide inquiry, proposal or offer from any person relating to, or that
could reasonably be expected to lead to, any direct or indirect acquisition or
purchase, in one transaction or a series of transactions, of a business that
constitutes 20% or more of the net revenues, net income or the assets of the
Company, or 20% or more of any class of equity securities of the Company, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the
Company, or any merger, consolidation, business combination, recapitalization,
liquidation, dissolution, joint venture, binding share exchange or similar
transaction involving the Company pursuant to which any third party or the
shareholders of any third party would own 20% or more of the Company or any
resulting parent company of the Company, or any direct or indirect
acquisition, purchase or transfer, in one transaction or a series of
transactions, of any rights of the Company in or to the product[s] known as
Ad5FGF-4 and any related Intellectual Property Rights or other assets or
components of Ad5FGF-4, other than the transactions contemplated by this
Agreement or the Stockholders Agreement. For purposes of this Agreement,
"Superior Proposal" means any bona fide offer not solicited by the Company
after the date of this Agreement made by a third party that if consummated
would result in such third party (or its shareholders) owning, directly or
indirectly, more than 35% of the shares of Company Common Stock then
outstanding (or of the surviving entity in a merger or the direct or indirect
parent of the surviving entity in a merger) or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors of
the Company determines in good faith (based on the advice of a financial
advisor of nationally recognized reputation), taking into account such factors
deemed appropriate by the Board of Directors of the Company, to be reasonably
likely to obtain stockholder and other required approvals on a timely basis
and to provide consideration to the holders of Company Common Stock with a
greater value than the consideration payable in the Merger, taking into
account any changes to the terms of this Agreement proposed by Parent in
response to such Superior Proposal or otherwise.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent or Sub) or
propose publicly to withdraw (or modify in a manner adverse to Parent or Sub)
the recommendation or declaration of advisability by the Board of Directors of
the Company or any such committee of this Agreement or the Merger, or
recommend, or propose publicly to recommend, the approval or adoption of any
41
Takeover Proposal (other than a Takeover Proposal made by Parent) (each such
action being referred to herein as an "Adverse Recommendation"), unless the
Board of Directors of the Company determines in good faith, based on such
factors deemed appropriate by it, after consulting with outside counsel, that
the failure to take such action would be reasonably likely to result in a
breach of its fiduciary duties under applicable law, (ii) adopt or approve, or
propose publicly to adopt or approve, any Takeover Proposal (other than a
Takeover Proposal made by Parent), or withdraw its approval of the Merger or
propose publicly to withdraw its approval of the Merger, (iii) cause or permit
the Company to execute or enter into any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, license agreement,
partnership agreement or other similar agreement (each, an "Acquisition
Agreement") constituting or related to, or which is intended to or could
reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) or (iv) agree or
resolve to take any of the actions prohibited by clauses (i), (ii) or (iii) of
this sentence. Notwithstanding anything in this Section 4.02 to the contrary,
at any time prior to obtaining the Company Stockholder Approval, the Board of
Directors of the Company may, in response to a Superior Proposal that was
unsolicited and that did not otherwise result from a breach of Section
4.02(a), cause the Company to terminate this Agreement pursuant to Section
7.01(f) and concurrently enter into an Acquisition Agreement; provided
however, that the Company shall not terminate this Agreement pursuant to
Section 7.01(f), and any purported termination pursuant to Section 7.01(f)
shall be void and of no force or effect, unless the Company shall have
complied with the provisions of this Section 4.02, including the notification
provisions in this Section 4.02, and with all applicable requirements of
Section 5.08(b) (including the payment of the Termination Fee (as defined in
Section 5.08(b)) prior to or concurrently with such termination); and provided
further, however, that the Company shall not exercise its rights to terminate
this Agreement pursuant to Section 7.01(f) until after the fifth Business Day
following Parent's receipt of written notice (a "Notice of Superior Proposal")
from the Company advising Parent that the Board of Directors of the Company
has received a Superior Proposal, identifying the person making such Superior
Proposal and stating that the Board of Directors of the Company intends to
exercise its right to terminate this Agreement pursuant to Section 7.01(f) (it
being understood and agreed that, prior to such termination taking effect, any
amendment to the price or any other material term of a Superior Proposal shall
require a new
42
Notice of Superior Proposal and a new five Business Day period).
(c) In addition to the obligations of the Company set forth in
Sections 4.02(a) and 4.02(b), the Company shall immediately advise Parent
orally and in writing of any request for information that the Company
reasonably believes could lead to or contemplates a Takeover Proposal or of
any Takeover Proposal, or any inquiry the Company reasonably believes could
lead to any Takeover Proposal, the terms and conditions of such request,
Takeover Proposal or inquiry (including any subsequent amendment or other
modification to such terms and conditions) and the identity of the person
making such request, Takeover Proposal or inquiry. The Company shall keep
Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request, Takeover Proposal or inquiry and
shall provide to Parent as soon as practicable after receipt or delivery
thereof with copies of all correspondence and other written material sent or
provided to the Company from any third party in connection with any Takeover
Proposal or sent or provided by the Company to any third party in connection
with any Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (i) taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
(ii) making any required disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure to so disclose would be
inconsistent with its obligations under applicable law; provided, however,
that in no event shall the Company or its Board of Directors or any committee
thereof take, or agree to resolve to take, any action prohibited by Section
4.02(b)(i) or 4.02(b)(ii).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form F-4 and the Proxy Statement;
Company Stockholders' Meeting. (a) As soon as practicable following the date
of this Agreement, the Company and Parent shall prepare and the Company shall
file with the SEC the Proxy Statement and Parent shall file with the SEC the
Form F-4, in which the Proxy Statement shall be included as a prospectus. Each
of the Company and Parent shall use its commercially reasonable efforts to
have the Form F-4 declared effective under the Securities Act as
43
promptly as practicable after such filing. The Company shall use its
commercially reasonable efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after the Form F-4 is
declared effective under the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction 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
issuance of Parent ADSs in the Merger, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. No filing of,
or amendment or supplement to, or correspondence to the SEC or its staff with
respect to, the Form F-4 shall be made by Parent, and no filing of, or
amendment or supplement to, or correspondence to the SEC or its staff with
respect to, the Proxy Statement shall be made by the Company, in each case
without providing the other party the opportunity to review and comment
thereon. If at any time prior to the Effective Time any information relating
to the Company or Parent, or any of their respective Affiliates, directors or
officers, should be discovered by the Company or Parent which should be set
forth in an amendment or supplement to either the Form F-4 or the Proxy
Statement, so that (i) the Form F-4 would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading or (ii) the Proxy Statement would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, as applicable, the party which discovers
such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated
to the stockholders of the Company. The parties shall notify each other
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or the Form F-4 or for additional information and shall supply each
other with copies of all correspondence between it or any of its
Representatives, on the one hand, and the SEC or its staff on the other hand,
with respect to the Proxy Statement, the Form F-4 or the Merger.
(b) The Company (i) shall, as soon as practicable following the date
of this Agreement, establish a record date (which shall be as soon as
practicable following the date of this Agreement) for, duly call, give notice
of,
44
convene and hold a meeting of its stockholders (the "Company Stockholders'
Meeting") solely for the purpose of obtaining the Company Stockholder Approval
and (ii) except as expressly permitted pursuant to Section 4.02(b), shall,
through its Board of Directors, recommend to its stock holders the approval
and adoption of this Agreement, the Merger and the other transactions
contemplated by this Agreement and use commercially reasonable efforts to
solicit the Company Stockholder Approval. The Company agrees that its
obligations pursuant to this Section 5.01(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the
Company or any other person of any Takeover Proposal.
SECTION 5.02. Letters of the Company's Accountants. The Company
shall use its commercially reasonable efforts to cause to be delivered to
Parent two letters from Ernst & Young LLP, the Company's independent public
accountants, one dated a date within two business days before the date on
which the Form F-4 shall become effective and one 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 comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form F-4.
SECTION 5.03. Letters of Parent's Accountants. Parent shall use its
commercially reasonable efforts to cause to be delivered to the Company two
letters from each of BDO Deutsche Warentreuhand Aktiengessellschaft and BDO
International GmbH, Parent's independent public accountants, one from each
dated a date within two business days before the date on which the Form F-4
shall become effective and one from each 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 comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form F-4.
SECTION 5.04. Access to Information; Confidentiality. The Company
shall afford to Parent, and to Parent's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time or
the termination of this Agreement to all its properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by
45
it during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except for
disclosures expressly permitted by the terms of the Confidential Disclosure
Agreement dated as of October 26, 2001, between Parent and the Company (as it
may be amended from time to time, the "Confidentiality Agreement"), Parent
shall hold, and shall cause its officers, employees, accountants, counsel,
financial advisors and other representatives and controlled Affiliates to
hold, all information received from the Company, directly or indirectly, in
confidence in accordance with the Confidentiality Agreement. Neither Parent
nor the Company shall be required to provide access to or disclose information
where such access or disclosure would contravene any applicable law, rule,
regulation, order or decree or would, with respect to any pending matter,
result in a waiver of attorney-client privilege or the protections afforded
attorney work-product. Parent and the Company shall use commercially
reasonable efforts to obtain from third parties any consents or waivers of
confidentiality restrictions with respect to any information being provided by
it. No investigation pursuant to this Section 5.04 or information provided or
received by any party hereto after the date hereof pursuant to this Agreement
shall affect any of the representations or warranties of the parties hereto
contained in this Agreement or the conditions hereunder to the obligations of
the parties hereto.
SECTION 5.05. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use its commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and the Stockholders Agreement, including using commercially
reasonable efforts to accomplish the following: (a) the taking of all
reasonable acts necessary to cause the conditions to Closing to be satisfied
as promptly as practicable, (b) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all steps as may be necessary
to obtain an approval or waiver from, or to avoid any suit, claim, action or
proceeding by any Governmental Entity, (c) the obtaining of all necessary
46
consents, approvals or waivers from third parties, (d) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Stockholders Agreement, or the consummation
of the Merger or the other transactions contemplated by, and to carry out the
purposes of, this Agreement and the Stockholders Agreement, including seeking
to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (e) the execution and delivery of
any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and
the Stockholders Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (a) use its
commercially reasonable efforts to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement, the
Stockholders Agreement, the Merger or any of the other transactions
contemplated by this Agreement or the Stockholders Agreement and (b) if any
state takeover statute or similar statute becomes applicable to this
Agreement, the Stockholders Agreement, the Merger or any other transactions
contemplated by this Agreement or the Stockholders Agreement, use its
commercially reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Stockholders Agreement and otherwise to minimize the effect
of such statute or regulation on this Agreement, the Stockholders Agreement,
the Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement. Nothing in this Agreement shall be deemed to require
Parent to agree to, or proffer to, divest or hold separate any assets or any
portion of any business of Parent or its subsidiaries or the Company.
SECTION 5.06. Treatment of Equity Awards. (a) Neither Parent nor the
Surviving Corporation shall assume any Company Stock Options in connection
with the transactions contemplated by this Agreement. Accordingly, pursuant to
the terms of the Company's 1995 Stock Option Plan and 1998 Stock Incentive
Plan (collectively, and together with the Company's Employee Stock Purchase
Plan, the "Company Stock Plans"), (i) each outstanding Company Stock Option
(other than those granted under the Company's Employee Stock Purchase Plan)
shall automatically accelerate so that each such Company Stock Option shall,
immediately prior to the Effective Time, become fully exercisable for all of
the shares of Company Common Stock at the time subject to such Company Stock
Option and may be exercised by
47
the holder thereof for any or all of such shares as fully- vested shares of
Company Common Stock and (ii) upon the Effective Time, all outstanding Company
Stock Options, to the extent not exercised prior to the Effective Time, shall
terminate and shall cease to be outstanding.
(b) As soon as practicable following the date of this Agreement, the
Company shall (i) terminate, effective at the Effective Time, the Company
Stock Plans and (ii) provide that there shall not be any additional purchase
interval, as defined in the Company's Employee Stock Purchase Plan (each, a
"Purchase Interval"), commencing following the date of this Agreement under
the Company's Employee Stock Purchase Plan. If the Effective Time occurs on or
before July 31, 2002, then, with respect to the Purchase Interval in effect as
of the date of this Agreement, immediately prior to the Effective Time each
then outstanding purchase right under the Company's Employee Stock Purchase
Plan shall automatically be exercised, by applying the payroll deductions of
each current participant in the Company's Employee Stock Purchase Plan for
such Purchase Interval to the purchase of whole shares of Company Common Stock
(subject to the provisions of the Company's Employee Stock Purchase Plan
regarding the number of shares purchasable per participant) at a purchase
price per share equal to 85% of the lower of (x) the fair market value per
share of Company Common Stock on such participant's Entry Date (as defined in
the Company's Employee Stock Purchase Plan) into the current offering period
under the Company's Employee Stock Purchase Plan and (y) the fair market value
per share of Company Common Stock immediately prior to the Effective Time.
SECTION 5.07. Indemnification, Exculpation and Insurance. (a) All
rights to indemnification and exculpation (including any rights related to the
advancement of expenses) from liabilities for acts or omissions occurring at
or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company as provided in the Company Certificate,
the Company By-laws or any indemnification agreement between such directors or
officers and the Company (in each case, as in effect on the date of this
Agreement) shall be assumed by the Surviving Corporation in the Merger,
without further action, as of the Effective Time and shall survive the Merger
and shall continue in full force and effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or
48
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all its properties and other assets
to any person, then, and in each such case, Parent shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.07.
(c) For a period of six years from and after the Effective Time,
Parent shall maintain in effect the Company's current directors' and officers'
liability insurance covering acts or omissions occurring at or prior to the
Effective Time, covering each person currently covered by the Company's
directors' and officers' liability insurance policy (a complete and correct
copy of which has been heretofore delivered to Parent), on terms with respect
to such coverage and amount no less favorable than those of such policy in
effect on the date of this Agreement; provided, however, that Parent may
substitute therefor policies of Parent or its subsidiaries containing terms
with respect to coverage and amount no less favorable in any material respect
to such directors and officers; provided further, however, that in satisfying
its obligation under this Section 5.07(c) Parent shall not be obligated to pay
aggregate premiums for insurance under this Section 5.07(c) in excess of 150%
of the amount of the aggregate premiums paid by the Company in calendar year
2001 for such purpose (which calendar year 2001 aggregate premiums the Company
hereby represent and warrant to be $222,000); it being understood and agreed
that Parent shall nevertheless be obligated to provide such coverage as may be
obtained for such 150% amount. Notwithstanding anything in this Section
5.07(c) to the contrary, Parent's obligation to provide directors' and
officers' liability insurance coverage under this Section 5.07(c) shall cease
immediately upon such time, if any, as Parent shall have assumed the
obligations of the Surviving Corporation under Section 5.07(a), regardless of
whether any such time occurs within six years from and after the Effective
Time.
(d) The provisions of this Section 5.07 (i) are intended to be for
the benefit of, and shall be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.
SECTION 5.08. Fees and Expenses. (a) Except as provided in Section
5.08(b) and Section 5.16, all fees and expenses incurred in connection with
this Agreement, the
49
Stockholders Agreement, the Merger and the other transactions contemplated by
this Agreement and the Stockholders Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of Parent and the Company shall bear and pay one-half of (i)
the costs and expenses incurred in connection with filing, printing and
mailing the Proxy Statement and the Form F-4 (including SEC filing fees) and
(ii) the filing fees for the premerger notification and report forms under the
HSR Act and any similar foreign antitrust or competition laws.
(b) In the event that (i) (A) a Takeover Proposal shall have been
made to the Company or shall have been made directly to the stockholders of
the Company generally or shall have otherwise become publicly known or any
person shall have publicly announced an intention (whether or not conditional
and whether or not withdrawn) to make a Takeover Proposal, (B) thereafter this
Agreement is terminated by either Parent or the Company pursuant to Section
7.01(b)(i) (but only if the Company Stockholders' Meeting has not been held by
the date that is five Business Days prior to the date of such termination) or
Section 7.01(b)(iii) and (C) within 15 months after such termination, the
Company enters into any Acquisition Agreement with respect to, or consummates,
any Takeover Proposal (solely for purposes of this Section 5.08(b)(i)(C), the
term "Takeover Proposal" shall have the meaning set forth in the definition of
Takeover Proposal contained in Section 4.02(a) except that all references to
20% shall be deemed references to 40%), (ii) this Agreement is terminated by
the Company pursuant to Section 7.01(f) or (iii) this Agreement is terminated
by Parent pursuant to Section 7.01(e), then the Company shall pay to Parent a
fee equal to $7.0 million (the "Termination Fee") by wire transfer of same day
funds to an account designated by Parent (x) in the case of a termination by
the Company pursuant to Section 7.01(f), concurrently with such termination,
(y) in the case of a termination by Parent pursuant to Section 7.01(e), within
two Business Days after such termination and (z) in the case of a payment as a
result of any event referred to in Section 5.08(b)(i)(C), upon the first to
occur of such events.
(c) The Company acknowledges and agrees that the agreements
contained in Section 5.08(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 5.08(b), and, in order to
obtain such payment, Parent commences a suit that results in a judgment
against the Company for the
50
Termination Fee, the Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on the amount of the Termination Fee from the
date such payment was required to be made until the date of payment on the
amount of the Termination Fee at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.
SECTION 5.09. Public Announcements. Promptly after the date of this
Agreement, Parent and Company shall develop a joint communications plan and
each party hereto shall use commercially reasonable efforts to ensure that all
press releases and other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and the Stockholders
Agreement shall be consistent with such joint communications plan. Parent and
the Company shall consult with each other before issuing any press release or
otherwise making any written public statement with respect to the transactions
contemplated by this Agreement, including the Merger, and the Stockholders
Agreement and shall not issue any such press release or make any such written
public statement prior to such consultation, except as either party may
determine is required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange or national trading
system. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement and the
Stockholders Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.10. Affiliates. The Company shall deliver to Parent at
least 30 days prior to the Closing Date a letter identifying all persons who
are, at the time this Agreement is submitted for adoption by the stockholders
of the Company, "affiliates" of the Company for purposes of Rule 145
promulgated under the Securities Act and other applicable SEC rules and
regulations. The Company shall use its commercially reasonable efforts to
cause each such person to deliver to Parent at least 20 days prior to the
Closing Date a written agreement substantially in the form attached as Exhibit
B hereto.
SECTION 5.11. Stock Exchange Listing. Parent shall use its
commercially reasonable efforts to cause the Parent ADSs to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date.
51
SECTION 5.12. Tax Treatment. Each of Parent and the Company shall
use commercially reasonable efforts to permit the Company to obtain the
opinion of counsel referred to in Section 6.03(c) and shall not take or fail
to take actions that could reasonably be expected to prevent the receipt of
such tax opinion.
SECTION 5.13. Stockholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Stockholders Agreement, and
no such settlement shall be agreed to without Parent's prior written consent.
SECTION 5.14. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.01(t)) requested by Parent in order to render the rights (the
"Rights") issued pursuant to the Rights Agreement to purchase Series A Junior
Participating Preferred Stock of the Company, inapplicable to the Merger and
the other transactions contemplated by this Agreement and the Stockholders
Agreement. Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreement,
the Board of Directors of the Company shall not, without the prior written
consent of Parent, (a) amend the Rights Agreement or (b) take any action with
respect to, or make any determination under, the Rights Agreement, including a
redemption of the Rights or any action to facilitate a Takeover Proposal
(other than by Parent or its subsidiaries).
SECTION 5.15. Stockholders Agreement Legend. The Company shall
inscribe upon any Certificate representing Subject Shares tendered by a
Stockholder (as such terms are defined in the Stockholders Agreement) in
connection with any proposed transfer of any Subject Shares by such
Stockholder in accordance with the Stockholders Agreement the following
legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE, OF COLLATERAL
THERAPEUTICS, INC. REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF March 19, 2002, AND ARE SUBJECT TO TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE
OFFICES OF COLLATERAL THERAPEUTICS, INC.".
SECTION 5.16. Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar taxes (including
interest,
52
penalties and additions to any such taxes) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the Surviving Company.
SECTION 5.17. Further Assurances. The Company shall deliver, or
shall cause to be delivered, if required by the terms of any note, indenture,
credit agreement, warrant or other financing instrument or preferred stock, as
promptly as possible after the date of this Agreement but in no event less
than 15 days prior to the Effective Time, any notice of the Merger or the
transactions contemplated by this Agreement. The Company shall, with
reasonable promptness, take such further actions and furnish such further
information as Parent may reasonably request in accordance with applicable
laws in order to carry out the transactions contemplated by this Agreement and
the Stockholders Agreement.
SECTION 5.18. Section 16 Matters. Prior to the Effective Time,
Parent and the Company shall use commercially reasonable efforts to take all
such steps as may be required to cause any dispositions of Company Common
Stock (including derivative securities in respect to Company Common Stock)
resulting from the transactions contemplated by Article I, Article II or
Section 5.06 of this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 5.19. Parent ADSs. Prior to the Effective Time, Parent shall
use its commercially reasonable efforts to obtain the Parent Share
Authorization.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party hereto 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) NYSE Listing. The Parent ADSs issuable to the Company's
stockholders as contemplated by this
53
Agreement shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(c) Antitrust. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired and all applicable filings shall have been made and
all applicable approvals shall have been obtained under similar foreign
antitrust or competition laws and regulations.
(d) No Injunctions. No judgment, order, decree, statute, law,
ordinance, rule or regulation entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect, and there shall not be pending or
threatened any suit, claim, action or proceeding by any Governmental
Entity (i) preventing the consummation of the Merger or (ii) which
otherwise has had or would reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect as
applicable, or to materially impair the benefits intended to be obtained
by Parent in the Merger; provided, however, that each of the parties
hereto shall have used its commercially reasonable efforts to prevent the
entry of any such Restraints and to appeal as promptly as possible any
such Restraints that may be entered.
(e) Form F-4. The Form F-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.
(f) Parent Share Authorization. The Parent Share Authorization shall
have been obtained.
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
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of the Company contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date as
though
54
made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date. Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
(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 and the chief financial officer of the
Company to such effect.
(c) Repayment of Executive Loans. The outstanding Executive Loans
identified in Section 3.01(i) of the Company Disclosure Schedule in the
aggregate principal amount of $1.2 million issued by the Company to
certain of its executive officers shall have been repaid to the Company
in full through the delivery by such executive officers to the Company of
the aggregate number of shares of Company Common Stock set forth in
Section 6.02(c) of the Company Disclosure Schedule.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Sub contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier
date, in which case as of such earlier date. The Company shall have
received a certificate signed on behalf of Parent by an executive officer
of Parent to such effect.
(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
55
them under this Agreement at or prior to the Closing Date. The Company
shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.
(c) Tax Opinion. The Company shall have received from Coudert
Brothers LLP, tax counsel to the Company, on the date on which the Form
F-4 is filed with the SEC and on the Closing Date, an opinion, in each
case dated as of such respective date and to the effect that (i) the
Merger will qualify for U.S. Federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code, (ii)
the Company, Parent and Sub will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code and (iii) no gain or
loss will be recognized by the Company stockholders who exchange Company
Common Stock solely for Parent ADSs pursuant to the Merger (except with
respect to (x) any cash received in lieu of fractional Parent ADSs and
(y) Company stockholders who are not Eligible Company Stockholders). The
issuance of such opinion may be conditioned upon the receipt by such tax
counsel of representation letters from each of Parent and the Company
substantially in the form of Exhibits C-1 and C-2 to this Agreement.
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to comply
with its obligations under Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Company Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
September 1, 2002; provided, however, that the right to terminate
this Agreement under this Section 7.01(b)(i) shall
56
not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Merger
to be consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate the
Agreement pursuant to this Section 7.01(b)(ii) shall have used
commercially reasonable efforts to prevent the entry of and to
remove such Restraint;
(iii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders' Meeting duly convened therefor
or at any adjournment or postponement thereof; or
(iv) if the Parent Shareholder Approval shall not have been
obtained at the Parent Shareholders' Meeting duly convened therefor
or at any adjournment or postponement thereof;
(c) by Parent, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or other
agreements set forth in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (ii) has not been or is incapable of being
cured by the Company within 30 calendar days following its receipt of
written notice of such breach or failure to perform from Parent;
(d) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or other
agreements set forth in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Section 6.03(a) or 6.03(b) and (ii) has not been or is incapable of being
cured by Parent within 30 calendar days following its receipt of written
notice of such breach or failure to perform from the Company;
(e) by Parent in the event an Adverse Recommendation has occurred;
or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
57
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(r), the second sentence of Section 5.04,
Section 5.08, this Section 7.02 and Article VIII, which provisions shall
survive such termination, and except to the extent that such termination
results from the wilful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, including Section 4.02.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after the receipt of Company Stockholder
Approval; provided, however, that after such approval has been obtained, there
shall be made no amendment that by law requires further approval by the
stockholders of the Company or the approval of the shareholders of Parent
without such further approval having been obtained. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, a party hereto 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 of the other parties contained herein or in
any document delivered pursuant hereto or (c) subject to the proviso to the
first sentence of Section 7.03, waive compliance of the other parties with any
of the agreements or conditions contained herein. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure
of any party hereto to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations, warranties, covenants or agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This Section 8.01 shall not
58
limit any covenant or agreement of the parties hereto which by its terms
contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given
if delivered personally, telecopied (which is confirmed) or sent by an
internationally recognized overnight courier (providing proof of delivery) to
the parties hereto at the following addresses (or at such other address for a
party as shall be specified by like notice):
if to Parent or Sub, to:
Schering Aktiengesellschaft
▇▇▇▇▇▇▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Telecopy No.: 49-30-468-14086
Attention: General Counsel
with copies to:
Schering Berlex Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
if to the Company, to:
Collateral Therapeutics, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
59
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
with a copy to:
Coudert Brothers LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 8.03. 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, where
"control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise;
(b) "Business Day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in New York
or in the Federal Republic of Germany;
(c) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of such person's
executive officers and other officers having primary responsibility for
such matter, in each case after due inquiry;
(d) "Company Material Adverse Change" or "Company Material Adverse
Effect" means any state of facts, change, development, effect, condition
or occurrence that would reasonably be expected to be material and
adverse to the (a) business, (b) assets, (c) properties, (d) condition
(financial or otherwise) or (e) results of operations of the Company,
other than any state of facts, change, development, effect, condition or
occurrence (x) relating to the economy in general or the United States
equity capital markets in general or (y) relating to the pharmaceutical
or biotechnical industry in general and not specifically relating to the
Company;
60
(e) "Parent Material Adverse Change" or "Parent Material Adverse
Effect" means any state of facts, change, development, effect, condition
or occurrence that would reasonably be expected to be material and
adverse to the (a) business, (b) assets, (c) properties, (d) condition
(financial or otherwise) or (e) results of operations of Parent and its
subsidiaries, taken as a whole , other than any state of facts, change,
development, effect, condition or occurrence (x) relating to the economy
in general or the United States or the German equity capital markets in
general or (y) relating to Parent's and its subsidiaries' industries in
general and not specifically relating to Parent;
(f) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(g) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting partnership
interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such reference shall be
to an Article of, 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". The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or
61
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and references to
all attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns. Terms used herein
that are defined under GAAP are used herein as so defined.
SECTION 8.05. 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 hereto and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), the
Stockholders Agreement and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter
of this Agreement, the Stockholders Agreement and the Confidentiality
Agreement and (b) except for the provisions of Article II and Section 5.07,
are not intended to confer upon any person other than the parties hereto any
rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.08. 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
hereto without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations under this Agreement. Any purported assignment in violation of
this Section 8.08 shall be void. Subject to the preceding sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties hereto and their respective permitted successors and assigns.
62
SECTION 8.09. Enforcement; Consent to Jurisdiction. The parties
hereto agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law 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 hereto
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any Delaware state court or any Federal court located in the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware in the event any
dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, (c) agrees that it shall not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a Delaware state court or a Federal court located in the
State of Delaware, (d) waives any right to trial by jury with respect to any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any Delaware state court or any Federal court located in the
State of Delaware and (e) hereby unconditionally waives and agrees not to
plead or claim in any such court that any such action brought in any such
court has been brought in an inconvenient forum. Parent hereby irrevocably
appoints CT Corporation, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as its
agent for service of process in connection with any action brought against it
relating to this Agreement and the Stockholders Agreement.
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated by this Agreement are
fulfilled to the extent possible.
63
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.
SCHERING AKTIENGESELLSCHAFT,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice Chairman
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇-Laebe
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇-Laebe
Title: Legal Counsel
EUROPEAN ACQUISITION COMPANY,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
COLLATERAL THERAPEUTICS, INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
Title: Chairman and Chief
Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term
Acquisition Agreement........................................Section 4.02(b)
Adverse Recommendation.......................................Section 4.02(b)
Affiliate....................................................Section 8.03(a)
Agreement....................................................Preamble
Benefit Agreements...........................................Section 3.01(g)
Benefit Plans................................................Section 3.01(l)
Business Day.................................................Section 8.03(b)
Certificate..................................................Section 2.01(c)
Certificate of Merger........................................Section 1.03
Closing......................................................Section 1.02
Closing Date.................................................Section 1.02
Code.........................................................Preamble
Company......................................................Preamble
Company By-laws..............................................Section 3.01(a)
Company Certificate..........................................Section 3.01(a)
Company Common Stock.........................................Preamble
Company Disclosure Schedule..................................Section 3.01
Company Material Adverse Change..............................Section 8.03(d)
Company Material Adverse Effect..............................Section 8.03(d)
Company SEC Documents........................................Section 3.01(e)
Company Stock Plans..........................................Section 5.06(a)
Company Stockholder Approval.................................Section 3.01(p)
Company Stockholders' Meeting................................Section 5.01(b)
Company Stock Options........................................Section 3.01(c)
Confidentiality Agreement....................................Section 5.04
Depositary...................................................Section 2.01(c)
Deposit Agreement............................................Section 2.01(c)
DGCL.........................................................Section 1.01
Effective Time...............................................Section 1.03
Eligible Company Stockholders................................Preamble
Environmental Laws...........................................Section 3.01(j)
ERISA........................................................Section 3.01(l)
Exchange Act.................................................Section 3.01(d)
Exchange Agent...............................................Section 2.02(a)
Exchange Fund................................................Section 2.02(a)
Exchange Ratio...............................................Section 2.01(c)
FDA..........................................................Section 3.01(j)
FDCA.........................................................Section 3.01(j)
Filed Company SEC Documents..................................Section 3.01(e)
Form F-4.....................................................Section 3.01(f)
GAAP.........................................................Section 3.01(e)
Governmental Entity..........................................Section 3.01(d)
Hazardous Material...........................................Section 3.01(j)
HSR Act......................................................Section 3.01(d)
Intellectual Property Rights.................................Section 3.01(o)
IRS..........................................................Section 3.01(l)
Knowledge....................................................Section 8.03(c)
Legal Provisions.............................................Section 3.01(j)
2
Term
Liens........................................................Section 3.01(d)
Merger.......................................................Preamble
Merger Consideration.........................................Section 2.01(c)
Notice of Superior Proposal..................................Section 4.02(b)
NYSE.........................................................Section 3.02(c)
Parent.......................................................Preamble
Parent ADR...................................................Section 2.01(c)
Parent ADS...................................................Section 2.01(c)
Parent Material Adverse Change...............................Section 8.03(e)
Parent Material Adverse Effect...............................Section 8.03(e)
Parent Ordinary Share........................................Section 2.01(c)
Parent SEC Documents.........................................Section 3.02(d)
Parent Share Authorization...................................Section 3.02(c)
Parent Shareholder Approval..................................Section 3.02(c)
Parent Shareholders' Meeting.................................Section 3.02(c)
Participant..................................................Section 3.01(g)
Permits......................................................Section 3.01(j)
person.......................................................Section 8.03(f)
Pharmaceutical Product.......................................Section 3.01(u)
Post-Signing Returns.........................................Section 4.01(d)
Preferred Stock..............................................Section 3.01(c)
Principal Stockholders.......................................Preamble
Proxy Statement..............................................Section 3.01(d)
Purchase Interval............................................Section 5.06(b)
Release......................................................Section 3.01(j)
Representatives..............................................Section 4.02(a)
Restraints...................................................Section 6.01(d)
Rights.......................................................Section 5.14
Rights Agreement.............................................Section 3.01(t)
SBI..........................................................Preamble
SEC..........................................................Section 3.01(d)
Securities Act...............................................Section 3.01(e)
Stockholders Agreement.......................................Preamble
Sub..........................................................Preamble
subsidiary...................................................Section 8.03(g)
Superior Proposal............................................Section 4.02(a)
Surviving Corporation........................................Section 1.01
Surviving Corporation Common Stock...........................Section 2.01(a)
Takeover Proposal............................................Section 4.02(a)
Taxes........................................................Section 3.01(m)
Termination Fee..............................................Section 5.08(b)