EXHIBIT 2
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ORCHID BIOSCIENCES, INC.
PERSIA MERGER SUB, INC.
AND
LIFECODES CORPORATION
Dated as of October 1, 2001
________________________________________________________________________________
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER................................................................1
1.1 The Merger...................................................................1
1.2 Effective Time...............................................................2
1.3 Effect of the Merger.........................................................2
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.............2
1.5 Directors and Officers.......................................................2
1.6 Merger Consideration; Conversion of Company Shares; Escrow...................2
1.7 Cancellation of Treasury Shares..............................................4
1.8 Stock Options................................................................4
1.9 Warrants.....................................................................5
1.10 Capital Stock of Merger Sub.................................................5
1.11 Adjustments to Exchange Ratio Fraction......................................5
1.12 Fractional Shares...........................................................6
1.13 Surrender of Certificates...................................................6
1.14 Further Ownership Rights in Company Shares..................................7
1.15 Closing.....................................................................8
1.16 Lost, Stolen or Destroyed Certificates......................................8
1.17 Dissenters' Rights..........................................................8
1.18 Further Assurances..........................................................8
1.19 Closing of Company Transfer Books...........................................9
1.20 Tax and Accounting Consequences.............................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................9
2.1 Organization and Qualification; Subsidiaries.................................9
2.2 Certificate of Incorporation and Bylaws.....................................10
2.3 Capitalization..............................................................10
2.4 Authority Relative to this Agreement; Required Vote.........................12
2.5 No Conflict; Required Filings and Consents..................................13
2.6 Material Agreements.........................................................14
2.7 Compliance..................................................................15
2.8 Financial Statements........................................................15
2.9 Books and Records...........................................................16
2.10 Accounts and Notes Receivable..............................................16
2.11 Inventory..................................................................16
2.12 Customers and Distributors.................................................16
2.13 Absence of Certain Changes or Events.......................................17
2.14 No Undisclosed Liabilities.................................................17
2.15 Absence of Litigation......................................................18
2.16 Employee Benefit Plans.....................................................18
2.17 Employment and Labor Matters...............................................21
2.18 Absence of Restrictions on Business Activities.............................22
2.19 Title to Assets; Leases....................................................22
2.20 Condition of Properties....................................................23
2.21 Taxes......................................................................24
2.22 Environmental Matters......................................................26
2.23 Intellectual Property......................................................27
2.24 Insurance..................................................................29
2.25 Brokers....................................................................30
2.26 Certain Business Practices.................................................30
2.27 Interested Party Transactions..............................................30
2.28 Disclosure.................................................................31
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2.29 Registration Statement; Proxy Statement/Prospectus.........................31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................32
3.1 Organization and Qualification..............................................32
3.2 Reports.....................................................................33
3.3 Authorization of Agreement..................................................34
3.4 Approvals...................................................................34
3.5 No Violation................................................................34
3.6 Absence of Certain Changes or Events........................................35
3.7 Brokers.....................................................................35
3.8 Litigation..................................................................35
3.9 Securities Act..............................................................35
3.10 Registration Statement; Proxy Statement/Prospectus.........................35
3.11 Future Profitability.......................................................36
3.12 Disclosure.................................................................36
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CONSENTING COMPANY STOCKHOLDERS....36
4.1 Ownership...................................................................36
4.2 Authority...................................................................36
4.3 Execution...................................................................36
4.4 No Conflict.................................................................36
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER....................................37
5.1 Conduct of Business by the Company Pending the Merger.......................37
5.2 Solicitation of Other Proposals.............................................39
ARTICLE VI ADDITIONAL OBLIGATIONS...................................................40
6.1 Proxy Statement; Registration Statement.....................................40
6.2 Meeting of Company Stockholders.............................................41
6.3 Access to Information; Confidentiality......................................42
6.4 All Reasonable Efforts; Further Assurances..................................42
6.5 SEC Filings by Parent.......................................................43
6.6 Notification of Certain Matters.............................................44
6.7 Public Announcements........................................................44
6.8 Takeover Laws...............................................................45
6.9 Existing Registration Rights Agreements.....................................45
6.10 Release Agreements.........................................................45
6.11 Maintenance, Prosecution and Filing Obligations............................45
6.12 Employee Benefits..........................................................45
6.13 Listing....................................................................46
6.14 Registration of Shares Issued in the Merger................................46
6.15 Covenants for Tax-Free Status..............................................50
6.16 Stockholder Agreements; Stockholder Appointment Letter.....................50
6.17 Accountant's Letters.......................................................50
6.18 Helix Transaction..........................................................51
6.19 Payment of Transfer Taxes..................................................51
6.20 Company Employees; Offer Letters...........................................51
ARTICLE VII CONDITIONS OF MERGER....................................................51
7.1 Conditions to Obligation of Each Party to Effect the Merger.................51
7.2 Additional Conditions to Obligations of Parent and Merger Sub...............52
7.3 Additional Conditions to Obligations of the Company.........................55
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER......................................56
8.1 Termination.................................................................56
8.2 Effect of Termination.......................................................57
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8.3 Fees and Expenses...........................................................58
8.4 Amendment...................................................................59
8.5 Waiver......................................................................59
ARTICLE IX INDEMNIFICATION; ESCROW..................................................59
9.1 Survival....................................................................59
9.2 Indemnification.............................................................59
9.3 Claims for Indemnification..................................................60
9.4 Threshold with Respect to Indemnification...................................61
9.5 Limitations on Indemnification..............................................61
9.6 Exclusive Remedy............................................................61
9.7 Escrow Arrangements.........................................................61
ARTICLE X GENERAL PROVISIONS........................................................62
10.1 Individuals Subject to an Agreement Not to Compete.........................62
10.2 Notices....................................................................63
10.3 Disclosure Schedule........................................................64
10.4 Certain Definitions........................................................64
10.5 Other Definitions..........................................................67
10.6 Interpretation.............................................................70
10.7 Severability...............................................................71
10.8 Entire Agreement...........................................................71
10.9 Assignment.................................................................71
10.10 Parties in Interest.......................................................71
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative.....................71
10.12 Governing Law.............................................................71
10.13 Counterparts..............................................................72
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Certificate of Merger
EXHIBIT C Form of Letter of Transmittal
EXHIBIT D Form of Opinion of Counsel to the Company
EXHIBIT E Form of Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
EXHIBIT F Form of Escrow Agreement
EXHIBIT G-1 Form of Stockholders Agreement
EXHIBIT G-2 Form of Stockholder Appointment Letter
EXHIBIT H Form of Separation and Consulting Agreement
EXHIBIT I Form of Release and Waiver Agreement
EXHIBIT J Form of Lock-Up Agreement
EXHIBIT K Form of Supply Agreement
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SCHEDULES
Company's Schedules
I Consenting Company Stockholders
1.6(III)(B) Fully Diluted Share Amount
1.6(c) Preferred Exchange Ratio Fraction
1.8 Assumed Options
2.1(c) Company Subsidiaries
2.3(b) Company Capitalization
2.3(c) Company Stockholders; Company Options
2.3(d) Equity Obligations
2.3(e) Registration Rights
2.5(a) No Conflict; Required Filings and Consents
2.5(b) Company Consents and Approvals
2.6(a) Material Agreements
2.6(b) Enforceability of Material Agreements
2.7(a) Law, Regulation or Order; Violation
2.7(b) Permits
2.7(c) Law, Rule Regulation; Violation
2.10 Accounts and Notes Receivable
2.12 Customers, Distributors and Suppliers
2.13 Absence of Certain Changes or Events
2.14 Undisclosed Liabilities
2.15 Absence of Litigation
2.16(a) Employee Benefit Plans
2.16(e) Benefits; Acceleration
2.16(i) Severance Payments
2.16(j) Benefit Claims
2.16(l) Company Employee Securityholders
2.16(m) Retired Company Employees or Directors
2.17(a) Employment and Consultant Agreements
2.17(b) Employee Controversies
2.18 Restrictions on Business Activity
2.19(a) Real Property
2.19(b) Leases
2.19(c) Title
2.21 Taxes
2.22 Environmental Matters
2.23(a) Intellectual Property: Patents, Trademarks, Copyrights
2.23(b) Intellectual Property: Non-Exclusive Intellectual
Property Rights
2.23(c) Patent Interference
2.23(d) Patent Infringement
2.23(g) Patent Litigation
2.24 Insurance
2.25 Brokers
2.27 Interested Parties
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Other Schedules
5.1(l) Related Party Agreements, Arrangements, Understandings
6.20 Company Employees, Offer Letters
7.2(h) Affiliate Agreement
10.1 Individuals Subject To An Agreement Not To Compete
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October
1, 2001 (the "Execution Date") by and among ORCHID BIOSCIENCES, INC., a Delaware
corporation ("Parent"), PERSIA MERGER SUB, INC., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), LIFECODES CORPORATION, a
Delaware corporation (the "Company"), and the stockholders of the Company listed
on Schedule I attached hereto (the "Consenting Company Stockholders").
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WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors
of Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company, and the Consenting Company
Stockholders have consented to the Merger, each in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), subject to the conditions
set forth herein, which Merger will result in, among other things, (a) the
Company becoming a wholly-owned subsidiary of Parent, and (b) all of the issued
and outstanding Company Shares (as defined in Section 2.3(a)) held by the
stockholders of the Company, being exchanged and converted into shares of Common
Stock, $.001 par value per share, of Parent ("Parent Common Stock") on the terms
described herein;
WHEREAS, as a condition to the willingness of, and as an inducement
to, Parent and Merger Sub to enter into this Agreement, contemporaneously with
the execution and delivery of this Agreement, certain holders of shares of the
capital stock of the Company, including the Consenting Company Stockholders, are
entering into a Stockholders Agreement dated the Execution Date in the form
attached hereto as Exhibit G-1 providing for certain actions relating to the
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transactions contemplated by this Agreement, including their agreement to vote
their respective Company Shares in favor of the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of Section
368(a) of the Code and the United States Treasury Regulations promulgated
thereunder.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent, Merger Sub and the
Consenting Company Stockholders hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement and the
provisions of the DGCL, Merger Sub
shall be merged with and into the Company, the separate corporate existence of
Merger Sub shall cease and the Company shall, as the surviving corporation in
the Merger, continue its existence under the provisions of the DGCL as a wholly-
owned subsidiary of Parent. The Company, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Effective Time. On the Closing Date, the parties hereto shall cause
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the Merger to be consummated by filing the Certificate of Merger, substantially
in the form set forth in Exhibit B attached hereto (the "Certificate of
Merger"), and such other documents as may be required, with the Secretary of
State of the State of Delaware, executed in accordance with the relevant
provisions of the DGCL (the date and time of such filing, or such later date and
time as may be specified in the Certificate of Merger by mutual agreement of
Parent, Merger Sub and the Company, being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.
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Unless otherwise determined by Parent prior to the Effective Time, at the
Effective Time, without further action on the part of the parties, the
Certificate of Incorporation of the Company, as amended by the Certificate of
Merger, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL. The bylaws of the Merger Sub
shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by the DGCL or the bylaws.
1.5 Directors and Officers. The directors of Merger Sub immediately prior
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to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and bylaws of the Surviving Corporation. The officers of the
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and bylaws. Prior to the Effective Time, the
Company shall deliver to Parent resignation letters of each of the directors of
the Company to be effective as of such Effective Time .
1.6 Merger Consideration; Conversion of Company Shares; Escrow.
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(a) At the Effective Time, by virtue of the Merger and without any
action on the part hereto:
(i) Subject to the other provisions of this Article I, each
outstanding Company Share and Convertible Security (as such terms are defined
below) issued and outstanding immediately prior to the Effective Time (other
than any shares of Company
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Common Stock to be canceled pursuant to Section 1.7 and any Dissenting Shares
(as described in Section 1.17)) shall be converted automatically into the right
to receive the Exchange Ratio Fraction (or, to the extent Section 1.6(c) is
applicable, the Preferred Exchange Ratio Fraction), of a fully paid and non-
assessable share of Parent Common Stock, together with cash, if any, in lieu of
any fraction of a share of Parent Common Stock pursuant to Section 1.11 (the
"Merger Consideration").
(ii) For purposes of this Agreement, the term "Exchange Ratio
Fraction" shall mean the quotient (calculated to the nearest five (5) decimal
places) obtained by dividing the sum of (x) the Merger Shares and (y) the Helix
Acquisition Shares by the Fully Diluted Company Share Amount (as defined below
in clause (iii)(B)).
(iii) In addition, for purposes of this Agreement:
(A) the term "Merger Shares" shall mean 6,500,000 shares
of Parent Common Stock;
(B) the term "Fully Diluted Company Share Amount" shall
mean the aggregate number of fully-diluted shares of capital stock of the
Company as of the Effective Time, as listed on Schedule 1.6(b)(iii)(B) to
be attached hereto on or before the Effective Time, which shall equal the
sum of (1) all shares of Company Common Stock and Preferred Stock on a
fully diluted and as-converted basis and all other capital stock of the
Company outstanding as of the Effective Time (each, a "Company Share" and
collectively, the "Company Shares"), (2) all Company Options (as defined in
Section 1.8 of this Agreement) and Company Warrants outstanding as of the
Effective Time less the Assumed Options and Assumed Warrants and (3) any
other rights, calls, commitments or other agreements to which the Company
is a party or by which it is bound as of the Effective Time that calls for
the issuance of shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for, or representing the
right to purchase or otherwise receive, directly or indirectly, any such
capital stock, or other arrangement to acquire, at any time or under any
circumstance, capital stock of the Company (each, a "Convertible Security"
and collectively, the "Convertible Securities");
(C) the term "Merger Price" shall be equal to $3.05;
(D) the term "Helix Acquisition Shares" shall mean a
number of shares of Parent Common Stock obtained by dividing fifty percent
(50%) of the negotiated aggregate acquisition price (whether in cash or in
shares of Company Common Stock) agreed to by the parties in the Helix
Transaction by the Merger Price; and
(E) the term "Preferred Exchange Ratio Fraction" shall
mean the exchange ratio for each series of Preferred Stock of the Company
set forth on Schedule 1.6(c) attached hereto.
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(b) As of the Effective Time, each Company Share issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding, shall automatically be canceled and retired and shall cease to
exist, and each holder of any Company Share (each, a "Company Stockholder" and
collectively, the "Company Stockholders") shall cease to have any rights with
respect thereto, except the right to receive such Company Stockholder's portion
of the Merger Consideration in the form of Parent Common Stock upon surrender of
such certificate in accordance with Section 1.12 hereof.
(c) As of the Effective Time, any shares of Preferred Stock that
remain issued and outstanding immediately prior to the Effective Time shall be
converted automatically into the right to receive the Preferred Exchange Ratio
Fraction of a fully paid and non-assessable share of Parent Common Stock,
together with cash, if any, in lieu of any fraction of a share of Parent Common
Stock pursuant to Section 1.11.
(d) Within five (5) Business Days after the Closing Date, Parent will
deposit 1,414,754 shares of Parent Common Stock in escrow (the "Escrow Shares"),
to be held in accordance with the terms of the General Indemnity Escrow
Agreement, a form of which is attached hereto as Exhibit F (the "Escrow
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Agreement").
1.7 Cancellation of Treasury Shares. Each share of Company Common Stock
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that is (i) held in the treasury of the Company, (ii) authorized but unissued,
or (iii) owned by any Company Subsidiary, immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof or other
consideration in exchange therefor.
1.8 Stock Options.
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(a) At the Effective Time, the 1992 Employee Stock Option Plan, the
1995 Employee Stock Option Plan and the 1998 Stock Plan (the "Company Stock
Plans") will be terminated. The Company and its Board of Directors shall take
all actions necessary to ensure that following the Effective Time no holder of
any options to purchase Company Shares (the "Company Options," individually, a
"Company Option") or rights pursuant to, nor any participant in, the Company
Stock Plans, or any other plan, program or arrangement providing for the
issuance or grant of any interest in respect of the capital stock of the Company
will have any right thereunder to acquire equity securities, or any right to
payment in respect of equity securities, of the capital stock of the Company or
the Surviving Corporation, except as provided in subsection (c) below.
(b) As soon as practicable after the Execution Date, the Company shall
pursuant to each Company Stock Plan, (i) notify each holder of an outstanding
option issued pursuant to any of the Company Stock Plans, (ii) provide for the
accelerated vesting of each outstanding option so that each such option shall
become fully exercisable, (iii) notify each holder that each option shall,
unless exercised by the holder in accordance with its terms, be canceled and
terminate on the date which is thirty (30) days from the date of such notice,
and (iv) cause each of the Company Stock Plans to be terminated. Parent shall
provide to Company a copy of Parent's 2001 Employee, Director and Consultant
Stock Plan ("Parent's Stock Plan").
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(c) The Company Options set forth on Schedule 1.8 of this Agreement
which have not been exercised or otherwise converted as of the Effective Time
shall cease to represent the right to acquire Company Shares, and shall, by
virtue of the Merger and without any further action on the part of any holder
thereof, be converted into and become the right to acquire a number of shares of
Parent Common Stock determined by multiplying the number of Company Shares
covered by such Company Option immediately prior to the Effective Time by the
Exchange Ratio Fraction (rounded to the nearest whole number of shares), at an
exercise price per share of Parent Common Stock equal to the exercise price in
effect under such Company Option immediately prior to the Effective Time divided
by the Exchange Ratio Fraction (rounded to the nearest cent), which option to
purchase Parent Common Stock shall contain the same term, vesting schedule
(giving credit for prior service with the Company) and otherwise be on
substantially the same terms and conditions as set forth in the assumed Company
Option (any such assumed Company Option being herein referred to as an "Assumed
Option"). At the Effective Time, such Assumed Options, if any, shall be subject
to Parent's Stock Plan.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Assumed Options in accordance with this Section 1.8.
1.9 Warrants. As soon as practicable after the Execution Date, the Company
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shall use commercially reasonable efforts to cause the exercise or termination
of all then issued and outstanding warrants to acquire shares of Company Common
Stock or securities convertible into Company Common Stock (collectively, the
"Company Warrants"). At the Effective Time, each Company Warrant that is
outstanding and has not been terminated, exercised, or otherwise converted as of
the Effective Time shall be assumed by Parent (any such assumed Company Warrant
being referred to herein as an "Assumed Warrant"). The Company shall take all
actions necessary or reasonably requested by Parent to ensure that following the
Effective Time no holder of any Company Warrant will have any right thereunder
to acquire equity securities of the Company or any of its Subsidiaries, or any
right to payment in respect of the equity securities of the Company, any of its
Subsidiaries or the Surviving Corporation, except as provided in this Section
1.9. Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Common Stock for delivery upon exercise of
the Assumed Warrants.
1.10 Capital Stock of Merger Sub. Each share of common stock, $.001 par
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value per share, of Merger Sub (the "Merger Sub Common Stock"), issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and non-assessable share of Common
Stock, $.01 value per share, of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any Merger Sub Common Stock
shall continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
1.11 Adjustments to Exchange Ratio Fraction. Without limiting any other
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provision of this Agreement, the Exchange Ratio Fraction shall be
correspondingly adjusted to reflect fully the effect of any stock split, reverse
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Shares), reorganization,
recapitalization, reclassification, conversion, consolidation, contribution or
exchange of shares or
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other like change with respect to Parent Common Stock or Company Shares
occurring after the Execution Date and prior to the Effective Time.
1.12 Fractional Shares. No fraction of a share of Parent Common Stock will
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be issued hereunder, but in lieu thereof each holder of Company Shares who would
otherwise be entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock to be received by such
holder) shall receive from Parent an amount of cash (rounded to the nearest
whole cent) equal to the product of such fraction multiplied by $3.05).
1.13 Surrender of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, Parent shall
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designate one or more Persons reasonably acceptable to the Company to act as
Exchange Agent hereunder.
(b) Parent to Provide Parent Common Stock. Not later than five (5)
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Business Days after the Effective Time, Parent shall cause to be delivered to
the Exchange Agent, for exchange in accordance with this Article I, the shares
of Parent Common Stock issuable pursuant to Section 1.6 in exchange for
outstanding Company Shares paid pursuant to Section 1.6.
(c) Exchange Procedures. Prior to the Effective Time, the Company
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shall provide a schedule to Parent which lists (i) the names and mailing
addresses for all holders of Company Shares and (ii) the portion of Merger
Consideration to which each such holder is entitled pursuant to Sections 1.6 and
1.11 hereof (the "Company Distribution Schedule"). Promptly after the Effective
Time, Parent shall deliver to the Exchange Agent for delivery to each holder of
record of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding Company Shares (i) a letter
of transmittal in the form of Exhibit C hereto and instructions for use in
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effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock and (ii) the Company Distribution
Schedule. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the holder of such
Certificate shall, as soon as practicable thereafter, receive in exchange
therefor, (x) a certificate representing the number of whole shares of Parent
Common Stock representing the number of shares of Parent Common Stock that such
holder has the right to receive pursuant to Section 1.6 (less the shares of
Parent Common Stock representing such holder's pro rata contribution to the
Escrow Fund), and (y) cash in lieu of fractional shares which such holder has
the right to receive pursuant to Section 1.11, and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented Company Shares will
be deemed from and after the Effective Time, for all corporate purposes, other
than the payment of dividends, to evidence the right to receive, upon surrender
of such Certificate, the number of full shares of Parent Common Stock into which
the Company Shares represented by such Certificate shall have been so converted,
together with an amount in cash in lieu of fractional shares, if any, in
accordance with Section 1.11. Any portion of the shares of Parent Common Stock
deposited with the Exchange Agent pursuant to this Section 1.13(c) which remains
undistributed to the holders of the Certificates representing Company Shares for
one hundred and eighty (180) days after the
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Effective Time shall be delivered to Parent, upon demand, and any holders of
Company Shares who have not theretofore complied with this Article I shall
thereafter look only to Parent for such portion of Parent Common Stock, any
dividends or distributions with respect to Parent Common Stock and the amount of
cash in lieu of the fraction of a share of Parent Common Stock, if any, to which
such holders may be entitled.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
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other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby until the holder of record of such Certificate
shall surrender such Certificate. Subject to applicable Law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, 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 shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of Parent
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Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the Person requesting such
exchange will have paid to Parent, or the Exchange Agent, any transfer or other
taxes required by reason of the issuance of a certificate for shares of Parent
Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or the
Exchange Agent that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
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Agreement, none of the Exchange Agent, Parent, Merger Sub, the Company or the
Surviving Corporation shall be liable to a holder of Company Shares for any
Parent Common Stock or any amount properly paid to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
(g) Withholding of Tax. Parent or the Exchange Agent will be entitled
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to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Shares such amounts as Parent (or any
Affiliate thereof) or the Exchange Agent are required to deduct and withhold
with respect to the making by such holder of payment required under the Code, or
any provision of any Law governing Taxes incurred or accrued as a result of the
Merger. To the extent that amounts are so withheld by Parent or the Exchange
Agent, such withheld amounts will be treated for all purposes of this Agreement
as having been paid to the holder of the Company Shares in respect of whom such
deduction and withholding were made by Parent.
1.14 Further Ownership Rights in Company Shares. All shares of Parent
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Common Stock issued upon the surrender for exchange of Company Shares in
accordance with the terms of this Agreement (including any cash paid for
fractional shares paid in respect thereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Company Shares
7
under this Agreement, and there shall be no further registration of transfers on
the records of the Surviving Corporation of Company Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.15 Closing. Unless this Agreement shall have been terminated and the
-------
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VIII, and subject to the provisions of Article VII, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. (Eastern time) on a
date (the "Closing Date") to be mutually agreed upon by the parties, which date
shall be not later than the third Business Day after all the conditions set
forth in Article VII shall have been satisfied (or waived in accordance with
Section 7.5, to the extent the same may be waived), unless another time and/or
date is agreed to in writing by the parties. The Closing shall take place at the
offices of ▇▇▇▇▇▇ & ▇▇▇▇ LLP, 400 Atlantic Street, Stamford, Connecticut, unless
another place is agreed to in writing by the parties.
1.16 Lost, Stolen or Destroyed Certificates. In the event any Certificates
--------------------------------------
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common Stock
(and cash for fractional shares, if any), as may be required pursuant to
Sections 1.6 or 1.11; provided, however, that Parent may, as a condition
-------- -------
precedent to the issuance or payment thereof, require the owner of such lost,
stolen or destroyed certificates to indemnify Parent against any claim that may
be made against Parent or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.17 Dissenters' Rights. All persons who have executed and delivered a
------------------
Stockholder Agreement shall have consented to the Merger and shall have
delivered their stock certificates in accordance with the terms hereof.
Notwithstanding anything in this Agreement to the contrary, any Company Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or delivered a valid, unrevoked proxy in favor
of the Merger, or consented thereto in writing and who has delivered written
notice to the Company objecting to the Merger and demanding payment for his
shares as required in accordance, and has otherwise complied, with the
applicable provisions of the DGCL ("Dissenting Shares"), shall not be converted
into the right to receive the Parent Common Stock, unless and until such holder
fails to elect to dissent from the Merger or effectively withdraws or otherwise
loses his right to payment of the fair value of his shares under the provisions
of the DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses his right to such payment, such Dissenting Shares
shall thereupon be treated as if they had been converted as of the Effective
Time into the right to receive that portion of the Merger Consideration to which
such holder is entitled, without interest thereon. Any amounts paid to holders
of Dissenting Shares in an appraisal proceeding will be paid by the Surviving
Corporation out of its own funds and will not be paid by Parent or Merger Sub.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to any such demands or offer to settle or settle any such
demands.
1.18 Further Assurances. If at any time after the Effective Time, the
------------------
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of
8
record or otherwise, in the Surviving Corporation its right, title or interest
in, to or under any of the rights, privileges, immunities, powers, purposes,
franchises, properties or assets of the Company or Merger Sub, or (b) otherwise
to carry out the purposes of this Agreement, the Surviving Corporation and its
proper officers and directors or their designees shall be authorized to solicit
in the name of the Company or Merger Sub any third party consents or other
documents required to be delivered by any third party, to execute and deliver,
in the name and on behalf of the Company or Merger Sub, all such deeds, bills of
sale, assignments and assurances and do, in the name and on behalf of the
Company or Merger Sub, all such other acts and things necessary, desirable or
proper to vest, perfect or confirm its right, title or interest in, to or under
any of the rights, privileges, immunities, powers, purposes, franchises,
properties or assets of the Company or Merger Sub and otherwise to carry out the
purposes of this Agreement.
1.19 Closing of Company Transfer Books. At the Effective Time, the stock
---------------------------------
transfer books of the Company shall be closed and no transfer of Company Shares
shall thereafter be made. If, after the Effective Time, certificates
representing Company Shares are presented to the Surviving Corporation, they
shall be canceled and presented to the Exchange Agent in accordance with Section
1.13.
1.20 Tax and Accounting Consequences. It is intended by the parties hereto
-------------------------------
that the Merger shall be treated for federal income tax purposes as a
reorganization within the meaning of Section 368 of the Code, and that this
Agreement shall be, and is hereby, adopted as a plan of tax-free reorganization
for purposes of Section 368 of the Code. None of the parties will knowingly take
any action that would cause the Merger to fail to qualify as a reorganization
within the meaning of Section 368 of the Code. The parties shall not take a
position, whether on any Tax Return or otherwise, that is inconsistent with this
Section 1.20.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub, except
as disclosed in the disclosure schedule dated the Execution Date and as amended
through the Closing Date, certified by the President and Chief Executive Officer
of the Company and delivered by the Company to Parent and Merger Sub
simultaneously herewith (which disclosure schedule shall contain specific
references to the representations and warranties to which the disclosures
contained therein relate, and an item on such disclosure schedule shall be
deemed to qualify only the particular subsection or subsections specified for
such item (the "Company Disclosure Schedule") as follows:
2.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation. The
Company has all the requisite corporate power and authority and is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and Orders (collectively, "Approvals")
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so qualified,
existing and in
9
good standing or to have such power, authority or Approvals would not, either
individually or in the aggregate, have a Material Adverse Effect.
(b) The Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate have a Material Adverse Effect.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth, as
of the Execution Date, a true and complete list of all of the Company's directly
and indirectly owned Subsidiaries (each, a "Company Subsidiary" and
collectively, the "Company Subsidiaries"), together with the jurisdiction of
incorporation or organization of each Company Subsidiary and the percentage of
each Company Subsidiary's outstanding capital stock or other equity or other
interest owned by the Company and by any other Person. Neither the Company nor
any Company Subsidiaries owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, directly or indirectly, any
equity or similar interest in, any Person.
(d) Each Company Subsidiary is a corporation duly incorporated or
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has all the
requisite power and authority, and is in possession of all Approvals necessary
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except where the failure to be so qualified, existing and
in good standing or to have such power, authority or Approvals would not, either
individually or in the aggregate, have a Material Adverse Effect.
(e) Each Company Subsidiary is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect.
2.2 Certificate of Incorporation and Bylaws. The Company has heretofore
---------------------------------------
furnished to Parent a complete and correct copy of its and each of the Company
Subsidiaries' Certificates of Incorporation and bylaws or equivalent
organizational documents, as amended or restated to the Execution Date. Such
Certificates of Incorporation and bylaws, or equivalent organizational documents
of the Company and the Company Subsidiaries, are in full force and effect.
Neither the Company nor any Company Subsidiary is in violation of any of the
provisions of its respective Certificate of Incorporation or bylaws or
equivalent organizational documents.
2.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of (i)
15,000,000 shares of common stock, $0.10 par value per share (the "Company
Common Stock") and 1,000,000 shares of preferred stock, $10.00 par value per
share, of which 21,500 shares are
10
designated as Series A Convertible Preference Stock (the "Series A Preferred
Stock"), 800 shares are designated as Class A Redeemable Preferred Stock (the
"Class A Preferred Stock"), and 800 shares are designated as Class B Redeemable
Preferred Stock (the "Class B Preferred Stock" and, together with the Series A
Preferred Stock and the Class A Preferred Stock, the "Preferred Stock"). As of
the Execution Date, (i) 3,088,743 shares of Company Common Stock, 21,500 shares
of the Series A Preferred Stock, 165 shares of the Class A Preferred Stock and
115 shares of the Class B Preferred Stock are issued and outstanding; (ii)
28,452 Company Shares are held in the treasury of the Company; (iii) 691,743
shares of Company Common Stock are duly reserved for future issuance pursuant to
issued and outstanding options granted by the Company, all of which were granted
under the Company Stock Plans; (iv) 949,817 shares of Company Common Stock are
duly reserved for future issuance pursuant to options available for grant under
the option pool remaining under the Company Stock Plans; and (v) 1,410,235
shares of the Company Common Stock are duly reserved for future issuance
pursuant to issued and outstanding warrants granted by the Company. Except as
set forth above or in the Company Disclosure Schedule, as of the Execution Date,
(x) no shares of voting or non-voting capital stock, other equity interests, or
other voting securities of the Company were issued, reserved for issuance or
outstanding and (y) there are no outstanding stock appreciation rights of the
Company and no outstanding limited stock appreciation rights. All outstanding
Company Shares are, and all Company Shares which may be issued upon exercise of
Company Options, when issued upon exercise of such Company Options in accordance
with their respective terms will be, duly authorized, validly issued, fully paid
and non-assessable and not subject to preemptive rights. None of the outstanding
Company Shares or Company Options was issued in violation of the Securities Act
or any other Law, Regulation or Order. As of the Execution Date, there are no
outstanding bonds, debentures, notes or other indebtedness of the Company with
voting rights (or convertible into, or exchangeable for, securities with voting
rights) on any matters on which stockholders of the Company may vote.
(b) Section 2.3(b) of the Company Disclosure Schedule sets forth, as
of the Execution Date, the number of authorized and outstanding shares of
capital stock or other security or equity interest, and the names of the owners
of record thereof, of each Company Subsidiary. All of the outstanding shares of
capital stock or other security or equity interest of each Company Subsidiary
have been duly authorized, validly issued, fully paid and nonassessable, are not
subject to, and were not issued in violation of, any preemptive (or similar)
rights, and are owned, of record and beneficially, by the Company (or such other
person indicated in Section 2.3(b) of the Company Disclosure Schedule), free and
clear of all Liens whatsoever. There are no restrictions of any kind which
prevent the payment of dividends, where applicable, by any Company Subsidiary,
and neither the Company nor any Company Subsidiary is subject to any obligation
or requirement to provide funds for or to make any investment (in the form of a
loan or capital contribution) to or in any Person.
(c) Section 2.3(c) of the Company Disclosure Schedule sets forth a
true and complete list as of the Execution Date of (i) the names of the owners
of record of all Company Shares, (ii) all holders of outstanding Company Options
granted under the Company Stock Plans including the number of Company Shares
subject to each such Company Option, the exercise or vesting schedule, the
exercise price per share and the term of each such Company Option, (iii) all
holders of outstanding Company Warrants, including the number of Company Shares
subject to each such Company Warrant, the exercise price per share and the term
of each such Company
11
Warrant. On the Closing Date, the Company shall deliver to Parent an updated
Section 2.3(c) of the Company Disclosure Schedule current as of such date.
(d) As of the Execution Date, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind (contingent or otherwise) to which the Company or any
Company Subsidiary is a party or by which any of them is bound obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding contractual obligations of the Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock (or options to acquire any such shares) or other security or
equity interest of the Company or any Company Subsidiary. As of the Execution
Date, there are no stock-appreciation rights, security-based performance units,
"phantom" stock or other security rights or other agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
Person is or may be entitled to receive any payment or other value based on the
revenues, earnings or financial performance, stock price performance, assets or
other similar attributes of the Company or any Company Subsidiary or otherwise
calculated in accordance therewith (other than ordinary course payments or
commissions to sales representatives of the Company based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby).
(e) There are no (i) voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
is bound with respect to the voting of any shares of capital stock of the
Company and (ii) agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any Person is or may be entitled or
to cause the Company or any Company Subsidiary or any successor corporation
(including Parent) to file a registration statement under the Securities Act or
which otherwise relate to the registration of any securities of the Company, any
Company Subsidiary or such successor corporation (the "Existing Registration
Rights Agreements").
2.4 Authority Relative to this Agreement; Required Vote.
---------------------------------------------------
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, and, subject to approval of the Merger by
the Company Stockholders, each instrument (including each Related Agreement to
which it is a party) required to be executed and delivered by it at the Closing,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Company of this Agreement and each Related Agreement to which it is a party, the
performance of its obligations hereunder and thereunder, and the consummation by
the Company of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or any Related Agreement or to consummate the transactions so contemplated
(other than approval by the Company Stockholders). This Agreement and each
Related Agreement to which the Company is a party
12
has been duly and validly executed and delivered by the Company and, assuming
due authorization, execution and delivery hereof by each of Parent and Merger
Sub, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that such enforcement may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(b) The Board of Directors of the Company has, by unanimous written
consent or at a meeting duly called and held, (i) approved this Agreement and
each Related Agreement to which the Company is a party, (ii) determined that the
transactions contemplated hereby and thereby are advisable, fair to, and in the
best interests of, the Company Stockholders, (iii) resolved to recommend
adoption of this Agreement, the Merger and the other transactions contemplated
hereby and thereby to the Company Stockholders and (iv) directed that this
Agreement be submitted to the Company Stockholders for their approval and
authorization. The affirmative vote of sixty percent (60%) of the Company
Shares, voting together as a single class, is the only vote of the holders of
any class or series of capital stock of the Company necessary to approve and
authorize this Agreement, the Merger, the Related Agreements and the other
transactions contemplated hereby and thereby. The Consenting Company
Stockholders beneficially own and have the right to vote, in the aggregate,
approximately sixty percent (60%) of the total issued and outstanding Company
Shares.
2.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery by the Company of this Agreement, each
Related Agreement to which it is a party and any instrument required by this
Agreement to be executed and delivered by the Company at the Closing do not, and
the performance by the Company of its obligations under this Agreement, each
Related Agreement to which it is a party and any instrument required by this
Agreement to be executed and delivered by the Company at the Closing, will not
(i) conflict with or violate the Certificate of Incorporation or bylaws or
equivalent organizational documents of the Company or any Company Subsidiary,
(ii) conflict with or violate any Law, Regulation or Order applicable to the
Company or any Company Subsidiary or by which any of its or their respective
properties is bound or affected, (iii) conflict with, result in any breach or
violation of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair the Company's or any
Company Subsidiary's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the properties or assets of the Company or any Company Subsidiary pursuant to
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or any of its or their respective properties is bound or affected, including
without limitation any Intellectual Property Rights licensed to the Company or
such Company Subsidiary, except in the foregoing clause (ii) for any such
violation, conflict, default, right or Lien which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
13
(b) The execution and delivery by the Company of this Agreement, each
Related Agreement to which it is a party or any instrument required by this
Agreement to be executed and delivered by the Company at the Closing do not, and
the performance by the Company or any Company Subsidiary of its obligations
under this Agreement, each Related Agreement to which it is a party and any
instrument required by this Agreement to be executed and delivered by the
Company at Closing will not require on the part of the Company or any Company
Subsidiary any filing with, or any permit, authorization, consent or approval
of, any Court or Governmental Authority except (A) the compliance with
applicable requirements, if any, of the Securities Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), state securities laws ("Blue Sky
Laws"), (B) the filing of appropriate Merger or other documents as required by
Delaware Law, or (C) approvals, Orders or Permits set forth in Section 2.5(b) of
the Company Disclosure Schedule.
2.6 Material Agreements.
-------------------
(a) Section 2.6(a) of the Company Disclosure Schedule sets forth a
true and complete list of (i) all contracts, agreements, and instruments to
which the Company or any Company Subsidiary is a party or by which the Company
or any Company Subsidiary or any of its or their respective properties or assets
may be bound, which are material to the Company or such Company Subsidiary (in
the case of contracts, and agreements, "material" meaning that the aggregate
dollar value of obligations or commitments to or by the Company or any Company
Subsidiary thereunder shall be at least $50,000), (ii) each agreement pursuant
to which the Company or any Company Subsidiary has granted, or has been granted,
exclusive rights, (iii) each agreement that has a term of one year or longer
other than equipment leases entered into in the ordinary course of business, and
(iv) each agreement which is related in any way to Intellectual Property Rights
(collectively, the "Material Agreements"). True and complete copies of all
Material Agreements have been made available by the Company to Parent, and no
oral Material Agreements exist.
(b) Each Material Agreement is in full force and effect, is a valid
and binding obligation of the Company or such Company Subsidiary and is
enforceable against the Company or such Company Subsidiary and, to the Company's
Knowledge, each other party thereto in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar law now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). There has not occurred any material default by the Company or any
Company Subsidiary, or, to the Company's Knowledge, any other party thereto,
under any Material Agreement which remains unremedied as of the Execution Date.
No condition exists or, to the Company's Knowledge, event has occurred which
(whether with or without notice or lapse of time or both, or the happening or
occurrence of any other event) would result in a loss of rights or an
acceleration of an obligation or result in the creation of any Lien, or would
constitute a default by the Company or any Company Subsidiary or, to the
Company's Knowledge, any other party thereto under, any Material Agreement, or
otherwise result in a right in termination of any Material Agreement. The
continuation, validity, enforceability and effectiveness of each Material
Agreement will not be affected by the consummation of the transactions
contemplated by this Agreement and the Related Agreements. To the Company's
Knowledge, no party to a Material Agreement has
14
repudiated any provision thereof in writing. There are no negotiations pending
or in progress to revise any material terms of any Material Agreement.
2.7 Compliance.
----------
(a) Neither the Company nor any Company Subsidiary is in conflict
with, or in default or violation of, any Law, Regulation or Order applicable to
the Company or such Company Subsidiary or by which the Company or any Company
Subsidiary or any of their respective properties is bound or affected, except
for any such conflicts, defaults or violations which would not, individually or
in the aggregate, have a Material Adverse Effect.
(b) The Company (i) is in compliance with the terms of the material
Approvals applicable to the Company and (ii) has all requisite licenses,
permits, certificates, authorizations and approvals, including health and safety
and employee health and safety permits, from foreign, federal, state and local
authorities necessary to conduct its business and the business of the Company
Subsidiaries as currently conducted (collectively, the "Permits"), all of which
are set forth in Section 2.7 of the Company Disclosure Schedule, except for
those Permits the failure to have would not be reasonably likely to have a
Material Adverse Effect. All of the Permits are in full force and effect, and to
the Company's Knowledge, no party thereto is in default under any of such
Permits and no event has occurred and no condition exists, which with the giving
of notice, the passage of time, or both, would constitute a default thereunder.
To the Company's Knowledge, no action or claim is pending or threatened to
revoke or terminate any Permit.
(c) To the Knowledge of the Company, the Company is not, nor has it
been, in violation of any Law or Order related to building, zoning, land use
and/or employee health and safety matters. The Company has not received any
actual notice from any Governmental or Regulatory Authority or otherwise of any
such violation and to the Company's Knowledge, no such notice is threatened.
2.8 Financial Statements. The Company has delivered to Parent: (a)
--------------------
audited balance sheets of the Company and the Company Subsidiaries as of
September 30, 2000, 1999 and 1998 and the related audited consolidated
statements of income and cash flow for the fiscal years then ended, in each case
audited by Deloitte & Touche LLP, the Company's independent accountants, and (b)
unaudited balance sheets of the Company and the Company Subsidiaries as of June
30, 2001 (the most recent of which is referred to as the "Company Balance
Sheet") and the related unaudited consolidated statements of income and cash
flow for the six (6) months then ended. Such financial statements (collectively,
the "Company Financial Statements"), are true, correct and complete and fairly
present the financial condition, the results of operations and cash flows of the
Company and the Company Subsidiaries as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP,
subject, in the case of interim financial statements, to normal recurring year-
end adjustments and the absence of notes (the effect of which will not,
individually or in the aggregate, be materially adverse). Except as disclosed
therein, the Company Financial Statements reflect the consistent application of
such accounting principles throughout the periods involved. No financial
statements of any Person other than the Company and the Company Subsidiaries are
required by GAAP to be included in the Company Financial Statements.
15
2.9 Books and Records. The books of account, minute books, stock record
-----------------
books, and other records of the Company and the Company Subsidiaries, all of
which have been made available to Parent, are complete and correct in all
material respects. The Company and the Company Subsidiaries maintain a system of
internal financial and accounting controls that was deemed adequate by the
Company's independent auditors based on their review of such controls in
connection with the most recent audit of the Company's financial statements. The
minute books of the Company and the Company Subsidiaries contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of the Board of Directors
of each of the Company and the Company Subsidiaries, and no meeting of any such
stockholders, Board of Directors, or committee has been held, or corporate
action taken, for which minutes have not been prepared and are not contained in
such minute books.
2.10 Accounts and Notes Receivable. All accounts and notes receivable
-----------------------------
reflected in the Company Financial Statements and all accounts receivable
insofar as they represent income earned arising after December 31, 2000
(collectively, the "Company Accounts Receivable") have arisen in the ordinary
course of business of the Company or the Company Subsidiaries, represent valid
and enforceable obligations due to the Company or such Company Subsidiaries, and
are not subject to any discount, set-off or counter-claim. All such Company
Accounts Receivable have been collected or, to the Knowledge of the Company, are
fully collectible in the ordinary course of business of the Company in the
aggregate amounts thereof in accordance with their terms, net of reserves
therefor shown in the Company Financial Statements.
2.11 Inventory. All inventory of the Company and the Company Subsidiaries,
---------
whether or not reflected in the Company Balance Sheet, consists of a quality and
quantity usable and salable in the ordinary course of business in all material
respects, except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Company Balance Sheet. All inventories not written off have been priced at the
lower of cost or market on a first in, first out basis. The quantities of each
item of inventory (whether raw materials, work-in-process, or finished goods)
are not excessive, but are reasonable in the present circumstances of the
Company and the Company Subsidiaries.
2.12 Customers and Distributors. Section 2.12 of the Company Disclosure
--------------------------
Schedule sets forth (a) a list of all representatives and distributors of the
Company's products (whether pursuant to commission, royalty or other
arrangement) (the "Company Distributors"), (b) a list of the Company's twenty
largest customers (the "Company Customers") and (c) a list of the Company's ten
largest suppliers (the "Company Suppliers"). To the Knowledge of the Company,
the Company has good commercial working relationships with the Company
Customers, Company Distributors and Company Suppliers. To the Knowledge of the
Company, there is no plan or intention of any such Company Customer, Company
Distributor, or Company Supplier, and the Company has not received any written
threat from any Company Customer, Company Distributor, or Company Supplier, to
terminate, cancel or otherwise adversely modify its relationship with the
Company in a material respect or to decrease materially or limit its services,
supplies or materials to the Company or its usage, purchase or distribution of
the services or products of the Company.
16
2.13 Absence of Certain Changes or Events. Since December 31, 2000, the
------------------------------------
Company and each Company Subsidiary has conducted its respective business only
in the ordinary and usual course and in a manner consistent with past practice
and, since such date, there has not been any (i) purchase, redemption,
retirement, or other acquisition by the Company or any Company Subsidiary from
the Company Stockholders or any stockholder of such Company Subsidiary of any
shares of capital stock; (ii) declaration or payment of any dividend or other
distribution or payment by the Company or any Company Subsidiary in respect of
shares of its capital stock; (iii) payment or increase by the Company or any
Company Subsidiary of any bonuses, salaries, or other compensation to any
stockholder, director, officer, or employee or entry by the Company or any
Company Subsidiary into any employment, severance, or similar contract with any
director, officer, or employee; except in the ordinary course of business,
consistent with past practices; (iv) adoption of, or increase in the payments
to, or benefits under, any Company Benefit Plan (as defined in Section 2.16(a));
(v) damage to or destruction or loss of, any asset or property of the Company or
any Company Subsidiary, whether or not covered by insurance, that had or will
have a Material Adverse Effect; (vi) entry into, termination of, or receipt of
written notice of termination of any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or any transaction
involving a total remaining commitment by or to the Company or any Company
Subsidiary of at least $100,000; (vii) sale (other than sales of inventory in
the ordinary course of business), lease, or other disposition of any asset or
property of the Company or any Company Subsidiary or mortgage, pledge, or
imposition of any Lien on any material asset or property of the Company or any
Company Subsidiary, including the sale, lease, or other disposition of any of
the Intellectual Property Rights; (viii) cancellation or waiver of any claims or
rights with a value to the Company or any Company Subsidiary in excess of
$100,000; (ix) material change in the accounting methods used by the Company or
any Company Subsidiary; (x) incurrence of any indebtedness for borrowed money or
capital lease obligations outside the ordinary course of business; (xi) guaranty
of any indebtedness of another Person; (xii) acquisition by merger or
consolidation with, or by purchasing a substantial equity interest in, or by any
other manner, any business or any Person; (xiii) acceleration, termination
(other than end-of-term expirations), modification, cancellation, declaration of
a default under or indication of an intent to terminate any Material Agreement
(or series of related Material Agreements); (xiv) any capital expenditure (or
series of related capital expenditures) either involving more than $50,000 or
that is outside the ordinary course of business; (xv) delay or postponement of
the collection of accounts receivable or the payment of accounts payable and
other liabilities outside the ordinary course of business; (xvi) loan to, or,
except in the ordinary course of business, entry into any other transaction
with, any of its directors, officers and employees; (xvii) entry into any
transaction other than (A) in the ordinary course of business or (B) the Helix
Transaction or the MMD Transaction described in Sections 6.18 and 7.2(m)
respectively of this Agreement; (xviii) agreement, whether oral or written, by
the Company or any Company Subsidiary to do any of the foregoing; or (xix) any
other change, event, development or circumstance affecting the Company or any
Company Subsidiary which, individually or in the aggregate, has, or is
reasonably likely to have, a Material Adverse Effect or which would reasonably
be expected to prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement.
2.14 No Undisclosed Liabilities. Neither the Company nor any Company
--------------------------
Subsidiary has any liabilities or obligations of any nature except for (a)
liabilities or obligations reflected in the Company Balance Sheet; (b)
liabilities or obligations incurred in the ordinary course of
17
business consistent with past practice since June 30, 2001 which are not, and
will not have, individually or in the aggregate, a Material Adverse Effect; and
(c) liabilities or obligations which have not had, and will not have,
individually or in the aggregate, a Material Adverse Effect.
2.15 Absence of Litigation. There is no Litigation (a) pending against the
---------------------
Company or any Company Subsidiary or, to the Company's Knowledge, against any
licensors of Intellectual Property Rights which is related in any respect to the
Intellectual Property Rights licensed to the Company or Company Subsidiary; or
to the Company's Knowledge, threatened against the Company or any Company
Subsidiary, or (b) that had, or would be reasonably likely to have, a Material
Adverse Effect. Neither the Company nor any Company Subsidiary is subject to
any outstanding Claim or Order which, individually or in the aggregate, had, or
in the future would be reasonably likely to have, a Material Adverse Effect or
would prevent, hinder or delay the Company from consummating the transactions
contemplated by this Agreement.
2.16 Employee Benefit Plans.
----------------------
(a) Section 2.16(a) of the Company Disclosure Schedule contains a true
and complete list of each deferred compensation, incentive compensation, stock
purchase, restricted stock option and other equity compensation plan, "welfare"
plan, fund or program (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); each "pension"
plan, fund or program (within the meaning of Section 3(2) of ERISA); and each
other employee benefit plan, fund, program, agreement or arrangement, including
but not limited to vacation plans, cafeteria plans, educational assistance or
reimbursement plans, spending account plans (for medical expenses, dependent
care expenses, or other expenses), severance, golden parachute, termination,
supplemental unemployment, plant closing or similar benefits, health or life or
other post-employment welfare or insurance plans, bonus or performance based
compensation plans or arrangements, supplemental executive retirement plans or
other supplemental or excess benefit plans in each case, that is or has ever
been sponsored, maintained or contributed to or required to be contributed to by
the Company or any Company Subsidiary, or any trade or business (whether or not
incorporated) which is a member of a controlled group or which is under common
control with the Company or any Company Subsidiary within the meaning of Section
414 of the Code or which could be deemed a "single employer" within the meaning
of Section 4001(b) of ERISA (an "ERISA Affiliate"), or to which the Company or
any Company Subsidiary or an ERISA Affiliate is a party, whether written or
oral, for the benefit of any officer, director, employee or former employee of
the Company or any Company Subsidiary, or any ERISA Affiliates, whether or not
such plan has been terminated (the "Company Benefit Plans"). There are no
restrictions on the ability of the Company or any Company Subsidiary or any
ERISA Affiliates to amend, modify or terminate any Company Benefit Plan and each
Company Benefit Plan is fully and readily assignable and transferable by the
applicable plan sponsor to either the Parent or the Merger Sub.
(b) The Company has heretofore delivered to Parent true and complete
copies of each Company Benefit Plan and any amendments thereto (or if any
Company Benefit Plan is not a written Company Benefit Plan, a description
thereof), any related trust or other funding vehicle, the summary plan
description and any summaries of material modifications, the three (3) most
recent annual reports (with all schedules and attachments) required under ERISA
or the
18
Code, the most recent audited financial statements, plan testing results for the
most recent three (3) years for each Company Benefit Plan required to be tested
for non-discrimination purposes either under ERISA or the Code, the most recent
determination letter received from the Internal Revenue Service with respect to
each Company Benefit Plan intended to qualify under Section 401 of the Code,
copies of the three (3) most recent summary annual reports issued to
participants for each Company Benefit Plan required to provide such a report,
all correspondence between the Company, any Company Subsidiary or any ERISA
Affiliate and any governing agency, including but not limited to the United
States Department of Labor and the Internal Revenue Service, with respect to any
Company Benefit Plan, all material communications provided to employees or
participants of any Company Benefit Plan, a copy of the Company's form notice
required to be given to participants pursuant to Section 4980B of the Code and
the regulations promulgated thereunder ("COBRA") and a list of all individuals
currently receiving COBRA benefits along with the date such coverage is expected
to end for each.
(c) No liability under Title IV or Section 302 of ERISA or Section 412
of the Code has been incurred by the Company, any Company Subsidiary or any
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a risk to the Company, any Company Subsidiary or any ERISA
Affiliate of incurring any such liability.
(d) No Company Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code, nor is any Company Benefit Plan a "multiemployer pension plan,"
as defined in Section 3(37) of ERISA, or subject to Section 302 of ERISA. No
Company Benefit Plan is a "single-employer plan under multiple controlled
groups" as described in Section 4063 of ERISA.
(e) Each Company Benefit Plan has been operated and administered in
all respects in accordance with its terms and applicable law, including ERISA
and the Code. There has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any
Company Benefit Plan; there are no claims pending (other than routine claims for
benefits) or, to the Company's Knowledge, threatened against any Company Benefit
Plan or against the assets of any Company Benefit Plan, nor are there any
current or, to the Company's Knowledge, threatened, Liens on the assets of any
Company Benefit Plan or on the assets of the Company or any Company Subsidiary
under any provision of ERISA. The Company, each Company Subsidiary and each
ERISA Affiliate has performed all obligations required to be performed by them
under, are not in default under or violation of, and there has been no default
or violation by any other party with respect to, any of the Company Benefit
Plans. All contributions required to be made to any Company Benefit Plan under
applicable law or the terms of the respective Company Benefit Plan have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each Company Benefit Plan for the current plan years. The
transaction contemplated herein will not directly or indirectly result in an
increase of benefits, acceleration of vesting or acceleration of timing for
payment of any benefit to any participant or beneficiary under any Company
Benefit Plan, nor will any such payment result in an "excess parachute payment"
under Section 280G of the Code resulting in an excise tax under Section 4999 of
the Code.
(f) Each Company Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code and the trusts maintained thereunder that
are intended to be exempt from taxation under Section 501(a) of the Code is
qualified and has received a favorable
19
determination or opinion letter indicating that they are so qualified, and no
event has occurred since the date of said letter(s) or at any other time that
has or will adversely affect the qualification of such Company Benefit Plan.
(g) No Company Benefit Plan or written or oral agreement provides
medical, surgical, hospitalization, death or similar benefits (whether or not
insured) for directors, employees or former employees of the Company, any
Company Subsidiary or ERISA Affiliates for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
COBRA or other applicable Law, (ii) death benefits under any "pension plan" or
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
(h) No amounts payable under any Company Benefit Plan will fail to be
deductible for federal income Tax purposes by virtue of Section 280G of the
Code.
(i) The execution, delivery and performance of, and consummation of
the transactions contemplated by, this Agreement will not (i) entitle any
current or former employee or officer of the Company, any Company Subsidiary or
any ERISA Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, (ii) accelerate the
time of payment or vesting, or increase the amount of compensation due any such
employee or officer, or (iii) accelerate the vesting of any stock option or of
any shares of restricted stock of the Company or any Company Subsidiary.
(j) There are no pending or, to the Company's Knowledge, threatened or
anticipated claims by or on behalf of any Company Benefit Plan, by any employee
or beneficiary covered under any such Company Benefit Plan or otherwise
involving any such Company Benefit Plan (other than routine claims for
benefits).
(k) Each Company Benefit Plan can be terminated within thirty (30)
days, without such termination requiring the payment of any additional
contribution or amount and, except with respect to Qualified Plans, without the
vesting or acceleration of any benefits promised by such Plan.
(l) Section 2.16(l) of the Company Disclosure Schedule sets forth a
true and accurate list of each current or former employee, officer, director or
investor of the Company or any Company Subsidiary who holds any option, warrant
or other right to purchase Company Shares or shares of any Company Subsidiary,
if any, together with the number of Company Shares or shares of any Company
Subsidiary, if any, subject to such option, warrant or right, the date of grant
or issuance of such option, warrant or right, the extent to which such option,
warrant or right is vested and/or exercisable, the exercise price of such
option, warrant or right, whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code, and the
expiration date of each such option, warrant and right. Section 2.16(l) of the
Company Disclosure Schedule also sets forth the total number of such options,
warrants and rights. True and complete copies of each agreement (including all
amendments and modifications thereto) between the Company and each such holder
of such options, warrants and rights relating to the same have been furnished to
Parent and are listed in Section 2.16(l) of the Company Disclosure Schedule.
20
(m) Section 2.16(m) of the Company Disclosure Schedule contains a
complete and accurate list of the following information for each retired
employee or director of the Company or any Company Subsidiary, or their
dependents, receiving benefits or scheduled to receive benefits in the future:
name, pension benefit, pension option election, retiree medical insurance
coverage, retiree life insurance coverage and other benefits.
2.17 Employment and Labor Matters.
----------------------------
(a) Section 2.17(a) of the Company Disclosure Schedule, which schedule
has been previously provided to Parent, identifies all employees and consultants
employed or engaged by the Company and each Company Subsidiary and sets forth
(1) each such individual's rate of pay or annual compensation (and the portions
thereof attributable to salary and bonuses, respectively), job title and date of
hire, (2) any and all bonus payments potentially payable to such employees or
consultants through the end of the Company's fiscal year ended September 30,
2001 (the "Bonuses") and (3) any and all contemplated, proposed or approved
salary or bonus increases payable to such employees or consultants (the
"Proposed Compensation Increases"). There are no bonus payments owed, accrued
or otherwise contemplated by the Company payable to any employee or consultant
other than the Bonuses and there are no salary or bonus increases owed, accrued
or otherwise contemplated by the Company other than the Proposed Compensation
Increases. There are no employment, consulting, severance pay, continuation
pay, termination or indemnification agreements or other similar agreements of
any nature (whether in writing or not) between the Company, any Company
Subsidiary and any current or former stockholder, officer, director, employee
of, or consultant to, the Company or any Company Subsidiary. No individual will
accrue or receive additional benefits, service or accelerated rights to payments
under any Company Benefit Plan or any of the agreements set forth in Section
2.17(a) of the Company Disclosure Schedule, including the right to receive any
parachute payment, as defined in Section 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a result of the
transaction contemplated herein. Neither the Company nor any Company Subsidiary
is delinquent in payments to any of its employees or consultants for any wages,
salaries, commissions, bonuses or other compensation for any services. None of
the Company's nor any Company Subsidiaries' employment policies or practices are
currently being audited or investigated by any Governmental Authority. There
are no pending, or to the Company's Knowledge, threatened, claims, charges,
actions, lawsuits or proceedings alleging claims against the Company or any
Company Subsidiaries brought by or on behalf of any employee or other individual
or any Governmental Authority with respect to employment practices, and to the
Company's Knowledge, no facts or circumstances exist that could give rise to any
such claims, charges, actions, lawsuits or proceedings. Each individual
classified and paid as an "independent contractor" by the Company or any Company
Subsidiary has been accurately classified and paid for all employment, wage and
hour, tax and other purposes under applicable Law.
(b) There are no controversies pending or, to the Company's Knowledge,
threatened, between the Company, any Company Subsidiary and any of its or their
respective employees. As of the Effective Time, neither the Company nor any
Company Subsidiary is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or any
Company Subsidiaries nor are there any activities or proceedings of any labor
union or by any employees to organize any such employees of the
21
Company or any Company Subsidiary. During the past five years there have been no
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or any Company Subsidiary. Assuming that
Parent has not required the Company to terminate the employment of any of the
Company's employees and has not communicated its intention to terminate the
employment of any of the Company's employees, neither the Company nor any
Company Subsidiary has nor will have at the Closing any obligation under the
Worker Adjustment and Retraining Notification Act. The Company and each Company
Subsidiary is in compliance with all applicable provisions of applicable state,
local, federal and foreign employment, wage and hour, labor and other applicable
laws.
2.18 Absence of Restrictions on Business Activities.
----------------------------------------------
(a) There is no Material Agreement or Order binding upon the Company
or any Company Subsidiary or any of its or their respective properties which has
had or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any Company
Subsidiary or the conduct of business by the Company or any Company Subsidiary
as currently conducted and (ii) neither the Company nor any Company Subsidiary
is subject to any non-competition or similar restriction on its business.
Neither the Company nor any Company Subsidiary has at any time entered into, or
agreed to enter into, any interest rate swaps, caps, floors or option agreements
or any other interest rate risk management arrangement or foreign exchange
contracts.
(b) To the Company's Knowledge, no Key Employee or director of the
Company or any Company Subsidiary is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition or
proprietary rights agreement, between such employee or director and any other
Person that in any way adversely affects or will adversely affect (i) the
performance of his or her duties as an employee or director of the Company or
any Company Subsidiary, or (ii) the ability of the Company or any Company
Subsidiary to conduct its or their respective business. No director, officer,
or employee of the Company has provided the Company with written notice that he
or she intends to terminate his or her employment with the Company or any
Company Subsidiary.
2.19 Title to Assets; Leases.
-----------------------
(a) Neither the Company nor any Company Subsidiary owns any real
property.
(b) Section 2.19(b) of the Company Disclosure Statement sets forth (i)
a true and complete list of all real property leased by the Company or any
Company Subsidiary; (ii) the expiration date of such lease; (iii) the aggregate
monthly rental or other fee payable under such lease; (iv) a description of each
contract for the purchase, sale or development of real estate to which the
Company of any Company Subsidiary is a party; and (v) all items of the Company's
or any Company Subsidiary's tangible personal property and equipment with a book
value of $100,000 or more or having any annual lease payment of $50,000 or more.
The Company and/or the Company Subsidiaries have delivered to Parent complete
and accurate copies of all such leases and subleases (as amended to date). With
respect to each such lease and sublease:
22
(i) the lease or sublease is legal, valid, binding,
enforceable against the Company or Company Subsidiary, as the case may
be, and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in
effect immediately prior to the Closing;
(iii) neither the Company nor, to the Knowledge of the Company,
any other party is in breach or violation of, or default under, any
such lease or sublease, and no event has occurred, is pending or is
threatened, which, after giving of notice, with lapse of time, or
otherwise, would constitute a breach or default by the Company or any
other party under such lease or sublease;
(iv) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
(v) the Company is not aware of any Lien, easement, covenant
or other restriction applicable to the real property subject to such
lease, except for recorded easements covenants and other restrictions
which do not materially impair the current uses or the occupancy by
the Company or any Company Subsidiary of the property subject thereto;
and
(vi) the Company has not received written notice of, and does
not otherwise have Knowledge of, any pending, threatened or
contemplated condemnation proceeding affecting any premises leased by
the Company or any Company Subsidiary or any part thereof or of any
sale or other disposition of any such leased premises or any part
thereof in lieu of condemnation. There are no Laws, conditions of
record, or other impediments which interfere with the intended use by
the Company or any Company Subsidiary of any of the property leased or
occupied by them effective in accordance with their respective terms,
and there is not, under any such lease, any existing material default
or event of material default (or event which with notice or lapse of
time, or both, would constitute a material default).
(c) The Company and the Company Subsidiaries have good and
marketable title to all of their respective properties and assets, free and
clear of all Liens, except Liens for Taxes (as defined below) not yet due and
payable and such Liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby.
2.20 Condition of Properties. All real and tangible personal properties
-----------------------
owned or leased by the Company or any Company Subsidiary are in a good state of
maintenance and repair, are in good operating condition, subject to normal wear
and tear, conform (as to owned properties only) in all material respects to all
applicable ordinances, regulations and zoning laws, and are adequate for the
business conducted by the Company or such Company Subsidiary
23
subject to exceptions which are not, in the aggregate, material to the Company
and the Company Subsidiaries, on a consolidated basis.
2.21 Taxes.
-----
(a) All Tax Returns required to be filed (taking into account
extensions) by or on behalf of the Company, each Company Subsidiary and each
affiliated, combined, consolidated or unitary group of which the Company or any
Company Subsidiary is or has been a member, have been timely filed, and all such
Tax Returns are true, complete and correct in all material respects. The
Company has delivered to Parent true and complete copies of (i) all federal
income Tax Returns of the Company and each Company Subsidiary for the preceding
three (3) taxable years, and (ii) any audit report issued within the last three
(3) years (or otherwise with respect to any audit or proceeding in progress)
relating to federal income Taxes of the Company or any Company Subsidiary.
(b) All Taxes payable by or with respect to the Company, or any
Company Subsidiary has been timely paid, or are adequately reserved for (other
than a reserve for deferred Taxes established to reflect timing differences
between book and Tax treatment) in accordance with GAAP on the Company Balance
Sheet except where the failure to pay such taxes or adequately reserve for such
taxes would not have a Material Adverse Effect. No deficiencies for any Taxes
have been proposed, asserted or assessed or in writing against the Company or
any Company Subsidiary that are not adequately reserved for in accordance with
GAAP on the Company Balance Sheet. All assessments for Taxes due and owing by
or with respect to the Company or any Company Subsidiary with respect to
completed and settled examinations or concluded litigation have been paid.
Neither the Company nor any Company Subsidiary has incurred a Tax liability from
the date of the latest Company Balance Sheet other than a Tax liability in the
ordinary course of business or in connection with the Helix Transaction (as
defined below) or the MMD Transaction (as defined below).
(c) Neither the Company nor any Company Subsidiary has requested, or
has been granted, any waiver of any federal, state, local or foreign statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. No extension or waiver of time within which to file any Tax Return of,
or applicable to, the Company or any Company Subsidiary has been granted or
requested which extension or waiver has not since expired.
(d) Other than with respect to the Company Subsidiaries, the Company
is not (nor does the Company have any liability for unpaid Taxes because it once
was) a member of an affiliated, consolidated, combined or unitary group, and
neither the Company nor any Company Subsidiary is a party to any Tax allocation
or sharing agreement or liable for the Taxes of any other party, as transferee
or successor, by contract, or otherwise.
(e) Neither the Company nor any Company Subsidiary presently or has
been a "foreign investment company" as such term is defined in Section 1246(b)
of the Code, a "passive foreign investment company" as such term is defined in
Section 1297(a) of the Code, a "controlled foreign corporation" as such term is
defined in Section 957(a) of the Code or a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
24
(f) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code since the
effective date of Section 355(e) of the Code.
(g) Neither the Company nor any Company Subsidiaries have made any
payments, are obligated to make any payments, and are a party to any agreement
that under any circumstances could obligate any of them to make any payments,
that will not be deductible under Section 280G of the Code or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code.
(h) No unsatisfied deficiency, delinquency or default for any Tax has
been claimed, proposed or assessed against or with respect to the Company or any
Company Subsidiary in writing, nor has the Company or any Company Subsidiary
received written notice of any such deficiency, delinquency or default, and
there is no administrative or court proceeding or, to the Company's Knowledge,
any audit or investigation pending with respect to any liability of the Company
or any Company Subsidiary for Taxes.
(i) The Company and each Company Subsidiary have complied with all
applicable Laws relating to the payment and withholding of Taxes (including, but
not limited to, withholding of Taxes pursuant to Section 1441, 1442 and 3406 of
the Code or similar provisions under any foreign Laws) and have, within the time
and in the manner required by Law, withheld from employee wages and paid over to
the proper Governmental Authorities all amounts required to be so withheld and
paid over under all applicable Laws. No written claim has been made by a taxing
authority in a jurisdiction where either the Company or any Company Subsidiary
files income or franchise Tax Returns that the Company or any Company Subsidiary
is or may be subject to income or franchise taxation in that jurisdiction.
(j) Neither the Company nor any Company Subsidiary has filed a
consent under Section 341(f) of the Code.
(k) Neither the Company nor any Company Subsidiary has executed or
entered into any closing agreement under Section 7121 of the Code (or any
similar provision of state, local or foreign law) or has agreed to make any
adjustment to its income or deductions pursuant to Section 481(a) of the Code
(or similar provision of state, local or foreign law), in either case that could
affect the tax liability after the Closing Date to any material extent.
(l) Neither the Company nor any Company Subsidiary has agreed to, or
is required to, make any adjustment under Section 481(a) of the Code by reason
of a change in accounting method or otherwise.
(m) Each granted option that was designated as an "incentive stock
option" on the applicable books and records of the Company or any Company
Subsidiary qualified as an "incentive stock option" within the meaning of
Section 422 of the Code on the date on which such option was granted.
(n) None of the assets of the Company or any Company Subsidiary: (i)
is property that is required to be treated as being owned by any other Person
pursuant to the
25
provisions of former Section 168(f)(8) of the Code, (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code, or (iii) directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(o) No state or federal "net operating loss" of the Company or any
Company Subsidiary determined as of the Execution Date is subject to limitation
on its use pursuant to Section 382 of the Code or comparable provisions of state
law as a result of any "ownership change" within the meaning of Section 382(g)
of the Code or comparable provisions of any state law occurring prior to the
Execution Date.
(p) There are no Liens with respect to Taxes upon any of the assets,
properties or business of the Company or any Company Subsidiary, other than with
respect to Taxes arising in the ordinary course of business and not yet due and
payable.
(q) Neither the Company any Company Subsidiary nor, to the Company's
Knowledge, any of its Affiliates or stockholders, has taken or agreed to take
(or failed to so take or agree to take) any action or is aware of any fact or
circumstances that could reasonably be expected to prevent the Merger from
qualifying as a tax-free reorganization under Section 368 of the Code.
2.22 Environmental Matters.
---------------------
(a) The Company and each Company Subsidiary is, and has at all times
been, in compliance with all applicable Environmental Laws except where the
failure to be in such compliance would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company and each Company Subsidiary has obtained all permits
required by any applicable Environmental Law and all environmental permits
relating to the business of the Company and each Company Subsidiary, except
where the failure to obtain any permit relating to the business of the Company
or Company Subsidiary would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. All such environmental
permits are in full force and effect in all respects; and no such environmental
permits materially limit or affect the processes, methods, capacity or operating
hours of the persons carrying on the business of the Company and each of the
Company Subsidiaries as it is currently conducted.
(c) Neither the Company nor any Company Subsidiary has, and the
Company and each Company Subsidiary has no Knowledge of any other Person who
has, caused any unlawful or improper release, threatened release or disposal of
any Hazardous Material at any properties or facilities previously or currently
leased or occupied by the Company and any Company Subsidiary.
(d) To the Knowledge of the Company, none of the Company's and the
Company Subsidiaries facilities are adversely affected by any release,
threatened release or disposal of a Hazardous Material originating or emanating
from any other property.
26
(e) Neither the Company nor any Company Subsidiary (i) has any
liability for response or corrective action, natural resources damage, or any
other harm pursuant to any Environmental Law, (ii) is subject to, has notice or
Knowledge of, or is required to give any notice of, any Environmental Claim
involving an allegation against the Company or any of the Company Subsidiaries
or any properties or facilities of the Company or any of the Company
Subsidiaries or (iii) has Knowledge of any condition or occurrence which could
reasonably be expected to form the basis of an Environmental Claim against the
Company or any of the Company Subsidiaries or any of its properties or
facilities.
(f) Neither the Company nor any Company Subsidiary is subject to
any, and neither the Company nor any Company Subsidiary has any Knowledge of,
any imminent restriction on the ownership, occupancy, use or transferability of
their properties and facilities arising from any Environmental Law.
(g) There is no Environmental Claim pending, or, to the Company's
Knowledge, threatened, against the Company or any of the Company Subsidiaries
or, to the Company's Knowledge, against any Person whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries has or may
have retained or assumed either contractually or by operation of law. To the
Knowledge of the Company, no material capital expenditure is currently required
for the Company or any Company Subsidiary in relation to environmental matters
in order to comply with, extend, renew or obtain any environmental permit or
comply with Environmental Laws. Copies of all environmental audits and other
assessments, reviews and reports conducted by or on behalf of the Company or any
Company Subsidiary have been previously provided to Parent.
2.23 Intellectual Property.
---------------------
(a) Section 2.23(a) of the Company Disclosure Schedule sets forth a
true, correct and complete list of all United States and foreign (i) patents and
patent applications of the Company and each Company Subsidiary (the "Company
Patents"), (ii) registered and unregistered trademarks and trademark
applications, including material Internet domain name registrations of the
Company and each Company Subsidiary (the "Company Trademarks"), (iii) service
marks, service ▇▇▇▇ applications and trade names of the Company and each Company
Subsidiary (the "Company Tradenames"), (iv) copyright registrations and
copyright applications of the Company and each Company Subsidiary (the "Company
Copyrights"), and (v) licenses presently used by the Company or the Company
Subsidiaries, indicating for each, the applicable jurisdiction, registration
number (or applicable number), and date issued or filed, as applicable, with
respect to (i), (ii), (iii), and (iv) above and including the terms of such
licenses (all of which, together with patent rights, trade secrets, confidential
business information, formulas, processes, invention records, procedures,
research and development activity reports, and laboratory notebooks which relate
to or are used or held for use in connection with the business of the Company
and the Company Subsidiaries, are collectively referred to as, the "Intellectual
Property Rights"). Copies of all licenses listed in (v) above have been
previously provided or made available to Parent. The Intellectual Property
Rights owned or controlled by the Company are sufficient for the conduct of the
business of the Company and each Company Subsidiary as presently conducted,
except where the failure to own or control such Intellectual
27
Property Rights would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(b) Section 2.23(b) of the Company Disclosure Schedule sets forth a
true, correct and complete list of, and where appropriate, a description of, all
Intellectual Property Rights to which the Company's or the Company Subsidiaries'
rights are not exclusive, excluding all Intellectual Property Rights which the
Company or such Company Subsidiary has the right to use under a shrinkwrap or
similar mass marketing license. Excluding all Intellectual Property Rights
subject to a shrinkwrap or similar mass marketing license, the Company or such
Company Subsidiary exclusively owns or has the exclusive right to use all of the
Intellectual Property Rights listed in Section 2.23(a) of the Company Disclosure
Schedule.
(c) All Company Trademarks, Company Patents, and Company Copyrights
are currently in compliance with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications with respect to Company Trademarks, and the payment of filing,
examination and maintenance fees and proof of working or use with respect to
Company Patents), and are, to the Company's Knowledge, valid and enforceable. No
Company Trademark has been or is now involved in any cancellation and, to the
Company's Knowledge, no such action is threatened with respect to any of the
Company Trademarks. No Company Patent has been or is now involved in any
interference, reissue, re-examination or opposition proceeding. To the Company's
Knowledge, there are no trademarks or patents of any third party that could
potentially conflict with the Company Trademarks or Company Patents,
respectively.
(d) The Company owns free and clear of all Liens, all owned
Intellectual Property Rights, and has a valid and enforceable right to use in
accordance with the applicable license agreement, if any, all of the
Intellectual Property Rights licensed to the Company and/or the Company
Subsidiaries and used in the Company's or the Company Subsidiaries' business.
(e) The Company and the Company Subsidiaries have taken reasonable
steps to protect and preserve the Intellectual Property Rights which the Company
or such Company Subsidiary owns or has licensed.
(f) The conduct of the Company's and Company Subsidiaries' businesses
as currently conducted, or as contemplated does not, to the Company's Knowledge,
infringe upon any intellectual property rights owned or controlled by any third
party.
(g) There is no Litigation pending or, to the Company's Knowledge,
threatened, nor has the Company nor any of the Company Subsidiaries received any
written communication of and the Company has no Knowledge of any basis for a
claim against it (1) alleging that the activities, products, publications or
businesses of the Company or any Company Subsidiary infringes upon, violates, or
constitutes the unauthorized use of the intellectual property rights of any
third party, or (2) challenging the ownership, use, validity or enforceability
of any Intellectual Property Rights of the Company or the Company Subsidiaries.
(h) To the Company's Knowledge, no third party is misappropriating,
infringing, diluting, or violating any Intellectual Property Rights owned by the
Company or any
28
Company Subsidiary, and no such claims have been brought against any third party
by the Company or any Company Subsidiary, and neither the Company nor any
Company Subsidiary has knowingly misappropriated the trade secrets of any third
party.
(i) All Company Trademarks have been in continuous use by the
Company or the Company Subsidiaries. To the Company's Knowledge (i) there has
been no prior use of such Company Trademarks by any third party which would
confer upon said third party superior rights in such trademarks, and (ii) the
registered Company Trademarks have been continuously used in the form appearing
in, and in connection with the goods and services listed in, their respective
registration certificates.
(j) The Company and the Company Subsidiaries have taken all
reasonable steps in accordance with normal industry practice to protect the
rights of the Company and the Company Subsidiaries in their respective
confidential information and trade secrets. Without limiting the foregoing, (1)
the Company has and enforces a policy of requiring each employee, consultant and
contractor to execute proprietary information, confidentiality and assignment
agreements substantially consistent with the Company's standard forms thereof;
(2) all of the Company's and the Company Subsidiaries' employees, consultants
and contractors have executed such a proprietary information, confidentiality
and assignment agreement and (3) except under confidentiality obligations, to
the Knowledge of the Company, there has been no material disclosure by the
Company or any Company Subsidiary's material confidential information or trade
secrets.
2.24 Insurance.
---------
(a) Section 2.24 of the Company Disclosure Schedule sets forth a
true and complete list of all insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers and
directors of the Company and the Company Subsidiaries including: (i) a summary
of the loss experience under each policy; (ii) a statement describing each claim
under an insurance policy for an amount in excess of $100,000, which sets forth:
(A) the name of the claimant; (B) a description of the policy by insurer, type
of insurance, and period of coverage; and (C) the amount and a brief description
of the claim; and (iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims. There is no claim by the Company or the Company Subsidiaries that is
pending under any of such policies or bonds as to which coverage has been denied
or disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid, and to the Knowledge
of the Company, the Company and the Company Subsidiaries are otherwise in full
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). To the Knowledge of
the Company, such policies of insurance and bonds are of the type and in amounts
customarily carried by Persons conducting businesses similar to those of the
Company and the Company Subsidiaries and reasonable in light of the assets of
the Company and the Company Subsidiaries. As of the Execution Date, neither the
Company nor any Company Subsidiary has received written notice of any, and to
Company's Knowledge, there is no, threatened, termination of or material premium
increase with respect to any such policies or bonds.
29
(b) To the Knowledge of the Company, all policies to which the
Company or the Company Subsidiaries is a party or that provide coverage to
either the Company the Company Subsidiaries, or any director or officer of the
Company or the Company Subsidiaries: (A) are valid, outstanding, and
enforceable; (B) taken together, provide adequate insurance coverage for the
assets and the operations of the Company and the Company Subsidiaries for all
risks normally insured against by a Person carrying on a business comparable to
that of the Company or the Company Subsidiaries in terms of type and size; (C)
are sufficient for compliance with all Laws and Material Agreements to which the
Company and the Company Subsidiaries is a party or by which it is bound; (D)
will continue in full force and effect following the consummation of the
transactions contemplated by this Agreement; and (E) do not provide for any
retrospective premium adjustment or other experienced-based liability on the
part of the Company and the Company Subsidiaries.
(c) Neither the Company nor any Company Subsidiary has received (A)
any refusal of coverage from the issuer of any insurance policy of the Company
or the Company Subsidiaries or any written notice that a defense will be
afforded with reservation of rights, or (B) any written notice of cancellation
or any other written indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
2.25 Brokers. Except as set forth in Section 2.25 of the Company
-------
Disclosure Schedule, no broker, financial advisor, finder, investment banker or
other Person is entitled to any broker's, financial advisor's, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
2.26 Certain Business Practices. As of the Execution Date, neither the
--------------------------
Company nor any Company Subsidiary, nor to the Knowledge of the Company, any
director, officer, employee or agent of the Company or any Company Subsidiary,
in such person's capacity as a director, officer, employee or agent of the
Company or any Company Subsidiary, has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments relating to
political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
2.27 Interested Party Transactions.
-----------------------------
(a) The Company is not indebted to any director, officer, employee
or agent of the Company (except for amounts due as normal salaries and bonuses
and in reimbursement of ordinary expenses), and no such Person is indebted to
the Company.
(b) All loans presently on the books of the Company or any Company
Subsidiary to present or former directors or executive officers of the Company
or any Company Subsidiary, or their associates, or any members of their
immediate families, have been made in
30
the ordinary course of business and on the same terms and interest rates as
those prevailing for comparable transactions with other third parties and do not
involve more than the normal risk of repayment or present other unfavorable
features.
(c) No officer or director of the Company or any Company Subsidiary:
(i) has any interest in (A) any property, real or personal,
tangible or intangible, used in or pertaining to the business of the
Company or any Company Subsidiary except for the normal rights of a
stockholder; (B) any current competitor, customer, supplier or agent
of the Company or any Company Subsidiary (other than the ownership of
not more than five percent (5%) of the stock of any publicly traded
corporation) or (C) any Person which is currently a party to any
material contract or agreement with the Company or any Company
Subsidiary;
(ii) except as otherwise provided in this Agreement, has an
agreement, understanding, contract, commitment or pending transaction
relating to the purchase, sale or lease of real or personal property,
goods, materials, supplies or services, whether or not in the
ordinary course of business, with the Company or any Company
Subsidiary;
(iii) has received from the Company or any Company Subsidiary
any commitment, whether written or oral, to lend any funds to any
such person;
(iv) is owed any amounts by the Company or any Company
Subsidiary except for deposits taken in the ordinary course of
business and amounts due for normal compensation or reimbursement of
expenses incurred in furtherance of the business of such person's
employer and reimbursable according to a policy of the Company or
such Company Subsidiary, as appropriate, as in effect immediately
prior to the Execution Date; or
(v) is a party to any transaction or relationship with the
Company or any Company Subsidiary.
(d) The consummation of the transactions contemplated hereby will
not (either alone, or upon the occurrence of any act or event, the lapse of
time, or the giving of notice and failure to cure) result in any payment
(severance or other) or provision of a benefit becoming due from the Company or
any Company Subsidiary or any successor or assign thereof to any director,
officer or employee of the Company or any Company Subsidiary.
2.28 Disclosure. The representations and warranties of the Company
----------
contained in this Agreement (including the Company Disclosure Schedule) do not
contain, and will not contain at the Closing Date, any untrue statement of a
material fact, and do not omit, and will not omit at the Closing Date, to state
any material fact necessary to make such representations and warranties, in
light of the circumstances under which they are made, not misleading.
2.29 Registration Statement; Proxy Statement/Prospectus. None of the
--------------------------------------------------
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the
31
registration statement on Form S-4, or any amendment or supplement thereto,
pursuant to which the shares of Parent Common Stock to be issued in the Merger
will be registered with the SEC (including any amendments or supplements, the
"Registration Statement") shall, at the time such document is filed, at the time
amended or supplemented and at the time the Registration Statement is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied by the Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
the Company in connection with the meeting of the stockholders of the Company to
consider the Merger and to vote on a proposal to adopt the Merger Agreement (the
"Company Stockholders' Meeting") (such proxy statement/prospectus, as amended or
supplemented, is referred to herein as the "Proxy Statement") will, on the date
the Proxy Statement is first mailed to the stockholders of the Company, at the
time of the Company Stockholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein in light of the circumstances under
which they were made, not misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Stockholders' Meeting which has
become materially false or misleading. If at any time prior to the Effective
Time, any event relating to the Company, its officers and directors, or any
Subsidiary should occur which is required to be set forth in an amendment or
supplement to the Registration Statement or an amendment or supplement to the
Proxy Statement, the Company shall promptly inform Parent, and such event shall
be so described, and such amendment or supplement (which Parent shall have a
reasonable opportunity to review) shall be promptly filed with the SEC and, as
required by Law, disseminated to the stockholders of the Company. The Proxy
Statement, insofar as it relates to the Company Stockholders' Meeting shall
comply in all material respects as to form and substance with the requirements
of the Exchange Act and the Regulations promulgated thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant to
the Company that:
3.1 Organization and Qualification.
------------------------------
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, and each has the requisite corporate power and
authority, and is in possession of all franchises, grants, authorizations,
licenses, permits, consents, certificates, approvals and Orders ("Parent
Approvals") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
qualified, existing and in good standing or to have such power, authority and
Parent Approvals would not, either individually or in the aggregate, have a
Material Adverse Effect.
32
(b) Each of Parent and Merger Sub is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect.
(c) Merger Sub is a newly-formed corporation, which has been formed
solely for the purposes of the Merger, has carried on no business to date and
will not carry on any business or engage in any activities other than those
necessary to the Merger.
(d) As of the Execution Date, the authorized capital stock of Parent
consists of (i) one hundred million shares of Parent Common Stock of which, as
of August 1, 2001, 39,530,830 shares were issued and outstanding, and (ii)
5,000,000 shares of preferred stock, par value $.001 per share, including one
million shares reserved for issuance under the Parent's Rights Agreement dated
as of July 27, 2001, none of which are issued or outstanding. All of the
outstanding shares of Parent Common Stock are, and all shares to be issued as
part of the Merger Consideration will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and nonassessable.
(e) As of the Execution Date, the authorized capital stock of Merger
Sub consists of 3,000 shares of Merger Sub Common Stock, of which 1,000 shares
are issued and outstanding. All of the issued and outstanding shares of Merger
Sub Common Stock are owned by Parent.
3.2 Reports. Parent has timely filed with the SEC and heretofore
-------
furnished the Company with (i) its Annual Report on Form 10-K for its fiscal
year ended December 31, 2000 (the "Parent Annual Report"), (ii) its unaudited
periodic reports on Form 10-Q filed since the date of the Parent Annual Report
and (iii) all other reports required to be filed by it with the SEC since June
1, 2000 (all such documents included in (i), (ii) and (iii) above being
collectively referred to herein as the "Parent SEC Documents"). As of their
respective filing dates, the Parent SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except any such
misstatement or omission which was expressly corrected in a subsequent filing).
As of their respective filing dates, the descriptions of the business,
operations and financial condition of Parent contained in the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations promulgated thereunder. The
financial statements contained in the Parent SEC Documents, together with the
notes thereto, have been prepared in accordance with GAAP consistently followed
throughout the periods indicated (except as may be indicated in the notes
thereto), present fairly the financial condition of Parent at the dates and
during the periods indicated therein (subject, in the case of unaudited
statements, to normal, year-end adjustments. Parent meets all requirements for
eligibility to use Form S-3 and Form S-4 for the registration of the Parent
Common Stock as provided in Sections 6.1 and 6.14 hereof.
33
3.3 Authorization of Agreement. Each of Parent and Merger Sub has all
--------------------------
requisite corporate power and authority to execute and deliver this Agreement
and each instrument required hereby to be executed and delivered by it at the
Closing (including each Related Agreement to which it is a party), to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Parent
and Merger Sub of this Agreement and each instrument required hereby to be
executed and delivered by it at the Closing, the performance of obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors of Parent and Merger Sub, respectively, and by Parent as the sole
stockholder of Merger Sub, and except for the filing of the Certificate of
Merger, no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
each of Parent and Merger Sub and, assuming due authorization, execution and
delivery hereof by the Company and the Company Consenting Stockholders,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub, enforceable against each of Parent and Merger Sub in accordance with its
terms, in each case except to the extent that the enforcement hereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
3.4 Approvals. The execution and delivery by Parent and Merger Sub of
---------
this Agreement or any instrument required by this Agreement to be executed and
delivered by Parent or Merger Sub at the Closing do not, and the performance by
each of Parent and Merger Sub of its respective obligations under this Agreement
or any instrument required by this Agreement to be executed and delivered by
Parent or Merger Sub at the Closing shall not, require Parent or Merger Sub to
obtain any Approval, waiver, qualification, Order or permit of, observe any
waiting period imposed by, or require Parent or Merger Sub to make any filing
with or notification to, any Court or Governmental Authority, except (A)
compliance with applicable requirements, if any, of the Securities Act, the
Exchange Act or Blue Sky Laws, (B) the filing of appropriate Merger or other
documents as required by Delaware Law, (C) the requisite filings and
governmental actions required under the HSR Act or (D) such other Approvals,
waivers, qualifications, Orders or permits, filings or notifications, the
failure to obtain or make which would not have, individually or in the
aggregate, a Material Adverse Effect.
3.5 No Violation. Assuming effectuation of all filings, notifications,
------------
and registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all permits or Orders of Courts and/or
Governmental Authorities set forth in Section 3.4(A), (B) or (C) above, the
execution and delivery by Parent and Merger Sub of this Agreement or any
instrument required by this Agreement to be executed and delivered by Parent or
Merger Sub at the Closing do not, and the performance of this Agreement by each
of Parent or Merger Sub of its respective obligations under this Agreement or
any instrument required by this Agreement to be executed and delivered by Parent
or Merger Sub at the Closing will not, (i) conflict with or violate the Restated
Certificate of Incorporation or Amended and Restated Bylaws of Parent, or the
Certificate of Incorporation or bylaws of Merger Sub, (ii) conflict with or
violate any Law, Order or Regulation in each case applicable to Parent or Merger
Sub or by which any of their respective properties is bound or affected, or
(iii) result in any breach or
34
violation of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Parent or Merger Sub is a party or by which Parent or
Merger Sub or any of their respective properties is bound or affected.
3.6 Absence of Certain Changes or Events. Since December 31, 2000,
------------------------------------
Parent has conducted its business only in the ordinary and usual course and in a
manner consistent with past practice, and, since such date, there has not
occurred any event, development or change which, individually or in the
aggregate, has resulted in or is reasonably likely to result in a Material
Adverse Effect.
3.7 Brokers. No broker, financial advisor, finder, investment banker or
-------
other Person is entitled to any broker's, financial advisor's, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
3.8 Litigation. Except as disclosed in the Parent SEC Documents or this
----------
Agreement, there is no Litigation pending, or, to Parent's Knowledge,
threatened, against Parent or Merger Sub, that would be reasonably likely to
have a Material Adverse Effect on Parent or Merger Sub. Neither Parent nor
Merger Sub is subject to any outstanding Claim or Order which, individually or
in the aggregate, would be reasonably likely to have, a Material Adverse Effect
on Parent or Merger Sub would prevent, hinder or delay Parent or Merger Sub from
consummating the transactions contemplated by this Agreement.
3.9 Securities Act. Parent has complied with all applicable federal or
--------------
state securities Laws in connection with the issuance and sale of the Parent
Common Stock. Neither Parent nor anyone acting on its behalf has offered any of
the Parent Common Stock, or solicited any offers to purchase any of such Parent
Common Stock, so as to require registration of the issuance and sale of the
Parent Common Stock under the Securities Act or any state securities law.
3.10 Registration Statement; Proxy Statement/Prospectus. None of the
--------------------------------------------------
information supplied or to be supplied by Parent or Merger Sub for inclusion or
incorporation by reference in the Registration Statement shall, at the time such
document is filed, at the time amended or supplemented and at the time the
Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied by Parent and Merger Sub for inclusion in the Proxy
Statement will, on the date the Proxy Statement is first mailed to the
stockholders of the Company, at the time of the Company Stockholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein in light of the circumstances under which they were made, not
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders' Meeting which has become materially false
or misleading. If at any time prior to the Effective Time any event relating to
the Parent or Merger Sub, their respective officers and directors should occur
which is required to be set forth in an amendment or supplement to the
Registration Statement or an amendment or supplement to the Proxy
35
Statement, the Parent or Merger Sub, as the case may be, shall promptly inform
Company, and such event shall be so described, and such amendment or supplement
(which the Company will have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company Stockholders' Meeting shall comply in all material respects as to form
and substance with the requirements of the Exchange Act and the Regulations
promulgated thereunder.
3.11 Future Profitability. Parent acknowledges that the Company has not
--------------------
made any representations or warranties with regard to its future profitability
or future business prospects.
3.12 Disclosure. The representations and warranties of Parent and Merger
----------
Sub contained in this Agreement do not contain, and will not contain at the
Closing Date, any untrue statement of a material fact, and do not omit, and will
not omit at the Closing Date, to state any material fact necessary to make such
representations and warranties, in light of the circumstances under which they
are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE CONSENTING COMPANY STOCKHOLDERS
Each of the Consenting Company Stockholders represents and warrants to Parent as
follows:
4.1 Ownership. Except with respect to Company Shares pledged by ▇▇▇▇▇▇▇
---------
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, such Consenting Company
Stockholder is the record and beneficial owner of all of the outstanding Company
Shares set forth opposite his, her or its name on Schedule I attached hereto,
----------
and such Company Shares are owned by such Consenting Company Stockholder free
and clear of all Liens, claims, interests of, and rights in others.
4.2 Authority. Such Consenting Stockholder has all necessary power and
---------
authority to execute this Agreement and the Stockholder Agreement (including the
proxy appointment contained therein).
4.3 Execution. Each of this Agreement and the Proxy has been duly
---------
executed and delivered by the Consenting Stockholder and constitutes a valid and
binding agreement of such Consenting Stockholder, enforceable in accordance with
its terms.
4.4 No Conflict. Neither the execution nor delivery of this Agreement
-----------
and the Stockholder Agreement by such Consenting Stockholder will (i) require
the consent, waiver, approval, license or authorization of, or any filing with,
any Person or public authority, (ii) with or without the giving of notice or the
lapse of time, or both, conflict with or constitute a violation of, or default
under, or give rise to any right of acceleration under, any indenture, contract,
commitment, agreement, arrangement or other instrument of any kind to which the
Consenting Stockholder is a party or by which the Consenting Stockholder is
bound, or (iii) violate any applicable Law, or Order of any Governmental
Authority or Court having jurisdiction over the Consenting Stockholder.
36
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
-----------------------------------------------------
covenants and agrees that, between the Execution Date and the Effective Time,
except as expressly required or permitted by this Agreement and disclosed in
Section 2.13 of the Company Disclosure Schedule, or unless Parent shall
otherwise agree in writing, the Company shall conduct the business of the
Company and cause the business of each of the Company Subsidiaries to be
conducted, and the Company shall not take any action except in the ordinary
course of business and in a manner consistent with past practice. The Company
shall use its commercially reasonable best efforts to preserve intact the
business organization and assets of the Company and each of the Company
Subsidiaries, and to operate according to plans and budgets provided to Parent
and each of the Company Subsidiaries, to keep available the services of the
present officers, employees and consultants of the Company, to maintain in
effect Material Agreements and to preserve the present relationships of the
Company and each of the Company Subsidiaries with Company Distributors, Company
Customers and Company Suppliers. By way of amplification and not limitation,
except as expressly permitted by this Agreement neither, the Company nor any of
the Company Subsidiaries shall, between the Execution Date and the Effective
Time, directly or indirectly do, or propose to do, any of the following without
the prior written consent of Parent (which consent shall not be unreasonably
withheld, conditioned or delayed):
(a) amend or otherwise change the Certificate of Incorporation or
bylaws or equivalent organizational document of the Company or any Company
Subsidiary, or alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of the Company or
any Company Subsidiary;
(b) issue, sell, transfer, pledge, dispose of or encumber, or
authorize the issuance, sale, transfer, pledge, disposition or encumbrance of,
any shares of capital stock of any class (other than in connection with the
exercise of Company Options or Company Warrants), or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest of the Company or any Company
Subsidiary; or sell, transfer, pledge, dispose of or encumber, or authorize the
sale, transfer, pledge, disposition or encumbrance of any assets of the Company
or any Company Subsidiary (except for sales of assets in the ordinary course of
business and in a manner consistent with past practice) or redeem, purchase or
otherwise acquire, directly or indirectly, any of the capital stock of the
Company or any Company Subsidiary (other than the conversion or redemption of
the Preferred Stock);
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, 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 amend the terms
of, repurchase, redeem or otherwise acquire, any of its securities or propose to
do any of the foregoing;
37
(d) sell, transfer, lease, license, sublicense, mortgage, pledge,
dispose of, encumber, grant or otherwise dispose of any Intellectual Property
Rights, or amend or modify in any material way any existing agreements with
respect to any Intellectual Property Rights;
(e) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, limited liability company, partnership, joint
venture or other business organization or division thereof; incur any
indebtedness for borrowed money or issue any debt securities, or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances or enter into any
financial commitments, except in the ordinary course of business consistent with
past practice and as otherwise permitted under any loan or credit agreement to
which the Company or any of its subsidiaries is a party as of the Execution
Date; authorize any capital expenditures which are, in the aggregate, in excess
of $100,000, or enter into or amend in any material respect any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this Section 5.1(e);
(f) (i) hire or terminate any employee or consultant, except in the
ordinary course of business consistent with past practice; (ii) increase the
compensation (including, without limitation, bonus) payable or to become payable
to its officers or employees, except for increases in salary or wages of
employees of the Company or any Company Subsidiary who are not officers of the
Company or such Company Subsidiary in the ordinary course of business consistent
with past timing and practices, (iii) grant any severance or termination pay or
stock options to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any Company Subsidiary
except in the ordinary course of business consistent with past practice, or (iv)
establish, adopt, enter into or amend any Company Benefit Plan or collective
bargaining, employment, termination, severance or other agreement, for the
benefit of any current or former directors, officers or employees;
(g) change, any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of accounts
payable and collection of accounts receivable) unless required by statutory
accounting principles or GAAP;
(h) create, incur, suffer to exist or assume any Lien on any of the
Company's or any Company Subsidiaries' material assets other than Liens
outstanding on the Execution Date or otherwise incurred in the ordinary course
of the Company's or any Company Subsidiaries' business consistent with past
practice;
(i) other than in the ordinary course of business consistent with
past practice, (A) enter into any material agreement, (B) modify, amend or
transfer in any material respect, or terminate, any Material Agreement, or
waive, release or assign any material rights or claims thereto or thereunder or
(C) enter into or extend any lease with respect to real property with any third
party;
(j) make any Tax election or settle or compromise any federal, state,
local or foreign income tax liability or agree to an extension of any applicable
statute of limitations;
38
(k) settle any material Litigation or waive, assign or release any
material rights or claims, except, in the case of Litigation, any Litigation the
settlement of which would not (A) impose either material restrictions on the
conduct of the business of the Company or any Company Subsidiaries, or (B) for
any individual Litigation item settled, exceed $50,000 in cost or value to the
Company or any Company Subsidiaries; provided the aggregate of such individual
settlements shall not exceed $100,000 in cost or value to the Company neither
the Company nor any Company Subsidiaries shall pay, discharge or satisfy any
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except in the ordinary course of business consistent
with past practice in an amount or value not exceeding $100,000 in any instance
or series of related instances or $200,000 in the aggregate, or in accordance
with their terms as in effect as of the Execution Date;
(l) engage in any transaction, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any related party,
other than those contemplated pursuant to the terms of this Agreement and those
existing as of the Execution Date which are listed in Section 5.1(l) of the
Company Disclosure Schedule;
(m) fail to renew or maintain in full force and effect all insurance
policies, as the case may be, currently in effect or fail to pay any insurance
premiums thereon; and
(n) authorize, recommend, propose or announce an intention to do any
of the foregoing, or agree or enter into any agreement, contract commitment or
arrangement to do any of the foregoing.
5.2 Solicitation of Other Proposals.
-------------------------------
(a) From the Execution Date until the earlier of the Effective Time
or the termination of this Agreement in accordance with its terms, the Company
shall not, nor shall it permit any of its Affiliates or Subsidiaries to, nor
shall it permit its officers, directors, employees, representatives or agents
(collectively, the "Company Representatives"), directly or indirectly to, (i)
solicit, facilitate, initiate or encourage, or take any action to solicit,
facilitate, initiate or encourage, any inquiries or the making of any proposal
or offer that constitutes an Acquisition Proposal, or (ii) participate or engage
in communications, discussions or negotiations with, or provide any information
to, any Person concerning an Acquisition Proposal or which might reasonably be
expected to result in an Acquisition Proposal.
For purposes of this Agreement, the term "Acquisition Proposal" shall
mean any inquiry, proposal or offer from any Person (other than Parent or any of
its Affiliates) relating to:
(1) any merger, consolidation, recapitalization, liquidation or
other direct or indirect business combination, involving the Company or any
Company Subsidiary other than the MMD Transaction or Helix Transaction, or
the issuance or acquisition of shares of capital stock or other equity
securities of the Company or any Company Subsidiary representing 10% or
more of the outstanding capital stock of the Company or such Company
Subsidiary, or any tender or exchange offer that if consummated would
result in any Person, together with all Affiliates thereof, beneficially
owning shares of capital stock or other equity securities of the Company
representing
39
10% or more of the outstanding capital stock of the Company or such Company
Subsidiary; or
(2) the sale, lease, exchange, license (whether exclusive or
not) or any other disposition of any significant portion of any
Intellectual Property Right, or any significant portion of the business or
other assets of the Company or any Company Subsidiary, or any other
transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the consummation of the
transactions contemplated by this Agreement or which would reasonably be
expected to diminish significantly the benefits to Parent or its Affiliates
or any Company Subsidiary of the transactions contemplated hereby.
The Company shall immediately cease and cause to be terminated and shall cause
all Company Representatives (and shall use its best efforts to cause its non-
officer and non-director Affiliates) to terminate all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could reasonably be expected to lead to, an Acquisition Proposal. The Company
shall promptly notify all Company Representatives and non-officer and non-
director Affiliates of its obligations under this Section 5.2.
(b) Neither the Board of Directors of the Company nor any Company
Subsidiary nor any committee thereof shall:
(1) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal other than the Merger,
(2) withdraw or modify or propose to withdraw or modify in a
manner adverse to Parent or Merger Sub its approval or recommendation of
the Merger, this Agreement or the transactions contemplated hereby,
(3) upon a request by Parent to reaffirm its approval or
recommendation of this Agreement or the Merger, fail to do so within two
(2) Business Days after such request is made,
(4) enter, or cause the Company or any Company Subsidiary to
enter, into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any Acquisition Proposal,
or
(5) resolve or announce its intention to do any of the
foregoing.
ARTICLE VI
ADDITIONAL OBLIGATIONS
6.1 Proxy Statement; Registration Statement.
---------------------------------------
(a) As promptly as practicable following the Execution Date, Parent
shall prepare and file with the SEC a Registration Statement on Form S-4, in
which the Proxy
40
Statement shall be included as a prospectus, and shall use commercially
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. Parent shall obtain and furnish the information
required to be included in the Registration Statement and, after consultation
with the Company, respond promptly to any comments made by the SEC with respect
to the Registration Statement (which comments shall promptly be furnished to the
Company) and cause the prospectus included therein, including any amendment or
supplement thereto, to be mailed to the stockholders of the Company at the
earliest practicable date after the Registration Statement is declared effective
by the SEC, provided that no amendment or supplement to the Registration
Statement will be made by Parent without consultation with the Company and its
counsel.
(b) The Company shall (i) as promptly as practicable following the
Execution Date, cooperate in Parent's preparation of a preliminary proxy or
information statement relating to the Merger and this Agreement, (ii) obtain and
furnish the information required to be included by the SEC in the Proxy
Statement, (iii) cause the Proxy Statement and the prospectus to be included in
the Registration Statement, including any amendment or supplement thereto, to be
mailed to its stockholders at the earliest practicable date after the
Registration Statement is declared effective by the SEC, and (iv) use all
reasonable efforts to obtain the necessary approval of the Merger and this
Agreement by its stockholders. The Company shall not file with or supplementally
provide to the SEC or mail to its stockholders the Proxy Statement or any
amendment or supplement thereto without Parent's prior consent. The Company
shall allow Parent's full participation in the preparation of the Proxy
Statement and any amendment or supplement thereto and shall consult with Parent
and its advisors concerning any comments from the SEC with respect thereto.
(c) The Proxy Statement shall include the recommendation of the Board
of Directors of the Company in favor of approval and adoption of this Agreement
and the Merger by the stockholders of the Company, except to the extent that the
Company shall have withdrawn or modified its recommendation of this Agreement or
the Merger.
(d) Parent and the Company shall, as promptly as practicable, make
all necessary filings with respect to the Merger under the Securities Act and
the Exchange Act and the Regulations thereunder and under applicable Blue Sky or
similar securities Laws, and shall undertake all reasonable efforts to obtain
required Approvals with respect thereto.
6.2 Meeting of Company Stockholders.
-------------------------------
(a) The Company shall promptly after the Execution Date take all
action necessary in accordance with the DGCL and its Certificate of
Incorporation and bylaws to duly call, give notice of and (unless Parent
requests otherwise) hold the Company Stockholders' Meeting as soon as
practicable following the date upon which the Registration Statement becomes
effective and shall consult with Parent in connection therewith.
(b) Once the Company Stockholders Meeting has been called and
noticed, the Company shall not postpone or adjourn (other than for the absence
of a quorum and then only to a future date specified by Parent) the Company
Stockholders' Meeting without the consent of Parent. The Board of Directors of
the Company has declared that this Agreement is advisable
41
and shall recommend that this Agreement and the transaction contemplated hereby
be approved and authorized by the stockholders of the Company and shall include
in the Registration Statement and Proxy Statement a copy of such
recommendations. The Board of Directors of the Company shall submit this
Agreement to the stockholders of the Company, whether or not the Board of
Directors of the Company at any time changes, withdraws or modifies its
recommendation. The Company shall solicit from stockholders of the Company
proxies in favor of the Merger and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required by the DGCL and
its Certificate of Incorporation to authorize the Merger. Without limiting the
generality of the foregoing, (i) the Company agrees that its obligation to duly
call, give notice of, convene and hold the Company Stockholders' Meeting as
required by this Section 6.2, shall not be affected by the withdrawal, amendment
or modification of the Board of Directors' recommendation of the Merger and this
Agreement, and (ii) the Company agrees that its obligations under this Section
6.2 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
6.3 Access to Information; Confidentiality.
--------------------------------------
(a) Upon reasonable notice, the Company shall (and shall cause each
Company Subsidiary to) afford to the officers, employees, accountants, counsel
and other representatives of Parent, reasonable access, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall furnish promptly to Parent
all information concerning its business, properties, books, contracts,
commitments, records and personnel as Parent may reasonably request, and each
party shall make available to the other party the appropriate individuals for
discussion of such party's business, properties and personnel as the other party
may reasonably request. No investigation pursuant to this Section 6.3(a) shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
(b) Parent shall keep all information obtained pursuant to Section
6.3(a) confidential in accordance with the terms of the Letter of Intent dated
July 6, 2001(the "Letter of Intent"), between Parent and the Company. Anything
contained in the Letter of Intent to the contrary notwithstanding, the Company
and Parent hereby agree that each such party may issue press release(s) or make
other public announcements in accordance with Section 6.7.
6.4 All Reasonable Efforts; Further Assurances.
------------------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each party hereto shall use all reasonable efforts to take, or cause
to be taken, all appropriate actions, and do, or cause to be done, and to assist
and cooperate with the other party 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 hereby. The
Company and Parent (together with their respective Affiliates, as applicable)
shall use all reasonable efforts to:
42
(i) obtain all licenses, permits, consents, waivers,
approvals, authorizations, qualifications or Orders (including all
regulatory rulings and approvals), required to be obtained by either
of Parent or the Company;
(ii) make all filings (including, without limitation, all
filings with governmental or regulatory agencies) under applicable Law
required in connection with the authorization, execution and delivery
of this Agreement by the Company and Parent and the consummation by
them of the transactions contemplated hereby and thereby, including
the Merger (in connection with which Parent and the Company will
cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-
filing party and its advisors prior to filings and, if requested, will
accept all reasonable additions, deletions or changes suggested in
connection therewith);
(iii) furnish all information required for any application or
other filing to be made pursuant to any applicable law or any
applicable Regulations of any Governmental Authority in connection
with the transactions contemplated by this Agreement; and
(iv) lift, rescind or mitigate the effects of any Order
adversely affecting the ability of any party hereto to consummate the
transactions contemplated hereby and thereby and to prevent, with
respect to any threatened injunction, restraining order or other
Order, the issuance or entry thereof;
provided, however, that neither Parent nor any of its Affiliates shall be under
-------- -------
any obligation to (x) make proposals, execute or carry out agreements or submit
to Orders providing for the sale or other disposition or holding separate
(through the establishment of a trust or otherwise) of any assets or categories
of assets, material in nature or amount, of Parent or any of its Affiliates or
the Company, or the holding separate of the Company Shares or imposing or
seeking to impose any material limitation on the ability of Parent to conduct
its business or own such assets or to acquire, hold or exercise full rights of
ownership of the Company Shares or (y) otherwise take any step to avoid or
eliminate any impediment which may be asserted under any Law governing
competition, monopolies or restrictive trade practices which, in the reasonable
judgment of Parent, might result in a limitation of the benefit expected to be
derived by Parent as a result of the transactions contemplated hereby or might
adversely affect the Company or Parent or any of Parent's Affiliates; and,
provided, further, however, that if Parent terminates this Agreement because of
the occurrence of an event described in (x) or (y) of this Section 6.4(a), then
Parent shall pay the Stipulated Expenses of the Company. No party hereto will
take any action, which results in any of the representations or warranties made
by such party pursuant to Articles II, III or IV, as the case may be, becoming
untrue or inaccurate in any material respect.
(b) Parent and the Company shall use all reasonable efforts to
satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VII, as applicable to each of them, and to cause the
transactions contemplated by this Agreement to be consummated.
6.5 SEC Filings by Parent. From and after the Execution Date and through
---------------------
the Effective Time, Parent shall timely file all reports required to be filed by
it with the SEC under
43
the Securities Act and the Exchange Act, and, immediately upon any such filing,
Parent will provide a copy of the same to the Company and its counsel.
6.6 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence or non-occurrence of any
event, the occurrence or non-occurrence of which, results in any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect (or, in the case of any representation or warranty qualified by
its terms by materiality or Material Adverse Effect, then untrue or inaccurate
in any respect) and any failure of the Company, Parent or Merger Sub, as the
case may be, to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.6
-------- -------
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger, (ii)
any notice or other communication from any Governmental Authority in connection
with the Merger, (iii) any Litigation, relating to or involving or otherwise
affecting the Company or the Parent that relates to the consummation of the
Merger, (iv) the occurrence of a default or event that, with notice or lapse of
time or both, will become a default under any contract which is material to
Parent or any Material Agreement of the Company, and (v) any change that is
reasonably likely to have a Material Adverse Effect on the Company or Parent or
is likely to delay or impede the ability of either Parent or the Company to
consummate the transactions contemplated by this Agreement or to fulfill their
respective obligations set forth herein.
(c) Each of the Company and Parent shall give any notices to third
Persons, and use all reasonable efforts to obtain any consents from third
Persons (i) necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, (ii) otherwise required under any contracts,
licenses, leases or other agreements in connection with the consummation of the
transactions contemplated hereby, or (iii) required to prevent a Material
Adverse Effect on the Company or Parent from occurring. If any party shall fail
to obtain any such consent from a third Person, such party shall use all
reasonable efforts, and will take any such actions reasonably requested by the
other parties, to limit the adverse effect upon the Company and Parent and their
respective businesses resulting, or which would result after the Effective Time,
from the failure to obtain such consent.
6.7 Public Announcements. Parent and the Company shall consult with and
--------------------
obtain the approval of the other party before issuing any press release or other
public announcement with respect to the Merger or this Agreement and shall not
issue any such press release prior to such consultation and approval, except as
may be required by applicable Law or any listing agreement related to the
trading of the shares of either party on any national securities exchange or
national automated quotation system, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable efforts
to consult in good faith
44
with the other party before issuing any such press release or making any such
public announcement.
6.8 Takeover Laws. If any form of anti-takeover statute, regulation or
-------------
charter provision or contract is or shall become applicable to the Merger or the
transactions contemplated hereby, the Company and the Board of Directors of the
Company shall grant such approvals and take such actions as are necessary under
such laws and provisions so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute, regulation,
provision or contract on the transactions contemplated hereby.
6.9 Existing Registration Rights Agreements. The Company shall use its
---------------------------------------
commercially reasonable efforts to take such actions as are reasonably necessary
to terminate the Existing Registration Rights Agreements on or before the
Closing Date.
6.10 Release Agreements. The Company shall use its commercially reasonable
------------------
efforts, on behalf of Parent and pursuant to the request of Parent, to cause
each Consenting Company Stockholder to execute and deliver to Parent a written
release and waiver satisfactory in form and substance to Parent in its sole
discretion and in substantially the form attached hereto as Exhibit I (the
---------
"Release Agreements"), dated as of the Effective Time, providing for, among
other things, release of the Company, Parent and the Surviving Corporation and
their respective Affiliates from any and all claims, known and unknown, that
such Person has or may have against such Persons through the Effective Time.
6.11 Maintenance, Prosecution and Filing Obligations. Until the Effective
-----------------------------------------------
Time, the Company shall pay the costs of preparation for filing, prosecution,
and maintenance of all Intellectual Property Rights as required, shall continue
diligently to file and prosecute patent applications and maintain existing
patents, and shall not permit the lapse of any filings following the Execution
Date.
6.12 Employee Benefits.
-----------------
(a) Parent agrees that individuals who are employed by the Company
immediately prior to the Effective Time shall become employees of the Surviving
Corporation upon the Effective Time (each such employee who chooses to continue
his or her employment with the Surviving Corporation, a "Company Employee");
provided, however, that this Section 6.12 shall not be construed to limit the
-------- -------
ability of the Company or any of its Subsidiaries to terminate the employment of
any Company Employee at any time, nor restrict in any way the right of any
employee to so terminate the employment relationship at any time.
(b) Parent will, or will cause the Surviving Corporation to, give
Company Employees full credit for purposes of eligibility (including service and
waiting period requirements) and vesting under any employee benefit plans or
arrangements maintained by the Parent or the Surviving Corporation in which the
Company Employees are eligible to participate or to be covered after the
Effective Time, for such Company Employees' service with the Company to the same
extent recognized by the Company immediately prior (as clearly reflected in
Company personnel records) to the Effective Time.
45
(c) Parent will, or will cause the Surviving Corporation to, use its
commercially reasonable efforts to obtain from any insurance carrier an
agreement to (i) waive all limitations as to preexisting conditions, exclusions
and waiting periods and service requirements with respect to participation and
coverage requirements applicable to the Company Employees under any welfare
benefit plans of Parent or the Surviving Corporation in which Company Employees
are eligible to participate or to be covered after the Effective Time, other
than limitations, waiting periods or service requirements that are already in
effect with respect to such Company Employees and that have not been satisfied
under any welfare plan previously maintained for the Company Employees, and (ii)
provide each Company Employee with credit for any documented co-payments and
deductibles paid in the calendar (or plan) year in which the Effective Time
occurs under the welfare benefit plans of the Company or the Surviving
Corporation (as shown on the Company's or the Surviving Corporation's records)
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare benefit plans of Parent or Parent in which Company Employees are
eligible to participate or to be covered in the year in which the Effective Time
occurs.
6.13 Listing. Parent shall use its best commercial efforts to cause the
-------
Parent Common Stock to be issued in the Merger to be approved for listing on the
Nasdaq National Market prior to or at the Effective Time.
6.14 Registration of Shares Issued in the Merger.
-------------------------------------------
(a) Registrable Shares. For purposes of this Agreement, "Registrable
------------------
Shares" shall mean the shares of Parent Common Stock issued to the Company
Stockholders in accordance with Section 1.6 of this Agreement and held by
Affiliate Stockholders, including any and all Escrow Shares attributable to the
Affiliate Stockholders, other than shares of Parent Common Stock that may be
sold in accordance with Rule 145 or under Rule 144(k) of the Securities Act,
together with (i) any securities issued or issuable to the Affiliate
Stockholders upon the exchange of any such Parent Common Stock and (ii) any
other security issued as a dividend or other distribution with respect to such
Parent Common Stock.
(b) Required Registration; Additional Obligations of Parent.
-------------------------------------------------------
(i) Within one hundred twenty (120) days after the Effective
Time, Parent shall prepare and file with the SEC a registration statement on
Form S-3 or other comparable form which form Parent is eligible to use, covering
the resale of the Registrable Shares held by those Company Stockholders who are
affiliates (as defined in the Securities Exchange Act) of the Company as of the
Effective Time or their permitted distributees (collectively, "Affiliate
Stockholders"). Parent shall use reasonable commercial efforts to cause the
Registration Statement on Form S-3 (the "Resale Registration Statement") and all
registrations, qualifications and compliances (including, without limitation,
obtaining appropriate qualifications under applicable state securities or Blue
Sky laws and compliance with any other applicable governmental requirements or
regulations) as the Affiliate Stockholders may reasonably request and that would
permit or facilitate the sale of Registrable Shares to become effective as soon
as practicable and in any event within one hundred eighty (180) days after the
Effective Time; provided, however, that Parent shall not be required in
-------- -------
connection therewith to qualify to do business or to file a general consent to
service of process in any such state or
46
jurisdiction. Parent will provide the Affiliate Stockholders upon request with
as many copies of the prospectus contained in the Resale Registration Statement
as the Affiliate Stockholders may reasonably request.
(ii) Parent shall (i) furnish to each Affiliate Stockholder, such
number of copies of any prospectus (including and preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of the
Securities Act, and such other documents, as each Affiliate Stockholder may
reasonably request in order to effect the offering and sale of the shares of
Parent Common Stock to be offered and sold, but only while Parent shall be
required under the provisions of this Agreement to cause the Resale Registration
Statement to remain current; (ii) notify each Affiliate Stockholder upon the
happening of any event as a result of which the prospectus included in the
Resale Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated in
the prospectus or necessary to make the statements in the prospectus not
misleading in the light of the circumstances then existing and thereafter
promptly take action to correct the misstatement or omission; (iii) so long as
the Resale Registration Statement remains effective, promptly furnish to each
Affiliate Stockholder such number of copies of any supplement, to such
prospectus as may have been filed by Parent; (iv) notify each Affiliate
Stockholder, shortly after it shall receive notice thereof, of the date and time
the Resale Registration Statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of the Resale
Registration Statement has been filed; (v) notify each Affiliate Stockholder
promptly after it obtains knowledge thereof, of the issuance of any stop order
by the SEC suspending the effectiveness of the Resale Registration Statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(c) Effectiveness; Suspension Right.
-------------------------------
(i) From and after the effectiveness of the Resale Registration
Statement as contemplated by Section 6.14(b), Parent will use its best efforts
to maintain such effectiveness and other applicable registrations,
qualifications and compliances until the earlier of (A) such time as the
Affiliate Stockholders may sell all of the Registrable Shares held by them
without registration pursuant to Rule 144(k) or in accordance with Rule 145
under the Securities Act or (B) such time as all of the Registrable Shares have
been sold by the Affiliate Stockholders (the "Registration Effective Period"),
and from time to time Parent will amend or supplement the Resale Registration
Statement and the prospectus contained therein as and to the extent necessary to
comply with the Securities Act, the Exchange Act and any applicable state
securities statute or regulation, subject to the following limitations and
qualifications.
(ii) Following the Registration Statement Effective Date, the
Affiliate Stockholders will be permitted, subject to the Suspension Right (as
defined in paragraph (iii) below) to offer and sell Registrable Shares during
the Registration Effective Period pursuant to the Resale Registration Statement
provided that the Resale Registration Statement remains effective and no stop
order or suspension of the use of the Resale Registration Statement has been
imposed by the SEC.
47
(iii) Subject to the provisions of this Section 6.14, Parent
shall have the right at any time to require that the Affiliate Stockholders
suspend further open market offers and sales of Registrable Shares whenever, and
for so long as, in the reasonable judgment of Parent after consultation with
counsel there is in existence material undisclosed information or events with
respect to Parent (the "Suspension Right"). In the event Parent exercises the
Suspension Right, such suspension will continue for that minimal period of time
reasonably necessary for disclosure to occur at a time that is not materially
detrimental to Parent and its stockholders or until such time as the information
or event is no longer material, each as determined in good faith by Parent after
consultation with counsel. Parent will promptly give the Affiliate Stockholders
notice of any such suspension and will use its best efforts to limit the length
of the suspension to ten (10) days. Notwithstanding any other provision of this
Section 6.14, such suspension shall not exceed twenty (20) days or be exercised
more than two (2) times during the period when the Resale Registration Statement
is effective. In addition, during any period when a suspension is in effect
hereunder, Parent will suspend the use of, and not file, any other registration
statements.
(d) Expenses. Parent shall bear all costs and expenses of
--------
registration under this Section 6.14, including, without limitation, printing
expenses, legal fees and disbursements of counsel for Parent, legal fees and
disbursements (not to exceed $25,000 in aggregate) of one counsel for the
Affiliate Stockholders, Blue Sky expenses, accounting fees and filing fees, but
excluding underwriting commissions or similar charges in connection with the
resale of the Registrable Shares.
(e) Indemnification.
---------------
(i) To the fullest extent permitted by Law, Parent will
indemnify and hold harmless the Affiliate Stockholders, each underwriter of
Parent Common Stock being sold by such Affiliate Stockholders pursuant to this
Section 6.14 and each Person, if any, who controls the Affiliate Stockholders or
underwriter within the meaning of the Securities Act or the Exchange Act (for
purposes of this Section 6.14(e) only, an "Affiliate Stockholder Indemnified
Person") against all actions, claims, losses, damages, liabilities and expenses
to which they or any of them become subject under the Securities Act, the
Exchange Act or under any other Law and, except as hereinafter provided, will
promptly reimburse as incurred the Affiliate Stockholder Indemnified Persons for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions, whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact in any registration statement and any prospectus
filed pursuant to Section 6.14 or any post-effective amendment thereto, or arise
out of or are based upon any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or any
violation by Parent of any rule or regulation promulgated under the Securities
Act or the Exchange Act applicable to Parent and relating to action or inaction
required of Parent in connection with such registration; provided, however, that
-------- -------
Parent shall not be liable to any such Affiliate Stockholder Indemnified Person
in respect of any claims, losses, damages, liabilities and expenses resulting
from any untrue statement or alleged untrue statement, or omission or alleged
omission made in reliance upon and in conformity with information furnished in
writing to Parent by the Affiliate
48
Stockholder Indemnified Person specifically for use in connection with such
registration statement and prospectus or post-effective amendment.
(ii) To the fullest extent permitted by law, the Affiliate
Stockholders will, severally and not jointly, indemnify Parent, each Person, if
any, who controls Parent within the meaning of the Securities Act or the
Exchange Act, each director of Parent and each officer of Parent who signs the
Resale Registration Statement and each underwriter of Parent Common Stock (for
purposes of this Section 6.14(e) only, a "Parent Indemnified Person") against
any actions, claims, losses, damages, liabilities and expenses to which they or
any of them may become subject under the Securities Act, the Exchange Act or
under any other Law, and, except as hereinafter provided, will promptly
reimburse such Parent Indemnified Person for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any actions, whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact in any registration statement and any prospectus filed pursuant to Section
6.14 or any post-effective amendment thereto, or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, which untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished in writing to Parent by the Affiliate Stockholders
specifically for use in connection with such registration statement, prospectus
or post-effective amendment; provided, however, that the obligations of each of
-------- -------
the Affiliate Stockholders hereunder shall be limited to an amount equal to the
net after tax proceeds actually received by such Affiliate Stockholder from the
sale of such Affiliate Stockholder's Registrable Shares as contemplated herein.
(iii) Each Company Indemnified Person or Parent Indemnified
Person entitled to indemnification under this Section 6.14 (an "Indemnified
Person") shall give notice to the party required to provide indemnification (the
"Indemnifying Person") promptly after such Indemnified Person has actual
knowledge of any claim as to which indemnity may be sought and shall permit the
Indemnifying Person to assume and control the defense of any such claim and any
litigation resulting therefrom, provided that counsel for the Indemnifying
Person who conducts the defense of such claim or any litigation resulting
therefrom shall be approved by the Indemnified Person (whose approval shall not
unreasonably be withheld), and the Indemnified Person may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Person to give notice as provided herein shall not relieve the
Indemnifying Person of its obligations under this Section 6.14 except to the
extent the Indemnifying Person is materially prejudiced thereby. No Indemnifying
Person, in the defense of any such claim or litigation, shall (except with the
consent of each Indemnified Person) consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to each Indemnified Person of a complete
release from all liability in respect to such claim or litigation. Each
Indemnified Person shall furnish such information regarding itself or the claim
in question as an Indemnifying Person may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
49
(iv) To the extent that the indemnification provided for
in this Section 6.14 is held by a court of competent jurisdiction to be
unavailable to an Indemnified Person with respect to any loss, liability, claim,
damage or expense referred to herein, then the Indemnifying Person, in lieu of
indemnifying such Indemnified Person hereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Person on the one hand and of the Indemnified
Person on the other in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Person
and of the Indemnified Person shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Person or by the Indemnified Person and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
6.15 Covenants for Tax-Free Status. Prior to the Effective Time, each
-----------------------------
party shall use all commercially reasonable efforts to cause the Merger to
qualify as a tax free reorganization within the meaning of Section 368(a) of the
Code, and will not take any action reasonably likely to cause the Merger not to
so qualify.
6.16 Stockholder Agreements; Stockholder Appointment Letter. The Company
------------------------------------------------------
will use commercially reasonable efforts to (a) cause all Consenting Company
Stockholders to execute and deliver to Parent a Stockholders Agreement in the
form attached hereto as Exhibit G-1 (the "Stockholders Agreement") not later
-----------
than ten (10) Business Days after the Execution Date and (b) cause all Company
Stockholders to execute a Stockholder Appointment Letter in the form attached
hereto as Exhibit G-2 (the "Appointment Letter"), not later than three (3)
-----------
Business Days before the Effective Time.
6.17 Accountant's Letters.
--------------------
(a) The Company shall use its reasonable best efforts to cause to
be delivered to Parent a "comfort" letter of Deloitte & Touche LLP, dated a date
within two Business Days before the date on which the Registration Statement
shall become effective and addressed to Parent and the Company, in form and
substance reasonably satisfactory and customary in scope and substance for
letters delivered by Deloitte & Touche and other independent public accountants
in connection with registration statements similar to Form S-4.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company a "comfort" letter of KPMG LLP, dated a date within two
Business Days before the date on which the Registration Statement shall become
effective and addressed to Parent and the Company, in form and substance
reasonably satisfactory and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to Form S-4.
(c) Parent shall reimburse the Company for fifty percent (50%) of
the cost incurred by the Company in obtaining the comfort letter under Section
6.17(a).
50
6.18 Helix Transaction. The Company shall use commercially reasonable
-----------------
efforts to (i) sell all of the assets and liabilities or stock of its subsidiary
Helix Biotech, Ltd. ("Helix"), organized under the laws of Canada (the "Helix
Transaction"); (ii) deliver to Parent a release in form and substance reasonably
satisfactory to Parent for the benefit of Parent from the Buyer of Helix; and
(iii) sell or dissolve Genomics/Lifecodes Canadian Acquisition Corp., the parent
of Helix, in connection therewith.
6.19 Payment of Transfer Taxes. All transfer, documentary, sale, use,
-------------------------
registration, value-added and similar Taxes, including any penalties, interest
and additions incurred in connection with this Agreement and the transactions
contemplated herein shall be paid by Parent.
6.20 Company Employees; Offer Letters. The Company shall cooperate with
--------------------------------
Parent to assist Parent in employing each of the employees of the Company listed
in Schedule 6.20 pursuant to an offer letter from Parent. Each such offer letter
shall provide, inter alia, for the termination of any non-competition provision
----- ----
between Parent and such employee in the event that such employee is terminated
without cause (as defined in such offer letter) by Parent.
ARTICLE VII
CONDITIONS OF MERGER
7.1 Conditions to Obligation of Each Party to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the party entitled to the benefit thereof,
in whole or in part, the extent permitted by applicable Law:
(a) Stockholder Approval. This Agreement and the Merger shall have
--------------------
been authorized by the requisite vote of the stockholders of the Company in
accordance with the provisions of the DGCL and the Certificate of Incorporation
and bylaws of the Company.
(b) Regulatory Approvals. All approvals and consents of applicable
--------------------
Courts and/or Governmental Authorities required to consummate the Merger shall
have been received, except for such approvals and consents, the failure of which
to have been so received, shall not have a Material Adverse Effect.
(c) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other Order (whether
temporary, preliminary or permanent) issued by any Court of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect which is non-
appealable, nor shall any proceeding brought by any administrative agency or
commission or other Governmental Authority, domestic or foreign, seeking any of
the foregoing be pending, and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
(d) No Order. No Court or Governmental Authority having
--------
jurisdiction over the Company or Parent shall have enacted, issued, promulgated,
enforced or entered any Law,
51
Regulation or Order (whether temporary, preliminary or permanent) which is then
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger substantially on the terms contemplated
by this Agreement without an opportunity for appeal by either party.
(e) Effectiveness of the Registration Statement. The Registration
-------------------------------------------
Statement shall have been declared effective; no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the SEC
and no proceedings for that purpose shall have been initiated; and no similar
proceeding in respect of the Proxy Statement shall have been initiated or, to
the Knowledge of Parent or the Company, threatened by the SEC.
(f) NASDAQ. The shares of Parent Common Stock issuable to the
------
stockholders of the Company pursuant to this Agreement shall have been approved
for listing on NASDAQ subject to official notice of issuance.
7.2 Additional Conditions to Obligations of Parent and Merger Sub. The
-------------------------------------------------------------
obligations of Parent and Merger Sub to effect the Merger are also subject to
the following conditions, any or all of which may be waived by Parent and Merger
Sub, in whole or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in this Agreement and the Related Agreements
shall be true and correct in all material respects on and as of the Effective
Time, with the same force and effect as if made on and as of the Effective Time,
except for (i) changes contemplated by this Agreement (including the Company
Disclosure Schedule), (ii) representations and warranties that are qualified by
materiality or Material Adverse Effect, in which case such representations and
warranties shall be true and correct in all respects, and (iii) representations
and warranties which address matters only as of a particular date, in which case
such representations and warranties qualified as to materiality or Material
Adverse Effect shall be true and correct in all respects, and those not so
qualified shall be true and correct in all material respects, on and as of such
particular date; and Parent shall have received a certificate to such effect
signed by the President of the Company.
(b) Agreements and Covenants. The Company shall have performed or
------------------------
complied in all material respects with all agreements and covenants required by
this Agreement and the Related Agreements to be performed or complied with by it
on or prior to the Effective Time. Parent shall have received a certificate to
such effect signed by the President of the Company.
(c) Third Party Consents. Parent shall have received evidence, in
-------------------
form and substance reasonably satisfactory to it, that those licenses, Permits,
consents, waivers, approvals, authorizations, qualifications or Orders
(including all United States and foreign governmental and regulatory rulings and
approvals) of Governmental Authorities and other third parties described in
Section 2.5(a) or (b) of the Company Disclosure Schedule (or not described in
Section 2.5(a) or (b) of the Company Disclosure Schedule but required as
described in Section 2.5(a) or (b) of this Agreement) have been obtained, except
where failure to have been so obtained, either individually or in the aggregate,
shall not have a Material Adverse Effect.
52
(d) No Material Adverse Effect. From and including the Execution
--------------------------
Date, there shall not have occurred any event and no circumstance shall exist
which, alone or together with any one or more other events or circumstances has
had, is having or would reasonably be expected to have a Material Adverse Effect
on the Company.
(e) Certificate of Merger. The Company shall have executed and
---------------------
delivered the Certificate of Merger.
(f) Opinion of Counsel to the Company. Parent shall have received
---------------------------------
the opinion of ▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated as of the Effective Time, substantially
in the form of Exhibit D.
---------
(g) Related Agreements. Each of the Related Agreements shall be in
------------------
full force and effect as of the Effective Time and become effective in
accordance with the respective terms thereof, and the actions required to be
taken thereunder by the parties thereto immediately prior to the Effective Time
shall have been taken, and each Person who or which is required or contemplated
by the parties hereto to be a party to any Related Agreement who or which did
not theretofore enter into such Related Agreement shall execute and deliver such
Related Agreement.
(h) Company Affiliate Agreements. Each of the Persons identified in
----------------------------
Schedule 7.2(h) shall have executed and delivered an Affiliate Agreement
substantially in the form of Exhibit A attached hereto (the "Affiliate
---------
Agreement") with Parent which shall be in full force and effect.
(i) Releases. Parent shall have received Releases substantially in
--------
the form of Exhibit C executed and delivered by each Consenting Company
---------
Stockholder.
(j) Dissenting Shares. The Dissenting Shares shall comprise less
-----------------
than 5% of the issued and outstanding Company Shares.
(k) Stockholder Agreement and Stockholder Appointment Letter. Each
--------------------------------------------------------
of the Consenting Company Stockholders shall have executed and delivered to
Parent a Stockholder Agreement. Each Consenting Company Stockholder shall have
executed and delivered to Parent a Stockholder Appointment Letter, in
substantially the form attached hereto as Exhibit G-2.
-----------
(l) Lock-Up Agreement. Each of the Consenting Company Stockholders
-----------------
shall have entered into a Lock-Up Agreement substantially in the form of Exhibit
-------
J attached hereto (the "Lock-Up Agreement").
-
(m) Sale of Medical Molecular Diagnostics. The Company shall have
-------------------------------------
provided Parent with evidence in form and substance reasonably satisfactory to
Parent that the Company has sold all of the assets and liabilities or stock of
its subsidiary Medical Molecular Diagnostics GmbH ("MMD"), organized under the
laws of Germany other than those assets related to the Turkish repository
database (which assets shall be retained by the Company or purchased by
Affiliate Stockholders of the Company) (the "MMD Transaction"), and shall have
delivered to Parent a release in form and substance reasonably satisfactory to
Parent for the
53
benefit of Parent from the buyer of MMD and from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇ in connection therewith.
(n) Supply Agreement. Medical Molecular Diagnostics GmbH or any
----------------
successor thereof shall have entered into a Supply Agreement with Parent
covering the supply by Parent of certain consumables and providing, inter alia,
for the payment to Parent of a minimum of $3,000,000 in net proceeds over a
three (3) year term, which agreement shall have a minimum term of three years,
in substantially the form attached hereto as Exhibit K.
---------
(o) Certificate of Payment. The Company shall provide Parent with a
----------------------
balance sheet reflecting the Company's payment of all of the Excluded
Liabilities, accompanied with a certificate of the President and Treasurer of
the Company certifying the same.
(p) Bonuses. The Company shall have provided Parent with evidence
-------
in form and substance reasonably satisfactory to Parent that the aggregate
amount of Bonuses do not exceed $740,000 in the aggregate.
(q) Severance Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have entered into
-------------------
a Separation and Consulting Agreement with Parent in substantially the form
attached hereto as Exhibit H.
---------
(r) Termination of 401(k) Plan. The Company shall, at Parent's
--------------------------
request, which request shall be made within a reasonable period of time prior to
the Effective Time, have taken all actions necessary to terminate the 401(k)
Plan maintained by the Company (the "Company 401(k) Plan") prior to the
Effective Time, including, but not limited to the following: (i) preparation of
any and all amendments necessary to maintain the tax-qualified status of the
Company 401(k) Plan under the Code upon termination thereof and to comply with
the requirements of ERISA, (ii) preparation and distribution of notices in
connection with the termination of the Company 401(k) Plan to participants or
government agencies or authorities required by the Code or ERISA, (iii) filing
an Application for Determination upon Termination with the Internal Revenue
Service ("IRS"). If Parent requests the termination of the Company 401(k) Plan
hereunder, the employees of the Company as of the date after the Effective Time
shall, contingent upon the termination of the Company 401(k) Plan, commence
participation in the Parent's 401(k) Plan, subject to its terms and conditions
of eligibility and participation except as otherwise provided in this Agreement,
as of the day after the Effective Time.
(s) Proposed Compensation Increases. Parent shall have approved all
-------------------------------
Proposed Compensation Increases.
(t) Opinion of Special Counsel to Company and Certain Company
---------------------------------------------------------
Subsidiaries. To the extent the Helix Transaction has not been consummated as of
------------
the Effective Time, Parent shall have received the opinion of special counsel to
the Company and Helix dated as of the Effective Time in a form reasonably
satisfactory to Parent.
(u) MMD Tax Liability. Parent shall have received an opinion of
-----------------
special counsel or accountants to the Company and MMD in form and substance
reasonably satisfactory to Parent which describes the potential tax liability of
MMD under German law through the Effective Time.
54
(v) Termination of Company Stock Plans. Company shall have
----------------------------------
terminated all Company Stock Plans.
7.3 Additional Conditions to Obligations of the Company. The obligation of
---------------------------------------------------
the Company to effect the Merger is also subject to the following conditions,
any or all of which may be waived by Company, in whole or in part, to the extent
permitted by applicable Law:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Parent and Merger Sub contained in this Agreement and the Related
Agreements shall be true and correct in all material respects on and as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
representations and warranties that are qualified by materiality or Material
Adverse Effect, in which case such representations and warranties shall be true
and correct in all respects, and (iii) representations and warranties which
address matters only as of a particular date, in which case such representations
and warranties qualified as to materiality or Material Adverse Effect shall be
true and correct in all respects, and those not so qualified shall be true and
correct in all material respects, on and as of such particular date; and the
Company shall have received a certificate to such effect signed by the Senior
Vice President, Chief Operating Officer and Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
------------------------
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by the Senior Vice President, Chief Operating Officer and Chief
Financial Officer of Parent.
(c) Certificate of Merger. Merger Sub shall have executed and
---------------------
delivered the Certificate of Merger.
(d) Opinion of Counsel to Parent. The Company shall have received
----------------------------
the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. dated as of
the Effective Time, substantially in the form of Exhibit E.
---------
(e) Third Party Consents. The Company shall have received evidence,
--------------------
in form and substance reasonably satisfactory to it, that any actions required
to be taken or consents or approvals obtained, as described in Section 3.4
hereof, have been taken or obtained, except where the failure to do so, either
individually or in the aggregate, shall not have a Material Adverse Effect.
(f) No Material Adverse Effect. From and including the Execution
--------------------------
Date, there shall not have occurred any event and no circumstance shall exist
which, alone or together with any one or more other events or circumstances has
had, is having or would reasonably be expected to have a Material Adverse Effect
on Parent; provided, however, that no change in the market price of Parent
Common Stock shall constitute a Material Adverse Effect.
(g) Related Agreements. Each of the Related Agreements shall be in
------------------
full force and effect as of the Effective Time and become effective in
accordance with the respective terms thereof, and the actions required to be
taken thereunder by the parties thereto immediately
55
prior to the Effective Time shall have been taken, and each Person who or which
is required or contemplated by the parties hereto to be a party to any Related
Agreement who or which did not theretofore enter into such Related Agreement
shall execute and deliver such Related Agreement.
(h) Pay-off of First Union National Bank. Parent shall have paid
------------------------------------
off the Revolving Promissory Note issued by Company in favor of First Union
National Bank in an aggregate principal amount of $3.7 million dated March 31,
1998 and the Term Promissory Note issued by Company in favor of First Union
National Bank in an aggregate principal amount of $1.3 million dated March 31,
1998 pursuant to the Credit Agreement between Company and First Union National
Bank dated March 31, 1998 as amended by the First Amendment to Credit Agreement
between Lifecodes Corporation and First Union Bank dated April 27, 1999; and
further amended by the Second Amendment Agreement among Lifecodes Corporation,
Cellmark Diagnostics, Inc., Medical Molecular Diagnostics GmbH, International
Support for Bone Marrow Drives, Ltd., Genomics/Lifecodes Canadian Acquisition
Corp., Lifecodes Europe BVBA, Helix Biotech ULC and First Union National Bank
dated August 8, 2000, and by the Modification to Promissory Notes and Loan
Agreement and Reaffirmance of Guaranty, dated as of April 1, 2001, by and
between First Union National Bank, Lifecodes Corporation, Cellmark Diagnostics,
Inc., Medical Molecular Diagnostics GmbH, International Support for Bone Marrow
Drives, Ltd., Genomics/Lifecodes Canadian Acquisition Corp., and Helix Biotech,
ULC.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the Company Stockholders:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) By either Parent or the Company if the Merger shall not have
been consummated on or before December 31, 2001; provided, that, the right to
-------- ----
terminate this Agreement under this Section 8.1 shall not be available to any
party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date; or
(c) By either Parent or the Company, if a Court of competent
jurisdiction or Governmental Authority, regulatory or administrative agency or
commission shall have issued an Order or ruling or taken any other action, in
each case which has become final and non-appealable which prohibits the Merger;
or
(d) By either Parent or the Company, if, at the Company
Stockholders' Meeting (including any adjournment or postponement thereof), the
requisite vote of the
56
stockholders of the Company to authorize this Agreement or the Merger shall not
have been obtained; or
(e) By Parent, if the Board of Directors of the Company or any
committee thereof shall have (i) approved or recommended, or proposed to approve
or recommend, any Acquisition Proposal other than the Merger, (ii) failed to
present and recommend the authorization of this Agreement and the Merger to the
Company Stockholders, or withdrawn or modified, or proposed to withdraw or
modify, in any manner adverse to Parent, its recommendation of the Merger, this
Agreement or the transactions contemplated hereby, (iii) upon request by Parent
to reaffirm the approval and recommendation of the Merger, failed to do so
within five (5) Business Days after such request is made, or (iv) resolved or
announced the intention of the Company to do any of the foregoing; or
(f) By Parent, if neither of Parent or Merger Sub is in material
breach of its obligations under this Agreement, and if (i) there has been a
material breach at any time by the Company of any of its representations and
warranties hereunder such that Section 7.2(a) would not be satisfied (treating
such time as if it were the Effective Time for purposes of this Section 8.1(f)),
or (ii) there has been the willful breach on the part of the Company of any of
its covenants or agreements contained in this Agreement or any Related Agreement
such that Section 7.2(b) would not be satisfied (treating such time as if it
were the Effective Time for purposes of this Section 8.1(f)), and, in both case
(i) and case (ii), such breach (if curable) has not been cured within 10
Business Days after written notice from Parent to the Company; or
(g) By the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) there has been a breach at any time
by Parent or Merger Sub of any of their respective representations and
warranties hereunder such that Section 7.3(a) would not be satisfied (treating
such time as if it were the Effective Time for purposes of this Section 8.1(g)),
or (ii) there has been the willful breach on the part of Parent or Merger Sub of
any of their respective covenants or agreements contained in this Agreement or
any Related Agreement such that Section 7.3(b) would not be satisfied (treating
such time as if it were the Effective Time for purposes of this Section 8.1(g)),
and, in both case (i) and case (ii), such breach (if curable) has not been cured
within 10 Business Days after written notice from the Company to Parent.
8.2 Effect of Termination. Except as provided in this Section 8.2, in the
---------------------
event of the termination of this Agreement pursuant to Section 8.1, this
Agreement (other than Sections 8.2 and 8.3, which shall survive such
termination) will forthwith become void, and there will be no liability on the
part of Parent and Merger Sub, on the one hand, or the Company and the Company
Stockholders, on the other hand, or any of their respective officers or
directors (as the case may be), to the other parties, and all rights and
obligations of any party hereto will cease, except that nothing herein will
relieve any party from liability for any breach, prior to termination of this
Agreement in accordance with its terms, of any representation, warranty,
covenant or agreement contained in this Agreement. No termination of this
Agreement shall affect the confidentiality obligations of the parties contained
in the Letter of Intent, which shall survive the termination of the Agreement.
57
8.3 Fees and Expenses.
-----------------
(a) Except as set forth in this Section 8.3 or in Section 6.17(c),
all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
(b) In the event that any of the following occurs:
(i) Parent terminates this Agreement pursuant to Section
8.1(e);
(ii) Parent or the Company terminates this Agreement pursuant
to Section 8.1(d) hereof and, at any time prior to such termination or
prior to the Company Stockholders' Meeting, the Company shall have
made, proposed, communicated or disclosed, in a manner which is or
otherwise becomes public or becomes known by stockholders of the
Company, an intention to consummate any Acquisition Proposal (whether
or not such Acquisition Proposal or any announcement or agreement
relating to such Acquisition Proposal shall have been rejected or
shall have been withdrawn prior to the time of such termination or of
the Company Stockholders' Meeting); or
(iii) Parent or the Company terminates this Agreement pursuant
to Section 8.1(d) or (e) hereof, and the Company shall have entered
into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement in connection with any
Acquisition Proposal or any Acquisition Proposal shall be consummated,
in either case within twelve (12) months following termination of this
Agreement;
then, the Company shall pay to Parent (A) in the case a termination
described in clause (i) or (ii) above, simultaneously with such termination
of this Agreement, a fee in cash equal to $1,000,000, plus the amount of
Parent's Stipulated Expenses (collectively, the "Termination Fee"), which
Termination Fee shall be payable by wire transfer of immediately available
funds.
(c) If this Agreement is terminated pursuant to Section 8.1(f), then
the Company shall reimburse Parent for all of Parent's Stipulated Expenses not
later than two (2) Business Days after demand therefor.
(d) As used in this Agreement, the term "Stipulated Expenses" shall
mean those reasonable fees and expenses actually incurred by either Parent or
the Company, as the case may be, in connection with this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby, including (i)
reasonable fees and expenses of counsel, investment bankers, accountants,
experts, consultants and other representatives engaged by such party in
connection with such party's efforts to consummate the Merger, and (ii)
reasonable travel costs and expenses directly incurred by such party's
personnel, in investigating the other party and planning for and pursuing the
Merger.
58
(e) The respective remedies provided in this Section 8.3 in
connection with a termination of this Agreement by Parent pursuant to Section
8.1(e), (i) or (f) shall be the exclusive remedies available to Parent in the
event of such a termination.
8.4 Amendment. This Agreement may be amended by an instrument in writing
---------
signed by all of the parties hereto at any time prior to the Effective Time.
8.5 Waiver. At any time prior to the Effective Time, any party hereto may
------
extend the time for the performance of any of the obligations or other acts
required hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE IX
INDEMNIFICATION; ESCROW
9.1 Survival. All representations and warranties of the parties in this
--------
Agreement, in the Related Agreements or in any other agreement, instrument or
document furnished in connection with this Agreement or the transactions
contemplated hereby, shall survive the Closing and shall expire on the later of
(i) the fifteen (15) month anniversary of the Closing and (ii) the date of
expiration of any escrow applicable to the MMD Transaction agreed to by the
parties thereto (the "Expiration Date"), except that (a) claims, including any
claims attributable to any Excluded Liabilities incurred by Parent or Merger
Sub, if any, asserted in writing prior to such first anniversary identified as a
claim for indemnification pursuant to this Article IX shall survive until
finally resolved and satisfied in full if the party entitled to indemnification
prevails in establishing its right to indemnification and (b) claims, if any,
which are based upon fraud or intentional misrepresentation shall survive for
the full period of the applicable statute of limitations, until finally resolved
and satisfied in full if asserted on or prior to such anniversary date if the
party entitled to indemnification prevails in establishing its right to
indemnification.
9.2 Indemnification.
---------------
(a) Each of the Company Stockholders shall severally, but not
jointly, indemnify, defend and hold harmless Parent and the Surviving
Corporation and their respective officers, directors, employees and stockholders
(other than the Company Stockholders and their successors in interest) and their
successors and assigns, from, against and with respect to any claim, liability,
obligation, loss, damage, assessment, judgment, cost and expense (including,
without limitation, reasonable attorneys' and accountants' fees and costs and
expenses reasonably incurred in investigating, preparing, defending against or
prosecuting any litigation or claim, action, suit, proceeding or demand) of any
kind or character ("Damages") and (b) Parent and the Surviving Corporation shall
jointly and severally indemnify, defend and hold harmless the Company
Stockholders, from, against and with respect to any Damages arising out of or in
any manner incident, relating or attributable to:
59
(i) any material inaccuracy in any representation or material
breach of warranty by an indemnifying party contained in this
Agreement, any Related Agreement or in any certificate, instrument of
transfer or other document or agreement executed in connection with
this Agreement or otherwise made or given in connection with this
Agreement;
(ii) any failure by an indemnifying party to perform or
observe, or to have performed or observed, in full, any covenant,
agreement or condition to be performed or observed by it under this
Agreement, any Related Agreement or under any certificates or other
documents or agreements executed in connection with this Agreement;
(iii) in the case of clause (a) above, the Excluded Liabilities.
(iv) in the case of clause (b) above, arising out of reliance
by any Company Stockholder on the Parent SEC Documents.
9.3 Claims for Indemnification.
--------------------------
(a) In the event of the occurrence of any event which any party
asserts is an indemnifiable event pursuant to this Article IX, the party
claiming indemnification (the "Indemnified Party") shall provide prompt notice
to the party required to provide indemnification (the "Indemnifying Party"),
specifying in detail the facts and circumstances with respect to such claim and
the basis for which indemnification is available hereunder. If such event
involves the claim of any third party, the Indemnifying Party shall have the
right to control the defense or settlement of such claim; provided, however,
that (i) the Indemnified Party shall be entitled to participate in the defense
of such claim at its own expense, (ii) the Indemnifying Party shall obtain the
prior written approval of the Indemnified Party (which approval shall not be
unreasonably withheld or delayed) before entering into any settlement of such
claim which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnified Party of a complete release from all
liability in respect to such claim or litigation, (iii) the Indemnifying Party
shall not be entitled to control (but shall be entitled to participate at its
own expense in the defense of), and the Indemnified Party shall be entitled to
have sole control over, and shall assume all expense with respect to, the
defense or settlement of any claim to the extent such claim seeks an order,
injunction or other equitable relief against the Indemnified Party which, if
successful, could materially interfere with the business, operations, assets,
condition (financial or otherwise) or prospects of the Indemnified Party;
provided, that, the Indemnified Party shall provide written notice to the
-------- ----
Indemnifying Party of its election to assume control over the defense of such
claim pursuant to this clause (iii), and (iv) if the Indemnifying Party is
entitled to but fails to assume control over the defense of a claim as provided
in this Section 9.3, providing that Damages associated with such claim are
covered by the indemnity provisions of Section 9.2, the Indemnified Party shall
have the right to defend such claim, provided further that the Indemnified Party
shall obtain the prior written approval of the Indemnifying Party (which
approval shall not be unreasonably withheld, conditioned or delayed) before
entering into any settlement of such claim if, pursuant to or as a result of
such settlement, injunctive or other non-monetary relief would imposed against
the Indemnifying Party.
60
(b) In the event that the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this Article IX, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the claim to which such indemnification
relates.
9.4 Threshold with Respect to Indemnification. No claim by Parent (on
-----------------------------------------
behalf of itself and the Surviving Corporation, as the case may be) shall be
made against the Company Stockholders for indemnification pursuant to this
Article IX with respect to any item of Damages arising out of, relating to or
attributable to this Agreement or the transactions contemplated hereby, unless
such item, together with the aggregate of all prior Damages of Parent and its
Affiliates for which indemnification could be sought pursuant to this Article
IX, shall exceed $50,000, in which event Parent shall be entitled, subject to
the provisions of this Article IX, to make claims for indemnification hereunder
to the extent of any and all such Damages.
9.5 Limitations on Indemnification. The indemnification obligations of
------------------------------
any Company Stockholder hereunder shall be limited to an amount equal to the net
after Tax proceeds actually received by such Company Stockholder from the sale
of such Company Stockholders' Registrable Shares.
9.6 Exclusive Remedy. Except for equitable remedies, each of the parties
----------------
hereto agrees that its sole and exclusive remedy after the Effective Time with
respect to any and all claims relating to this Agreement and the transactions
provided for herein or contemplated hereby, shall be pursuant to the
indemnification provisions contained in this Article IX.
9.7 Escrow Arrangements.
-------------------
(a) On the Effective Time, the Company Stockholders will be deemed to
have received and deposited with the Escrow Agent (as defined below) the Escrow
Shares plus any additional shares as may be issued with respect to the Escrow
Shares upon any stock split (including a stock split effected through a dividend
of stock) or recapitalization effected by Parent after the Effective Time,
without any act of any Company Stockholders. Within five (5) Business Days after
the Effective Time, the Escrow Shares, without any act of any Company
Stockholders, will be deposited with the Escrow Agent, such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed by the terms of the
Escrow Agreement substantially in the form attached hereto as Exhibit F. The
---------
Escrow Fund shall be available to fund the indemnification of Parent and the
Surviving Corporation with respect to Damages incurred by Parent and the
Surviving Corporation after the Effective Time.
(b) Subject to the terms of the Escrow Agreement, the Escrow Fund
shall be in existence immediately following the Effective Time and shall
terminate on the Expiration Date.
61
ARTICLE X
GENERAL PROVISIONS
10.1 Individuals Subject to an Agreement Not to Compete.
--------------------------------------------------
(a) Each of the individuals listed on Schedule 10.1 agrees that for a
period of two (2) years after the Closing Date, and so long as Parent or
Surviving Corporation are not in default hereunder, he or she will not, directly
or indirectly, own, manage, control or participate in the ownership, management
or control of, or be employed or engaged by or otherwise affiliated or
associated as a consultant, independent contractor or otherwise with, any other
corporation, partnership, proprietorship, firm, association or other business
entity, or otherwise engage in any business, that is engaged in any manner in or
otherwise competes with the services and business of the Company, any Company
Subsidiary, as conducted immediately prior to the Effective Time, in any state
in the United States or any foreign country in which the Company, or Company
Subsidiary is then doing business; provided, however, that (i) the ownership of
not more than five (5%) of the stock of any publicly traded corporation shall
not be deemed a violation of this covenant, and (ii) holding a position in a
college, university or other academic institution in which research is conducted
by other Persons in other laboratories that may be competitive with the business
of the Company or Parent shall not be deemed a violation of this covenant.
A business will be deemed to "compete with the services and business" of
the Company or any Company Subsidiary only to the extent that one of its
principal businesses is providing DNA testing products or services for human
paternity and forensic identification and for genetic typing of potential donors
and recipients of bone marrow and organ transplants; provided, however, that the
-------- -------
businesses of MMD and Helix conducted as of the Execution Date shall not be
deemed to be businesses which compete with the services and business of Parent
for purposes of this Section 10.1; and provided, further, however, with respect
-------- ------- -------
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ only, the business of Deutsche Knochenmarkspenderdatei
gemeinnutzige GmbH shall not be deemed to be businesses which compete with the
services and business of Parent for purposes of this Section 10.1. For purposes
of this definition, a "principal business" of an entity shall mean a business
that contributes at least twenty percent (20%) of the gross revenues of the
entity.
(b) Each party hereto expressly agrees and understands that the
remedy at law for any breach by it of this Section 10.1 will be inadequate and
that the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that Parent shall be
entitled, among other remedies, to seek immediate injunctive relief for any such
breach and to seek a temporary order restraining any threatened or further
breach. Any covenant-contained hereinabove shall nevertheless, if breached, give
rise to monetary damages in accordance with the other provisions of this
Agreement.
(c) In the event a party shall violate any legally enforceable
provision of this Section 10.1 as to which there is a specific time period
during which such party is prohibited from taking certain actions or from
engaging in certain activities, as set forth in this Section 10.1, then, in such
event, such violation shall toll the running of such time period from the date
of such violation until such violation shall cease.
62
10.2 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail, with a
confirmatory copy thereof to be delivered by mail (as aforesaid) within 24 hours
of such electronic mail, or by telecopier, with confirmation as provided above,
addressed as follows:
(a) If to Parent or Merger Sub:
Orchid BioSciences, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
(b) If to the Company:
Lifecodes Corporation
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally recognized
overnight courier, on the next Business Day after the date when delivered to the
courier (c) in the case of facsimile transmission or electronic mail, upon
confirmed receipt, and (d) in the case of mailing, on the fifth (5/th/) Business
Day following the date on which the piece of mail containing such communication
was posted.
63
10.3 Disclosure Schedule. The Company Disclosure Schedule shall be divided
-------------------
into sections corresponding to the sections and subsections of this Agreement.
Disclosure of any fact or item in any Section of the Company Disclosure Schedule
shall not, should the existence of the fact or item or its contents be relevant
to any other Section of the Company Disclosure Schedule, be deemed to be
disclosed with respect to such sections. If any event, condition, fact or
circumstance occurs that would require a change to the Company Disclosure
Schedule if the Company Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Company Disclosure Schedule specifying such change. Such update shall be deemed
to supplement or amend the Company Disclosure Schedule for the purposes of (i)
determining the accuracy of any representations and warranties made by Company
in this Agreement and (ii) determining whether any of the conditions set forth
in Article VII have been satisfied; provided that such event, condition, fact or
circumstance disclosed in such update would not be reasonably expected to result
in a Material Adverse Effect.
10.4 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "Affiliate" means, with respect to any Person, any other Person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person
including, without limitation, any partnership or joint venture in which the
Company (either alone, or through or together with any other Subsidiary) has,
directly or indirectly, an interest of 20% or more of the issued and outstanding
capital stock or other equity interests of such Person.
(b) "Business Day" means any day other than a Saturday, Sunday or day
on which banks are permitted to close in the State of New Jersey or in the State
of Delaware.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise.
(e) "Court" means any court or arbitration tribunal of the United
States or any domestic state, and any political subdivision thereof.
(f) "Environmental Claim" means any claim, action, cause of action,
investigation or written notice by any Person alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (a) the presence, release or disposal of any Hazardous Materials at any
location, whether or not owned or operated by the Company, or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
(g) "Environmental Laws" means any Law pertaining to: (i) the
protection of health, safety and the indoor or outdoor environment; (ii) the
conservation, management or use of natural resources and wildlife; (iii) the
protection or use of surface water and ground water;
64
(iv) the management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, release, threatened release,
abatement, removal, remediation or handling of, or exposure to, any Hazardous
Material; or (v) pollution (including any release to air, land, surface water
and ground water); and includes, without limitation, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980, as amended,
and the Regulations promulgated thereunder and the Solid Waste Disposal Act, as
amended, 42 U.S.C. (S)(S) 6901 et seq.
(h) "Excluded Liabilities" means (i) up to $1,000,000 in the aggregate
of Company's obligations with respect to certain transactions it has entered
into prior to the execution of the Letter of Intent providing for delayed
payment terms; (ii) any trade payable liability of the Company related to the
business of Company in excess of $250,000; (iii) any individual account payable
liability of the Company that is more than sixty (60) days old as of the Closing
Date; (iv) any indebtedness of the Company to First Union National Bank in
excess of $5 million, consisting of $1.3 million in term debt and $3.7 million
in a revolving line of credit; (v) the indebtedness of the Company or any of the
Company's Subsidiaries to FINOVA Mezzanine Capital, Inc. and Connecticut
Innovations, Inc. (which is in the aggregate principal amount of $6,000,000 as
of the Execution Date, as adjusted on the Closing Date to reflect the actual
amount of indebtedness); and (vi) any liability of the Company related to MMD,
Helix, the MMD Transaction or the Helix Transaction; (vii) any liability of the
Company for any bonus to any employee other than the Accrued Bonuses and (viii)
any liability of the Company for any payments or fees owed to Prudential
Securities in connection with the Engagement Letter between Vector Securities
and the Company dated as of March 30, 1999.
(i) "Exchange Agent" means American Stock Transfer and Trust Company
or any other entity appointed to act in the capacities required under Section
1.13.
(j) "GAAP" means United States generally accepted accounting
principles, consistently applied.
(k) "Governmental Authority" means any governmental agency or
authority (other than a Court) of the United States, any domestic state, or any
foreign country, and any political subdivision or agency thereof, and includes
any authority having governmental or quasi-governmental powers.
(l) "Hazardous Material" means any substance, chemical, compound,
product, solid, gas, liquid, waste, by-product, pollutant, contaminant or
material which is hazardous or toxic and is regulated under any Environmental
Law, and includes without limitation, asbestos or any substance containing
asbestos, polychlorinated biphenyls or petroleum (including crude oil or any
fraction thereof).
(m) "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, as amended through
the Execution Date.
(n) "Intellectual Property Rights" has the meaning ascribed to such
term in Section 2.23 of this Agreement.
65
(o) "Key Employee" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇.
(p) "Knowledge" means (i) in the case of an individual, the actual
knowledge possessed by the individual of a particular fact or other matter,
after making reasonable inquiry, or (ii) in the case of an entity (other than an
individual), such entity will be deemed to have "Knowledge" of a particular fact
or other matter if any individual who is serving as a director, executive,
officer, partner, patent counsel (with respect to Intellectual Property Rights
only), executor or trustee of such entity (or in any similar capacity) has, or
at any time had, after reasonable inquiry, actual knowledge of such fact or
other matter.
(q) "Law" means all laws, rules, regulations, statutes and ordinances
of any Governmental Authority, including all decisions of Courts having the
effect of law in each such jurisdiction.
(r) "Lien" means any mortgage, pledge, security interest, attachment,
encumbrance, lien (statutory or otherwise), option, conditional sale agreement,
right of first refusal, first offer, termination, participation or purchase or
charge of any kind (including any agreement to give any of the foregoing);
provided, however, that the term "Lien" shall not include (i) statutory liens
for Taxes, which are not yet due and payable or are being contested in good
faith by appropriate proceedings, (ii) statutory or common law liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented, (iii) deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age, pension or
other social security programs mandated under applicable Laws, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and materialsmen,
to secure claims for labor, materials or supplies and other like liens, and (v)
restrictions on transfer of securities imposed by applicable state and federal
securities Laws.
(s) "Litigation" means any suit, action, arbitration, cause of action,
claim, complaint, criminal prosecution, investigation, demand letter, or
governmental or other administrative proceeding, whether at law or at equity,
before or by any Governmental Authority, Court or other tribunal.
(t) "Material Adverse Effect" means any fact, event, change,
circumstance or effect that is materially adverse to the business, condition
(financial or otherwise), operations, result of operations, assets, liabilities
or prospects of (i) the Company (prior to the Effective Time) or the Surviving
Corporation (after the Effective Time, but based on the business, condition
(financial or otherwise), operations, result of operations, assets, liabilities
or prospects of the Surviving Corporation as of the Effective Time) when such
term is used in a representation or warranty of, or otherwise in relation to,
the Company, or the context otherwise so requires, or (ii) Parent or any of its
Subsidiaries when such term is used in relation to Parent, Merger Sub or the
Surviving Corporation, or the context otherwise so requires.
(u) "Order" means any judgment, order, writ, injunction or decree of
any Court or Governmental Authority.
66
(v) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
(w) "Registration Statement Effective Date" means the date upon which
the SEC has declared the Registration Statement effective.
(x) "Regulation" means any rule or regulation of any Governmental
Authority having the effect of Law.
(y) "Related Agreements" means the Affiliate Agreements, Release
Agreements, the Stockholder Agreements, Investment Letter Agreement, Escrow
Agreement, Lock-Up Agreements and Employment Agreements.
(z) "Securities Act" means the Securities Act of 1933, as amended.
(aa) "SEC" means the Securities and Exchange Commission.
(bb) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other Person means any corporation, partnership,
joint venture, limited liability company or other legal entity of which the
Company, the Surviving Corporation, Parent or such other Person, as the case may
be, either alone or through or together with any other Subsidiary, owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
(cc) "Tax" or "Taxes" means taxes and governmental impositions of any
kind in the nature of (or similar to) taxes, payable to any federal, state,
local or foreign taxing authority, including but not limited to those on or
measured by or referred to as income, franchise, profits, gross receipts,
capital ad valorem, custom duties, alternative or add-on minimum taxes,
estimated, environmental, disability, registration, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto.
(dd) "Tax Returns" shall mean returns, reports and information
statements, including any schedule or attachment thereto, with respect to Taxes
required to be filed with the Internal Revenue Service or any other governmental
or taxing authority or agency, domestic or foreign, including consolidated,
combined and unitary tax returns.
10.5 Other Definitions. The following defined terms shall have the meaning
-----------------
set forth in the referenced Section:
Acquisition Proposal............................................5.2
Affiliate Agreement.............................................7.2(h)
Affiliate Stockholders.........................................6.14
Affiliate Stockholders Indemnified Person......................6.14
67
Affiliate.......................................................10.4
Agreement...................................................Preamble
Appointment Letter..............................................6.16
Approvals........................................................2.1
Assumed Option...................................................1.8
Assumed Warrant..................................................2.5
Blue Sky Laws....................................................2.5
Business Day....................................................10.4
Certificate of Merger............................................1.2
Certificates....................................................1.13
Class A Preferred Stock..........................................2.3
Class B Preferred Stock..........................................2.3
Closing Date....................................................1.15
Closing.........................................................1.15
COBRA...........................................................2.16
Code............................................................10.4
Company Accounts Receivable.....................................2.10
Company Balance Sheet............................................2.8
Company Benefit Plans...........................................2.16
Company Common Stock.............................................2.3
Company Copyrights..............................................2.23
Company Customers...............................................2.12
Company Disclosure Schedule...................Preamble to Article II
Company Distribution Schedule...................................1.13
Company Distributors............................................2.12
Company Employee................................................6.12
Company Financial Statements.....................................2.8
Company Indemnified Person......................................6.14
Company Option...................................................1.8
Company Options..................................................1.8
Company Patents.................................................2.23
Company Representatives..........................................5.2
Company Shares...................................................1.6
Company Stock Plans..............................................1.8
Company Stockholder..............................................1.6
Company Stockholders.............................................1.6
Company Stockholders' Meeting...................................2.29
Company Subsidiaries.............................................2.1
Company Subsidiary...............................................2.1
Company Suppliers...............................................2.12
Company Trademarks..............................................2.23
Company Tradenames..............................................2.23
Company Warrants.................................................1.9
Company.....................................................Preamble
Convertible Securities..........................................1.16
Consenting Company Stockholders.............................Preamble
68
Control.........................................................10.4
Court...........................................................10.4
Damages..........................................................9.2
Delaware Law...................................................10.12
DGCL........................................................Preamble
Dissenting Shares...............................................1.17
Effective Time...................................................1.2
Environmental Claim.............................................10.4
Environmental Laws..............................................10.4
ERISA Affiliate.................................................2.16
ERISA...........................................................2.16
Escrow Agent.....................................................9.7
Escrow Agreement.................................................1.6
Escrow Fund......................................................9.7
Escrow Shares....................................................1.6
Excluded Liabilities............................................10.4
Exchange Act.....................................................2.5
Exchange Agent..................................................10.4
Exchange Ratio Fraction..........................................1.6
Execution Date..............................................Preamble
Expiration Date..................................................9.1
Fully Diluted Company Share Amount...............................1.6
GAAP............................................................10.4
Governmental Authority..........................................10.4
Helix Acquisition Consideration..................................1.6
Hazardous Material..............................................10.4
Helix............................................................6.18
Helix Transaction................................................6.18
HSR Act.........................................................10.4
Indemnified Party................................................9.3
Indemnified Person...............................................6.14
Indemnifying Party...............................................9.3
Indemnifying Person..............................................6.14
Injunction.......................................................7.1
Intellectual Property Rights....................................2.23
IRS..............................................................7.2(r)
Key Employee....................................................10.4
Knowledge.......................................................10.4
Law.............................................................10.4
Letter of Intent.................................................6.3
Lien............................................................10.4
Litigation......................................................10.4
Lock-Up Agreement................................................7.2(l)
Material Adverse Effect.........................................10.4
Material Agreements..............................................2.6
Merger Consideration.............................................1.6
69
Merger Price.....................................................1.6
Merger Shares....................................................1.6
Merger Sub Common Stock.........................................1.10
Merger Sub..................................................Preamble
Merger......................................................Preamble
MMD..............................................................7.2(m)
MMD Transaction..................................................7.2(m)
Order...........................................................10.4
Parent Annual Report.............................................3.2
Parent Approvals.................................................3.1
Parent Common Stock.........................................Preamble
Parent Indemnified Person.......................................6.14
Parent SEC Documents.............................................3.2
Parent......................................................Preamble
Permits..........................................................2.7
Person..........................................................10.4
Preferred Stock..................................................2.3
Proposed Compensation Increases.................................2.17
Proxy Statement.................................................2.29
Registrable Shares..............................................6.14
Registration Effective Period...................................6.14
Registration Statement Effective Date...........................10.4
Registration Statement..........................................2.29
Regulation......................................................10.4
Related Agreements..............................................10.4
Release Agreements..............................................6.10
SEC.............................................................10.4
Securities Act..................................................10.4
Series A Preferred Stock.........................................2.3
Stipulated Expenses..............................................8.3
Stockholder Agreement...........................................6.16
Stockholders Agreement...........................................7.2(k)
Subsidiary" or "Subsidiaries....................................10.4
Surviving Corporation............................................1.1
Suspension Right................................................6.14
Tax Returns.....................................................10.4
Tax or Taxes....................................................10.4
Termination Fee..................................................8.3
10.6 Interpretation. When a reference is made in this Agreement to
--------------
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or
70
Article. The table of contents and the headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Severability. If any term or other provision of this Agreement is
------------
determined by a Court of competent jurisdiction, without further opportunity to
appeal, to be invalid, illegal or incapable of being enforced in any respect,
then such term or provision shall be deemed to be limited to the extent that
such Court determines it enforceable, and as so limited shall remain in full
force and effect, and all other terms and provisions of this Agreement shall
remain in full force and effect. In the event that such Court shall determine
any such provision, or any portion thereof, to be wholly unenforceable, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon any determination that any term or other provision, or
portion thereof, is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
10.8 Entire Agreement. This Agreement (including all exhibits and schedules
----------------
hereto) constitutes the entire agreement of the parties hereto and supersedes
all prior agreements and undertakings (other than the confidentiality provisions
of the Letter of Intent between Parent and Company dated July 6, 2001), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any other Person any rights or remedies hereunder.
10.9 Assignment. This Agreement shall not be assigned by operation of law
----------
or otherwise, except that Parent and Merger Sub may assign all or any of their
rights hereunder to any Affiliate, provided that no such assignment shall
relieve the assigning party of its obligations hereunder.
10.10 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
-----------------------------------------------------
delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. Except as otherwise provided in this Agreement,
all rights and remedies existing under this Agreement are cumulative to, and not
exclusive to, and not exclusive of, any rights or remedies otherwise available.
10.12 Governing Law. This Agreement and the agreements, instruments and
-------------
documents contemplated hereby will be governed by and construed in accordance
with the Law of the State of Delaware (exclusive of conflicts of law principles)
("Delaware Law"). Delaware Courts within the State of Delaware and, more
particularly, to the fullest extent such Court shall have subject matter
jurisdiction over the matter, the Court of Chancery of the State of Delaware,
will have exclusive jurisdiction over any and all disputes between the parties
hereto, whether in
71
law or equity, arising out of or relating to this Agreement and the agreements,
instruments and documents contemplated hereby. The parties consent to and agree
to submit to the jurisdiction of such Courts, provided, however, that such
consent to jurisdiction is solely for the purpose referred to in this Section
10.12 and shall not be deemed to be a general submission to the jurisdiction of
such Courts or in the State of Delaware other than for such purpose. Each of the
parties hereby waives, and agrees not to assert in any such dispute, to the
fullest extent permitted by applicable Delaware Law, any claim that (i) such
party is not personally subject to the jurisdiction of such Courts, (ii) such
party and such party's property is immune from any legal process issued by such
Courts or (iii) any Litigation commenced in such Courts is brought in an
inconvenient forum.
10.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement.
[Remainder of this page is intentionally left blank.]
72
IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Consenting
Company Stockholders have caused this Agreement and Plan of Merger to be
executed as of the date first written above, in the case of corporations, by
their respective officers thereunto duly authorized.
ORCHID BIOSCIENCES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer, Chief Operating Officer
and Senior Vice President, Corporate Development
PERSIA MERGER SUB, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
LIFECODES CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
73
CONSENTING COMPANY STOCKHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
_____________________________________ -----------------------------------
Name: Prof. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Custodian for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Custodian for ▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
/s/ ▇▇▇▇. ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇./Century II
▇▇▇▇▇▇▇▇▇▇ FAMILY TRUST
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Trustee
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
74
SCHEDULE I
----------
CONSENTING COMPANY STOCKHOLDERS
-------------------------------
%
Name Security Ownership
------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D. 1.7%
------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Ph.D. 2.8%
------------------------------------------------------------------------
▇▇▇▇▇▇ Family Trust 3.5%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 16.2%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 5.6%
------------------------------------------------------------------------
Century II Corp. 0.4%
------------------------------------------------------------------------
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5.6%
------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.4%
------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ 0.6%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 0.1%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Custodian for ▇▇▇▇▇ ▇. ▇▇▇▇▇ 0.1%
------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0.1%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 0.1%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as Custodian for ▇▇▇▇ ▇. 0.1%
▇▇▇▇▇▇▇▇▇▇
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 14.2%
------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0.5%
------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ Family LLC 1.6%
------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 3.9%
------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2.5%
------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D. 2.3%
------------------------------------------------------------------------
75
SCHEDULE 1.6 (III) (B)
----------------------
FULLY DILUTED SHARE AMOUNT
--------------------------
[To be attached prior to the Closing Date]
SCHEDULE 1.6(c)
---------------
PREFERRED EXCHANGE RATIO FRACTION
---------------------------------
[To be attached prior to the Closing Date]
SCHEDULE 6.20
-------------
COMPANY EMPLOYEES, OFFER LETTERS
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
SCHEDULE 7.2(h)
---------------
AFFILIATE AGREEMENT
-------------------
Final determination of affiliate status will be made at the time the Merger is
submitted for vote or consent of the Company's stockholders.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Family LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Century II Corp.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
FMC Corporation
SCHEDULE 10.1
-------------
INDIVIDUALS SUBJECT TO AN
-------------------------
AGREEMENT NOT TO COMPETE
------------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Lifecodes Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
October 1, 2001
Orchid BioSciences, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Reference is made to that certain Agreement and Plan of Merger dated today
("Agreement"), by and among Orchid BioSciences, Inc., Persia Merger Sub, Inc.
and Lifecodes Corporation. Unless otherwise provided herein, capitalized terms
shall have the meanings ascribed to them in the Agreement.
In connection with the MMD Transaction, the Company will be required to deposit
approximately 1.4 million DM (the "German Escrow") of the approximate 9.4
million DM being paid for MMD to secure certain indemnity obligations and
covenants. It is anticipated that the German Escrow will have a term of 15 to 18
months. Notwithstanding any language to the contrary contained in Section 9.1 of
the Agreement, only the 350,000 shares of Parent Common Stock ("MMD Escrow
Shares") shall be subject to an extended term beyond the fifteen (15) month
period provided in such Section (except in the case of representations and
warranties for tax matters contained in the MMD Transaction).
In connection with the Agreement and notwithstanding any language to the
contrary contained in the Agreement or Escrow Agreement, only the MMD Escrow
Shares held under the Escrow Agreement shall be used in connection with any
liability incurred by Parent in connection with the MMD Transaction, provided
that in no event shall Parent's liability exceed the amount of the German
Escrow.
Parent agrees that it shall promptly execute and deliver such documents and
instruments as are reasonably required and reasonably acceptable to Parent to
provide a limited recourse liability to the buyer of MMD, Deutsche
Knochenmarkspenideratei gemeinnutzige GmbH ("DKMS"), to secure various
indemnities and covenants including the nonperformance of certain MicroArray
technology to be provided by Company to DKMS. In no event shall Parent's
liability exceed the amount of the German Escrow.
To the extent and only to the extent that DKMS realizes on all or any portion of
the German Escrow, then Parent may demand and obtain reimbursement solely from
the Escrow Shares an amount equal in value to the amount of the claims, if any,
paid to DKMS from the German Escrow.
2
If at any time between the Execution Date and Closing Date Company has
insufficient funds to repay amounts owed to third party creditors, then Company
may obtain from Parent up to a maximum amount of US $700,000, the repayment of
which amount shall be secured by the Escrow Shares, provided that in no event
shall Parent's liability exceed the amount of the German Escrow.
At the end of the indemnification period in the MMD Transaction, any funds
remaining in the German Escrow shall be released to Parent and, to the extent
there remain MMD Escrow Shares, such shares shall be promptly released to the
Holders (as such term is defined in the Escrow Agreement).
From and after the date hereof, the parties hereby agree to execute and deliver
all agreements, documents and instruments reasonably necessary to carry out the
purpose and intent of this letter agreement.
Kindly indicate your acceptance by signing and returning the copy of this letter
agreement enclosed for this purpose.
Very truly yours,
Lifecodes Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its CEO
Accepted and Approved:
Orchid BioSciences, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CFO, COO and Senior VP,
Corporate Development
3
