EXHIBIT 99(d)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GENZYME CORPORATION
SWIFT STARBOARD CORPORATION
AND SANGSTAT MEDICAL CORPORATION
Dated as of August 4, 2003
INDEX OF DEFINED TERMS
Acquisition Proposal..........................................................35
Affiliates....................................................................49
Agreement......................................................................1
Assignee......................................................................51
Audit.........................................................................22
business of...................................................................49
Certificate of Merger..........................................................4
Certificates...................................................................7
Closing........................................................................5
Closing Date...................................................................5
Code..........................................................................10
Company........................................................................1
Company Authorizations........................................................16
Company Balance Sheet.........................................................15
Company Balance Sheet Date....................................................15
Company Board of Directors.....................................................1
Company Capital Stock.........................................................12
Company Common Stock..........................................................12
Company Disclosure Letter.....................................................11
Company Employee Plans........................................................23
Company Financials............................................................15
Company Intellectual Property Rights..........................................18
Company Note...................................................................9
Company Option.................................................................9
Company Options................................................................9
Company Preferred Stock.......................................................12
Company Rights................................................................12
Company Rights Agreement......................................................12
Company SEC Reports...........................................................14
Company Stockholder Approval..................................................13
Company Technology............................................................18
Company Trademarks............................................................18
Company Warrants..............................................................10
Computer Software.............................................................18
Confidentiality Agreement.....................................................36
Copyrights....................................................................18
DGCL...........................................................................1
Dissenting Shares..............................................................8
DOJ...........................................................................38
Effect........................................................................49
Effective Time.................................................................4
Environmental Claims..........................................................20
Environmental Laws............................................................20
ERISA.........................................................................23
ERISA Affiliate...............................................................23
Exchange Act...................................................................2
Expiration Date................................................................2
FDA...........................................................................17
FDCA..........................................................................17
Fee Conversion Options.........................................................9
FTC...........................................................................38
Fully Diluted Shares..........................................................54
GAAP..........................................................................15
Governmental Entity...........................................................14
HSR Act.......................................................................14
Indemnified Liability.........................................................40
Indemnified Party.............................................................40
Indemnity Agreement...........................................................27
Independent Directors.........................................................42
Intellectual Property Rights..................................................18
IRS...........................................................................23
Knowledge.....................................................................50
Laws..........................................................................16
License Agreements............................................................18
Liens.........................................................................13
Material Adverse Effect.......................................................49
Material Contract.............................................................14
Materials of Environmental Concern............................................20
Merger.........................................................................4
Merger Agreement..............................................................56
Merger Consideration...........................................................7
Merger Filing..................................................................4
Minimum Tender Condition......................................................54
Nasdaq.........................................................................6
Offer..........................................................................1
Offer Documents................................................................3
Offer Price....................................................................1
Offer to Purchase..............................................................2
Option Plans...................................................................9
Parent.........................................................................1
Parent Board..................................................................44
Patents.......................................................................19
Paying Agent...................................................................7
person........................................................................49
PHS...........................................................................17
Proxy Statement................................................................6
Purchaser......................................................................1
Purchaser Common Stock.........................................................6
Regulation M-A.................................................................3
2
Representatives...............................................................35
Requisite Regulatory Approvals................................................42
Restraints....................................................................44
Schedule 14D-9.................................................................3
Schedule TO....................................................................3
SEC............................................................................2
Section 16 Affiliate..........................................................10
Securities Act................................................................14
Shares.........................................................................1
Significant Company IP........................................................19
Special Meeting................................................................5
Subsequent Determination......................................................37
Subsidiary....................................................................49
Superior Proposal.............................................................36
Surviving Corporation..........................................................4
Takeover Proposal.............................................................36
Tax...........................................................................22
Tax Authority.................................................................22
Tax Returns...................................................................22
Taxes.........................................................................22
Technology....................................................................19
Termination Date..............................................................44
Termination Fee...............................................................46
THP Agreement.................................................................29
Trade Secrets.................................................................19
Trademarks....................................................................19
Transactions..................................................................49
Voting Debt...................................................................12
WARN Act......................................................................25
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER...........................................................2
1.1 THE OFFER...............................................................2
1.2 COMPANY ACTIONS.........................................................3
1.3 THE MERGER..............................................................4
1.4 EFFECTIVE TIME..........................................................4
1.5 CLOSING.................................................................5
1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.....................5
1.7 SUBSEQUENT ACTIONS......................................................5
1.8 STOCKHOLDERS' MEETING...................................................5
1.9 MERGER WITHOUT MEETING OF STOCKHOLDERS..................................6
1.10 ISSUANCE OF COMPANY COMMON STOCK........................................6
ARTICLE II CONVERSION OF SECURITIES............................................6
2.1 CONVERSION OF CAPITAL STOCK.............................................6
2.2 EXCHANGE OF CERTIFICATES................................................7
2.3 DISSENTING SHARES.......................................................8
2.4 THE COMPANY OPTION PLANS................................................9
2.5 OTHER SECURITIES........................................................9
2.6 SECTION 16.............................................................10
2.7 WITHHOLDING............................................................10
2.8 TRANSFER TAXES.........................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................11
3.1 ORGANIZATION, STANDING AND POWER.......................................11
3.2 CAPITALIZATION.........................................................12
3.3 AUTHORITY; NONCONTRAVENTION............................................13
3.4 SEC FILINGS; COMPANY FINANCIAL STATEMENTS..............................14
3.5 ABSENCE OF CERTAIN CHANGES.............................................15
3.6 NO UNDISCLOSED LIABILITIES.............................................15
3.7 LITIGATION.............................................................16
3.8 GOVERNMENTAL AUTHORIZATION.............................................16
3.9 TITLE TO PROPERTY......................................................18
3.10 TECHNOLOGY AND INTELLECTUAL PROPERTY...................................18
3.11 ENVIRONMENTAL MATTERS..................................................20
3.12 TAXES..................................................................21
3.13 EMPLOYEE BENEFIT PLANS.................................................22
3.14 LABOR MATTERS..........................................................25
3.15 INSURANCE..............................................................25
3.16 COMPLIANCE WITH LAWS...................................................25
3.17 BROKERS' AND FINDERS' FEES.............................................26
3.18 STATE TAKEOVER STATUTES................................................26
3.19 BOARD APPROVAL.........................................................26
3.20 VOTE REQUIRED..........................................................26
3.21 MATERIAL CONTRACTS AND OTHER AGREEMENTS................................26
3.22 INFORMATION IN THE PROXY STATEMENT.....................................27
3.23 INFORMATION IN THE OFFER DOCUMENTS AND THE SCHEDULE 14D-9..............28
3.24 OPINION OF FINANCIAL ADVISOR...........................................28
3.25 RIGHTS PLAN............................................................28
3.26 NO DEFAULT.............................................................28
3.27 PRODUCT LIABILITY......................................................28
3.28 COMMERCIAL RELATIONSHIPS...............................................29
3.29 THERAPEUTIC HUMAN POLYCLONALS, INC.....................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.............29
4.1 ORGANIZATION, STANDING AND POWER.......................................29
4.2 AUTHORITY; NONCONTRAVENTION............................................30
4.3 INFORMATION IN THE OFFER DOCUMENTS.....................................30
4.4 INFORMATION IN THE PROXY STATEMENT.....................................30
4.5 FINANCING..............................................................31
4.6 OWNERSHIP OF COMPANY STOCK.............................................31
4.7 LITIGATION.............................................................31
4.8 BROKERS' AND FINDERS' FEES.............................................31
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME.................................31
5.1 CONDUCT OF BUSINESS BY THE COMPANY.....................................31
5.2 NO SOLICITATION........................................................35
ARTICLE VI ADDITIONAL AGREEMENTS..............................................37
6.1 PROXY STATEMENT........................................................37
6.2 MEETING OF STOCKHOLDERS OF THE COMPANY.................................37
6.3 CONFIDENTIALITY; ACCESS TO INFORMATION.................................37
6.4 PUBLIC DISCLOSURE......................................................38
6.5 REGULATORY FILINGS; REASONABLE EFFORTS.................................38
6.6 NOTIFICATION OF CERTAIN MATTERS........................................40
6.7 INDEMNIFICATION........................................................40
6.8 EMPLOYEE BENEFITS......................................................41
6.9 CONSENTS AND APPROVALS.................................................41
6.10 ADDITIONAL AGREEMENTS..................................................42
6.11 DIRECTORS..............................................................42
ARTICLE VII CONDITIONS........................................................43
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER...........43
7.2 ADDITIONAL CONDITION TO THE OBLIGATIONS OF PARENT AND PURCHASER........44
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................44
8.1 TERMINATION............................................................44
8.2 EFFECT OF TERMINATION..................................................46
8.3 FEES AND EXPENSES......................................................47
8.4 EXTENSION; WAIVER......................................................47
ARTICLE IX GENERAL PROVISIONS.................................................47
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........................47
9.2 NOTICES................................................................47
9.3 INTERPRETATION; CERTAIN DEFINED TERMS..................................48
9.4 COUNTERPARTS...........................................................50
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9.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES............................50
9.6 SEVERABILITY...........................................................50
9.7 OTHER REMEDIES; SPECIFIC PERFORMANCE...................................50
9.8 GOVERNING LAW; VENUE...................................................51
9.9 RULES OF CONSTRUCTION..................................................51
9.10 ASSIGNMENT.............................................................51
9.11 AMENDMENT AND MODIFICATION.............................................51
9.12 NO WAIVER; REMEDIES CUMULATIVE.........................................52
9.13 CONTROL OF COMPANY'S BUSINESS..........................................52
9.14 WAIVER OF JURY TRIAL...................................................52
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), is entered
into as of August 4, 2003 by and among
Genzyme Corporation, a Massachusetts
corporation ("PARENT"), Swift Starboard Corporation, a
Delaware corporation and
a wholly-owned subsidiary of Parent ("PURCHASER"), and SangStat Medical
Corporation, a
Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that (i) Purchaser
commence a cash tender offer (as it may be amended from time to time as
permitted by this Agreement, the "OFFER") to acquire all shares of the issued
and outstanding common stock, par value $0.001 per share, of the Company,
including the associated Company Rights (as defined in Section 3.2) (the
"SHARES"), for $22.50 per Share, net to the seller in cash (such price, or any
such higher price per Share as may be paid in the Offer, referred to herein as
the "OFFER PRICE");
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved this Agreement and the Transactions (as defined in Section
9.3(f)), including the Merger (as defined in Section 1.3) following the Offer in
accordance with the
Delaware General Corporation Law ("DGCL") and upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD
OF DIRECTORS") has determined that the consideration to be paid for each Share
in the Offer and the Merger is fair to the holders of such Shares and has
resolved to recommend that the holders of such Shares accept the Offer and adopt
this Agreement and each of the Transactions upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer, the Merger and the other Transactions.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements, representations and warranties set forth herein, the
parties agree as follows:
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ARTICLE I
THE MERGER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 and none of the events set forth in Annex I hereto
shall have occurred, Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (together with the rules
and regulations promulgated thereunder, the "EXCHANGE ACT")), the Offer as
promptly as practicable following the date hereof (but in no case later than ten
(10) business days from the date hereof). The obligations of Purchaser to accept
for payment and to pay for any Shares validly tendered and not withdrawn prior
to the expiration of the Offer (as it may be extended in accordance with
requirements of this Section 1.1(a)) shall be subject only to the conditions set
forth in Annex I hereto. Subject to the prior satisfaction or waiver by Parent
or Purchaser of the conditions of the Offer set forth in Annex I hereto,
Purchaser shall consummate the Offer in accordance with its terms and accept for
payment and pay for all Shares tendered and not withdrawn promptly following the
acceptance of Shares for payment pursuant to the Offer. The Offer shall be made
by means of an offer to purchase (the "OFFER TO PURCHASE") that contains the
terms set forth in this Agreement, and the conditions set forth in Annex I
hereto. Parent expressly reserves the right to waive any of such conditions, to
increase the Offer Price and to make any other changes in the terms of the
Offer; provided, however, that Purchaser shall not, and Parent shall cause
Purchaser not to, decrease the Offer Price, change the form of consideration
payable in the Offer, decrease the number of Shares sought in the Offer, impose
additional conditions to the Offer, extend the offer beyond the date that is
twenty (20) business days after commencement of the Offer or the last extension
(in accordance with this Section 1.1, if any, of the Offer, whichever is later
(the "EXPIRATION DATE") except as set forth below, waive or change the Minimum
Tender Condition (as defined in Annex I) or amend any other condition of the
Offer in any manner adverse to the Company or the holders of the Shares, in each
case without the prior written consent of the Company (such consent to be
authorized by the Company Board of Directors or a duly authorized committee
thereof). Notwithstanding the foregoing, Purchaser may, without the consent of
the Company, (i) extend the Offer beyond the initial expiration date if, at any
scheduled (or extended) expiration of the Offer, any of the conditions to
Purchaser's obligation to accept Shares for payment, shall not be satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation or
interpretation of the United States Securities and Exchange Commission ("SEC"),
or the staff thereof, applicable to the Offer, or (iii) extend (or re-extend)
the Offer for an aggregate period of not more than twenty (20) business days
(taking into account all such extensions and re extensions), beyond the latest
applicable date that would otherwise be permitted under clause (i) or (ii) of
this sentence, if, as of such date, all of the conditions to Purchaser's
obligations to accept for payment Shares are satisfied or waived, but there
shall not have been validly tendered and not withdrawn pursuant to the Offer
that number of Shares necessary to permit the Merger to be effected without a
meeting of the Company's stockholders in accordance with the DGCL. In addition,
Purchaser may provide a "subsequent offering period" in accordance with Rule
14d-l1 under the Exchange Act.
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(b) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC, pursuant to Regulation M-A under the Exchange Act
("REGULATION M-A"), a Tender Offer Statement on Schedule TO with respect to the
Offer (together with all amendments, supplements and exhibits thereto, the
"SCHEDULE TO"). The Schedule TO shall include the summary term sheet required
under Regulation M-A and, as exhibits, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (collectively, together with any
amendments and supplements thereto, the "OFFER DOCUMENTS"). The Company hereby
consents to the inclusion in the Offer Documents of the recommendation referred
to in clause (iii) of Section 3.19 and the approval of the Board of Directors
referred to in Section 3.19. Parent and Purchaser agree to take all steps
necessary to cause the Offer Documents to be filed with the SEC and disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and Purchaser, on the one hand, and the Company,
on the other hand, agree to promptly correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect or as otherwise required by law. Parent
and Purchaser further agree to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Schedule TO before it is filed with the SEC. In
addition, Parent and Purchaser agree to provide the Company and its counsel with
any comments, whether written or oral, that Parent, Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly upon receipt of such comments, and any written or oral
responses thereto.
(c) Parent shall provide or cause to be provided to Purchaser upon
expiration of the Offer or any subsequent extension thereof, as applicable, all
funds necessary to accept for payment, and pay for, any shares of Company Common
Stock that are validly tendered and not withdrawn pursuant to the Offer and that
Purchaser is obligated to accept for payment pursuant to the Offer and permitted
to accept for payment under applicable Law.
1.2 COMPANY ACTIONS.
(a) On the date the Offer is commenced, the Company shall, in a
manner that complies with Rule 14d-9 under the Exchange Act, file with the SEC a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments, supplements and exhibits thereto, the "SCHEDULE 14D-9")
which shall, subject to the provisions of Section 5.2, contain the
recommendation referred to in clause (iii) of Section 3.19 and the approval of
the Board of Directors referred to in Section 3.19. The Company further agrees
to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company, on the one hand,
and Parent and Purchaser, on the other hand, agree to promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect or as
otherwise required by law. The Company agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent, Purchaser and their
counsel shall be given the opportunity to review and comment on the Schedule
14D-9 and any
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amendment thereto before filing with the SEC. In addition, the Company agrees to
provide Parent, Purchaser and their counsel in writing with any comments,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments, and to consult with Parent, Purchaser and their
counsel prior to responding to any such comments, either in written or oral
form.
(b) In connection with the Offer, the Company shall promptly furnish
or cause to be furnished to Parent or Purchaser mailing labels, security
position listings and all available listings and computer files containing the
names and addresses of the record holders of the Shares as of a recent date, and
shall promptly furnish Parent or Purchaser with such information and assistance
(including, but not limited to, lists of holders of the Shares, updated
periodically, and their addresses, mailing labels and lists of security
positions) as Parent or Purchaser or its agent(s) may reasonably request. Such
information shall be held confidential by Parent and Purchaser under the terms
of the Confidentiality Agreement.
1.3 THE MERGER.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.4), the Company and Purchaser shall
consummate a merger (the "MERGER") in accordance with the DGCL pursuant to which
(i) Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall thereupon cease; (ii) the Company shall
be the successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of
Delaware; (iii) the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger; and (iv) the Company shall
succeed to and assume all the rights and obligations of Purchaser. The
corporation surviving the Merger is sometimes hereinafter referred to as the
"SURVIVING CORPORATION." The Merger shall have the effects set forth in the
DGCL.
(b) The Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, except as to the name of the
Surviving Corporation, until thereafter amended as provided by law and such
Certificate of Incorporation.
(c) The Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, except as to
the name of the Surviving Corporation, until thereafter amended as provided by
the DGCL, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
1.4 EFFECTIVE TIME. Parent, Purchaser and the Company shall cause an
appropriate certificate of merger (the "CERTIFICATE OF MERGER") to be executed
and filed on the Closing Date (as defined in Section 1.5) (or on such other date
as Parent and the Company may agree) with the Secretary of State of the State of
Delaware as provided in the DGCL (the "MERGER FILING"). The Merger shall become
effective on the time and date on which the Certificate of Merger has been duly
filed with the Secretary of State of the State of
Delaware or such time and date
as is agreed upon by the parties and specified in the Certificate of Merger,
such time hereinafter referred to as the "EFFECTIVE TIME."
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1.5 CLOSING. The closing of the Merger (the "CLOSING") will take place
at 9:00 a.m. (Boston time) on a date to be specified by the parties, such date
to be no later than the second business day after satisfaction or waiver of all
of the conditions set forth in Article VII (the "CLOSING DATE"), at the offices
of Ropes & ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
unless another date or place is agreed to in writing by the parties hereto.
1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
of Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation, and the officers
of Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation, in each case until
their respective successors shall have been duly elected, designated or
qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
1.7 SUBSEQUENT ACTIONS. If at any time after the Effective Time the
Surviving Corporation shall determine, in its sole discretion, or shall be
advised, that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the Company
or Purchaser acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger or otherwise to carry out this Agreement,
then the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of either the Company or
Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments
and assurances and to take and do, in the name and on behalf of each such
corporation or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title or interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
1.8 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through the Company Board of Directors, shall, in accordance
with applicable law and the Company's Certificate of Incorporation and Bylaws:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders to consider the approval and adoption of this
Agreement and the approval of the Merger (the "SPECIAL MEETING") as soon as
reasonably practicable following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer for the purpose of considering and
taking action upon this Agreement;
(ii) prepare and file with the SEC under the Exchange Act a
preliminary proxy or information statement relating to the Merger and this
Agreement and use its reasonable efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after Parent and its counsel shall have had a reasonable
opportunity to review and comment on the Proxy Statement, respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
5
statement (the "PROXY STATEMENT") to be mailed to its stockholders as promptly
as practicable;
(iii) include in the Proxy Statement the recommendation of the
Company Board of Directors that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement; and
(iv) use its reasonable efforts to solicit from holders of
Shares proxies in favor of the Merger and take all other action reasonably
necessary or advisable to secure the approval of stockholders required by the
DGCL and any other applicable law and the Company's Certificate of Incorporation
and Bylaws (if applicable) to effect the Merger;
provided that the obligations set forth in clauses (iii) and (iv) of this
Section 1.8(a) shall be subject to Section 5.2.
(b) Parent agrees to vote, or cause to be voted, all of the Shares
then beneficially owned by it, Purchaser or any of its other subsidiaries in
favor of the approval of the Merger and the adoption of this Agreement.
1.9 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding Section 1.8,
in the event that Parent, Purchaser or any other subsidiary of Parent shall
acquire at least ninety percent (90%) of the outstanding shares of each class of
capital stock of the Company entitled to vote on the Merger, pursuant to the
Offer or otherwise, the parties hereto agree, at the request of Parent and
subject to Article VII, to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with and subject
to the DGCL.
1.10 ISSUANCE OF COMPANY COMMON STOCK. Subject to compliance with
applicable law and the rules and regulations of the Nasdaq Stock Market, Inc.
("NASDAQ"), in the event that the Parent, Purchaser or any other subsidiary of
Parent shall acquire at least seventy-five percent (75%), but less than ninety
percent (90%) of the outstanding shares of each class of capital stock of the
Company entitled to vote on the Merger pursuant to the Offer, the Company shall,
at the request of Parent, issue and sell to Purchaser up to the number of shares
of Company Common Stock that represent nineteen and nine-tenths percent (19.9%)
of the outstanding shares of Common Stock of the Company entitled to vote on the
Merger at the greater of a purchase price of $22.50 per share and any higher
price paid for any Share in the Offer.
ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any shares of
Company Common Stock or any shares of common stock, par value $0.001 per share,
of Purchaser ("PURCHASER COMMON STOCK"):
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(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent or Purchaser shall automatically be cancelled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share (other
than Shares to be cancelled in accordance with Section 2.1(b) and other than
Dissenting Shares (as defined in Section 2.3(a))) shall be converted into the
right to receive the Offer Price, payable to the holder thereof in cash, without
interest (the "MERGER CONSIDERATION"). From and after the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest
thereon.
2.2 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Parent shall designate a bank or trust company to
act as agent for the holders of Shares in connection with the Merger (the
"PAYING AGENT") and to receive the funds to which holders of Shares shall become
entitled pursuant to Section 2.1(c). Prior to the Effective Time, Parent shall
deposit, or cause to be deposited (by Purchaser or otherwise), with the Paying
Agent the aggregate Merger Consideration. For purposes of determining the amount
of Merger Consideration to be so deposited, Parent and Purchaser shall assume
that no stockholder of the Company will perfect any right to appraisal of his,
her or its Shares. Such funds shall be invested by the Paying Agent as directed
by Parent or the Surviving Corporation, in its sole discretion (provided that
Parent shall be responsible for replacing any losses of principal to such fund
resulting from such investments), pending payment thereof by the Paying Agent to
the holders of the Shares. Earnings from such investments shall be the sole and
exclusive property of Parent and the Surviving Corporation, and no part of such
earnings shall accrue to the benefit of holders of Shares.
(b) Exchange Procedures. Promptly after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"), whose shares were converted pursuant to
Section 2.1(c) into the right to receive the Merger Consideration (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify); and (ii) instructions for
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed and properly completed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such
7
Certificate and the Certificate so surrendered shall forthwith be cancelled.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2,
without interest thereon, and shall not evidence any interest in, or any right
to exercise the rights of a stockholder or other equity holder of, the Company
or the Surviving Corporation. Notwithstanding the foregoing, any surrendered
Certificate that represents Dissenting Shares shall be returned to the person
surrendering such certificate.
(c) Transfer Books; No Further Ownership Rights in Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six (6)
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent and not
disbursed (or for which disbursement is pending subject only to the Paying
Agent's routine administrative procedures) to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If Certificates are not surrendered
prior to two (2) years after the Effective Time, unclaimed Merger Consideration
payable with respect to such Shares shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(e) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such amount as Parent may
reasonably direct as indemnity against any claim that may be made against it or
the Surviving Corporation with respect to such Certificate, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect thereto.
2.3 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has complied with Section 262 of the DGCL (the "DISSENTING SHARES") shall not be
converted into a right to receive the Merger
8
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his, her or its right to appraisal. From and after the Effective Time, a
stockholder who has properly exercised such appraisal rights shall not have any
rights of a stockholder of the Company or the Surviving Corporation with respect
to such Shares, except those provided under Section 262 of the DGCL. A holder of
Dissenting Shares shall be entitled to receive payment of the appraised value of
such Shares held by him, her or it in accordance with Section 262 of the DGCL,
unless, after the Effective Time, such holder fails to perfect or withdraws or
loses his, her or its right to appraisal, in which case such Shares shall be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Certificate or Certificates
representing such Shares, pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any Shares, attempted withdrawals of such demands and
any other instruments served pursuant to the DGCL and received by the Company
relating to rights of appraisal; and (ii) the opportunity to participate in the
conduct of all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Except with the prior written consent of Parent, the
Company shall not voluntarily make any payment with respect to any demands for
appraisal or settle or offer to settle any such demands for appraisal.
2.4 THE COMPANY OPTION PLANS. Effective as of the Effective Time, each
outstanding stock option, stock equivalent right or right to acquire Shares (a
"COMPANY OPTION" or "COMPANY OPTIONS") granted under the Company's 1996
Non-Employee Director Stock Option Plan (including, but not limited to, options
granted in lieu of a director's basic retainer payment ("FEE CONVERSION
OPTIONS"), and the 2002 Stock Option Plan (collectively, the "OPTION PLANS")),
whether or not then exercisable or vested, shall be (i) deemed to be one hundred
percent (100%) vested and exercisable immediately prior to the Effective Time;
and (ii) immediately prior to the Effective Time, cancelled and, in
consideration of such cancellation, Parent shall, or shall cause the Surviving
Corporation to, promptly following the Effective Time, pay to such holders of
Company Options, an amount in respect thereof equal to the product of (x) the
excess, if any, of the Offer Price over the exercise price of each such Company
Option and (y) the number of unexercised Shares subject thereto (such payment,
if any, to be net of applicable Taxes withheld pursuant to Section 2.6).
Effective as of the Effective Time, all repurchase rights in favor of the
Company with respect to shares issued upon exercise of Company Options
(including, but not limited to shares issued upon exercise of Fee Conversion
Options) shall terminate automatically, and the unvested shares of Common Stock
subject to those terminated rights shall immediately vest in full. As of the
Effective Time, the Option Plans shall terminate and all rights under any
provision of any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any Company Subsidiary shall be cancelled. The Company shall use all reasonable
efforts to effectuate the foregoing, including, but not limited to, sending out
the requisite notices and obtaining all consents necessary to cash out and
cancel all Company Options necessary to ensure that, after the Effective Time,
no person shall have any right under the Option Plans, except as set forth
herein.
2.5 OTHER SECURITIES. (a) At the Effective Time, if the $10 million
Convertible Promissory Note due March 29, 2004 by the Company in favor of
Warburg Dillon Read LLC (the "COMPANY NOTE") shall not have been converted by
the holder thereof, the Company Note
9
shall be assumed by Parent. The Company Note assumed by Parent shall have and be
subject to, and convertible upon, the terms and conditions set forth in the
Company Note, except that the Company Note shall be convertible only into such
Merger Consideration receivable by a holder of that number of shares of Company
Common Stock into which the holder would have received had such holder converted
the Company Note in full immediately prior to the Effective Time, in accordance
with Section 1(h) of the Company Note. Promptly after the commencement of the
Offer, Parent shall execute and deliver to the holder of the Company Note a
supplemental agreement regarding the conversion of the Company Note following
the Effective Time in accordance with Sections 1(h) and 4(a)(1) of the Company
Note and the Company shall deliver to the holder of the Company Note the
officer's certificate and legal opinion contemplated by Section 4(a)(3) of the
Company Note.
(b) COMPANY WARRANT. Promptly after the commencement of the Offer, the
Company shall deliver to each holder of a warrant to purchase Company Common
Stock (the "COMPANY WARRANTS") a notice regarding the Transactions, as
contemplated by the second paragraph of the introduction to the Company
Warrants.
2.6 SECTION 16. Parent, Surviving Corporation and the Company shall take
such steps with respect to each Section 16 Affiliate (as defined below) as
contemplated by the terms and conditions set forth in that certain No-Action
Letter, dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP. For purposes of this Agreement, "SECTION 16 AFFILIATE" shall
mean each individual who (x) immediately prior to the Effective Time is a
director or officer of the Company or (y) at the Effective Time will become a
director or officer of Parent.
2.7 WITHHOLDING. Each of the Paying Agent, Parent, and Surviving
Corporation shall be entitled to deduct and withhold, or cause the Paying Agent
to deduct and withhold, from any amounts payable or otherwise deliverable
pursuant to this Agreement to any holder or former holder of Shares or the
Company Options such amounts as are required to be deducted or withheld
therefrom under the Internal Revenue Code of 1986, as amended (the "CODE") or
any provision of Tax law or under any other applicable legal requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the person to whom
such amounts would otherwise have been paid.
2.8 TRANSFER TAXES. If payment of the Offer Price payable to a holder of
Shares pursuant to the Offer or the Merger is to be made to a person other than
the person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other Taxes required by
reason of the issuance to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of Parent
that such Tax either has been paid or is not applicable.
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in that section of the letter of even date
herewith delivered by the Company to Parent prior to the execution and delivery
of this Agreement (the "COMPANY DISCLOSURE LETTER") corresponding to the section
of this Agreement to which any of the following representations or warranties
pertain, the Company represents and warrants to Parent as set forth below. For
purposes of the representations and warranties of the Company contained herein,
disclosure in any section of the Company Disclosure Letter of any facts or
circumstances shall be deemed to be adequate response and disclosure of such
facts or circumstances with respect to all representations or warranties by the
Company calling for disclosure of such information, whether or not such
disclosure is specifically associated with or purports to respond to one or more
or all of such representations or warranties if it is reasonably apparent on the
face of the Company Disclosure Letter that such disclosure is applicable. The
inclusion of any information in any section of the Company Disclosure Letter or
other document delivered by the Company pursuant to this Agreement shall not be
deemed to be an admission or evidence of the materiality of such item, nor shall
it establish a standard of materiality for any purpose whatsoever.
3.1 ORGANIZATION, STANDING AND POWER. The Company and each of its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the Company and its Subsidiaries has the corporate power
to own, lease and operate its properties and to carry on its business as now
being conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the nature of its business as conducted makes such
qualification or licensing necessary, except where the failure to be so
qualified and in good standing would not be reasonably likely to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. The Company
has made available a true and correct copy of the Certificate of Incorporation
and Bylaws, or other equivalent charter documents, as applicable, of the Company
and each of its Subsidiaries, each as amended to date, to Parent. Neither the
Company nor any of its Subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws or equivalent charter documents, as
applicable. Other than its interest in its wholly owned Subsidiaries, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity. Section 3.1 of the Company Disclosure Letter
sets forth a true and complete list of the names, jurisdictions of organization
of each of the Company's Subsidiaries. Section 3.1 of the Company Disclosure
Letter also sets forth for each such Subsidiary the individuals who comprise the
board of directors or comparable body for each such entity, except as otherwise
noted on such Section of the Company Disclosure Letter. The Company agrees to
take, or cause to be taken, the actions necessary so that the individuals who
comprise the board of directors or comparable body for each such entity will
resign and be replaced by individuals specified by Parent effective as of the
Effective Time.
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3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
40,000,000 shares of common stock, par value $.001 per share ("COMPANY COMMON
STOCK"), of which 26,469,087 shares were issued and outstanding as of June 30,
2003, and (ii) 5,000,000 shares of preferred stock, par value $.001 per share
("COMPANY PREFERRED STOCK" and, together with Company Common Stock, "COMPANY
CAPITAL STOCK"), of which no shares are issued and outstanding as of the date
hereof. As of June 30, 2003, (i) no shares of Company Common Stock and no shares
of Company Preferred Stock are issued and held in the treasury of the Company,
(ii) 4,351,165 shares of Company Common Stock were reserved for issuance
pursuant to outstanding Company Options pursuant to the Company Option Plans,
(iii) there were warrants outstanding to purchase 50,000 shares of Company
Common Stock pursuant to the Company Warrants, (iv) there was Voting Debt (as
defined below) outstanding to purchase 500,773 shares of Company Common Stock
pursuant to the Company Note and (v) 500,000 shares of Company Preferred Stock
were designated as Series A Junior Participating Preferred Stock, all of which
were reserved for issuance upon exercise of preferred stock purchase rights (the
"COMPANY RIGHTS") issuable pursuant to the Rights Agreement, dated as of August
14, 1995, by and between the Company and Equiserve Trust Company, N.A., as
rights agent (the "COMPANY RIGHTS AGREEMENT"). All of the outstanding shares of
Company Capital Stock are, and all shares of Company Capital Stock which may be
issued pursuant to the exercise or conversion of outstanding Company Options,
Company Warrants or the Company Note will be, when issued in accordance with the
respective terms thereof or instruments relating thereto, duly authorized,
validly issued, fully paid and non-assessable. The rights, preferences and
privileges of the Company Preferred Stock are as set forth in the Certificate of
Incorporation of the Company.
(b) Except as set forth in Section 3.2(a) above (i) there are no
shares of capital stock of the Company authorized, issued or outstanding; (ii)
there are no existing options, warrants, calls, purchase rights, conversion
rights, exchange rights, stock appreciation rights preemptive rights,
indebtedness having general voting rights or debt convertible into securities
having such rights ("VOTING DEBT") or subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock or treasury shares of the capital stock of the Company or its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment; and (iii) there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Capital Stock, or other
capital stock of the Company or any of its Subsidiaries or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any other entity. There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(c) Each outstanding share of capital stock of each Subsidiary of
the Company is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by the Company or any Subsidiary of the Company is owned
free and clear of any mortgage, pledge,
12
assessment, security interest, lease, sublease, lien, adverse claim, levy,
charge, option, right of others or restriction (whether on voting, sale,
transfer, disposition or otherwise) or other encumbrance of any kind, whether
imposed by agreement, understanding, law or equity, or any conditional sale
contract, title retention contract or other contract to give or to refrain from
giving any of the foregoing (collectively, "LIENS").
(d) Section 3.2(d) of the Company Disclosure Letter sets forth a
listing of (i) all outstanding Company Options as of the date hereof, which
schedule shows the underlying shares that have vested, the date such options
were issued, and whether the option is an incentive stock option, and (ii) each
outstanding Company Option that will accelerate, in whole or in part, pursuant
to its terms as a result of the transactions contemplated hereby. Any such
acceleration of Company Options is required under the terms of the Option Plans.
No agreement or understanding requires a consent or approval from any holder of
any Company Option or Company Warrant or the Company Note to effectuate the
terms of this Agreement. The Company has previously provided true and complete
copies of all the Company Warrants and the Company Note to Parent.
(e) Except for (i) shares indicated as issued and outstanding in
Section 3.2(a) and (ii) shares issued pursuant to Section 1.10, there will not
be, immediately prior to the Effective Time, any shares of Company Common Stock
issued and outstanding.
3.3 AUTHORITY; NONCONTRAVENTION.
(a) The Company has the requisite power and authority to enter into
this Agreement (subject to obtaining approval and adoption of this Agreement by
the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "COMPANY STOCKHOLDER APPROVAL")) to consummate the
Transactions. The execution, delivery and performance by the Company of this
Agreement and the consummation of the Transactions have been duly authorized by
all necessary corporate action on the part of the Company, subject only to the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes the valid and
binding obligation of the other parties hereto and thereto, constitutes the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that enforceability may be
limited by the effect, if any, of (i) any applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally, and (ii) general principles of equity, regardless of whether
such enforceability is considered in a proceeding at law or in equity.
(b) The execution, delivery and performance of this Agreement by the
Company does not, and the consummation of the Transactions or compliance by the
Company with any of the provisions hereof or thereof will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation, right of
payment or acceleration of any obligation, modification of or loss of any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws,
or other equivalent charter documents, as applicable, of the Company or any of
its Subsidiaries, or (ii) any material note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, License Agreement, contract,
agreement or other instrument or obligation to which the Company or any
13
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound (a "MATERIAL CONTRACT") or any material
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except in the case
of clause (ii) where such violation, breach or default individually or in the
aggregate would not be reasonably likely to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole or materially impair the
ability of the Company to consummate the Transactions. Except for (i) compliance
with any applicable requirements of the Exchange Act, or the Securities Act of
1933, as amended (the "SECURITIES ACT"), (ii) the Merger Filings, (iii) the
Nasdaq and the State of
Delaware, (iv) the Company Stockholder Approval, if
required, (v) such filings and approvals as may be required by any applicable
state securities, blue sky or takeover laws, (vi) filings, clearances, permits,
authorizations, consents and approvals as may be required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and any comparable provisions under any applicable pre-merger
notification laws or regulations of foreign jurisdictions, and (vii) such other
consents, authorizations, filings, approvals and registrations which are
obtained prior to the Closing or if not obtained or made would materially reduce
the value of the Company or materially impair the ability of the Company to
consummate the Transactions, no notice to, filing with, and no permit,
authorization, consent or approval of, any arbitrator, court, nation,
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial regulatory or administrative
functions of, or pertaining to, government (a "GOVERNMENTAL ENTITY"), or any
private third party is necessary for the consummation by the Company of the
Transactions. The execution, delivery and performance of this Agreement by the
Company does not and the consummation of the Transactions or compliance by the
Company with any of the provisions hereof or thereof will not result in the
creation of any Lien on the assets or properties of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is or will be
required to give any notice to or obtain any consent or waiver from any
individual or entity in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby or
thereby, except where failure to give such notice or obtain such consent would
not be reasonably likely to have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole.
3.4 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required
to be filed by the Company with the SEC since December 31, 2001 and has made
available to Parent such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents are referred to herein as
the "COMPANY SEC REPORTS." As of their respective dates or, if amended, as of
the date of the last such amendment prior to the date of this Agreement, the
Company SEC Reports (i) complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact or disclose any matter or
proceeding required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Between the date of this Agreement
14
and the Closing Date will timely file, with the SEC all documents required to be
filed by it under the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"COMPANY FINANCIALS") (i) complied in all material respects with the published
rules and regulations of the SEC with respect thereto, (ii) was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act),
(iii) fairly presented in all material respects the consolidated financial
position of the Company and its Subsidiaries as at the respective dates thereof
and the consolidated results of the Company's operations and cash flows for the
periods indicated, except that the unaudited interim financial statements may
not contain footnotes and were or are subject to normal and recurring year-end
adjustments and (iv) was prepared from and in accordance with the Company's
books and records. The balance sheet of the Company contained in the Company SEC
Reports as of March 31, 2003 (the "COMPANY BALANCE SHEET DATE") as filed with
the SEC before the date hereof is hereinafter referred to as the "COMPANY
BALANCE SHEET."
(c) Within 10 business days of the date hereof, the Company will
provide to the Purchaser a complete list of all effective registration
statements filed on Form S-3 or Form S-8 or otherwise relying on Rule 415 under
the Securities Act.
3.5 ABSENCE OF CERTAIN CHANGES. Except as and to the extent disclosed in
the Company SEC Reports filed prior to the date of this Agreement, since the
Company Balance Sheet Date and through the date of this Agreement: (i) the
Company and its Subsidiaries have conducted their respective businesses and
operations in all material respects in the ordinary and usual course, (ii) there
has not been any declaration, setting aside or payment of any dividend on, or
other distribution (whether in case, stock or property) in respect of, any of
the Company's capital stock, or any purchase, redemption or other acquisition by
the Company of any of its capital stock or any other securities of the Company
on any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option on purchase agreements,
(iii) the Company has not acquired or agreed to acquire any assets other than in
the ordinary course of business consistent with past practice, (iv) there has
not been any split, combination or reclassification of any of the Company's
capital stock, and (v) there has not occurred any events, changes or effects
(including the incurrence of any liabilities of any nature, whether or not
accrued, contingent or otherwise) having, individually or in the aggregate, or,
which, individually or in the aggregate, would be reasonably likely to have, a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole or
(vi) any change by the Company in accounting principles or methods, except
insofar as may be required by a change in GAAP. There has not been any action
taken by the Company or any of its Subsidiaries since the Balance Sheet Date
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach of
Section 5.1.
3.6 NO UNDISCLOSED LIABILITIES. As of March 31, 2003, the Company and
its Subsidiaries had no material liabilities of any nature, whether accrued,
absolute, contingent or
15
otherwise (including without limitation, liabilities as guarantor or otherwise
with respect to obligations of others or liabilities for taxes due or then
accrued or to become due), required to be reflected or disclosed on the Company
Balance Sheet that were not adequately reflected or reserved against on the
Company Balance Sheet. The Company has no material liabilities of any nature,
whether accrued, absolute, contingent or otherwise, that would be required to be
reflected or disclosed in accordance with GAAP on a balance sheet, other than
liabilities (i) adequately reflected or reserved against on the Company Balance
Sheet, (ii) included in Section 3.6 of the Company Disclosure Letter, (iii)
incurred since March 31, 2003 in the ordinary course of business consistent with
past practice or (iv) litigation, as contemplated in Section 3.7 below, for any
claims filed since March 31, 2003.
3.7 LITIGATION. Except as set forth in the Company SEC Reports filed
prior to the date hereof, (a) there are no private or governmental actions,
suits, proceedings, claims, arbitrations or investigations pending before any
agency, court or tribunal, foreign or domestic, or to the Knowledge of the
Company, threatened against the Company or its Subsidiaries or any of their
properties, directors or officers, including without limitation medical
malpractice or professional liability suits, claims, actions, proceedings,
arbitrations or investigations related to activities of the Company or any of
its Subsidiaries in connection with any web sites sponsored or operated, or
formerly sponsored or operated, by the Company or any of its Subsidiaries and
(b) there is no judgment, decree or order against the Company or any of its
Subsidiaries, that, in the case of (a) or (b) individually or in the aggregate,
would be reasonably likely to have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole.
3.8 GOVERNMENTAL AUTHORIZATION. The Company and its Subsidiaries have
each Federal, state, county, local or foreign governmental consent, license,
permit, grant, or other authorization of a Governmental Entity (i) pursuant to
which the Company or any of its Subsidiaries currently operates or holds any
interest in any of its properties or (ii) that is required for the operation of
the business of the Company or any of its Subsidiaries or the holding of any
such interest ((i) and (ii) are herein collectively called "COMPANY
AUTHORIZATIONS"), and all of such Company Authorizations are in full force and
effect, except where the failure to obtain or have any such Company
Authorizations would not reasonably be likely to have a Material Adverse Effect
on the Company; and no proceeding is pending or, to the Knowledge of the
Company, threatened to revoke or limit any Company Authorization, except where
such proceedings would not reasonably be likely to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(b) The Company and its Subsidiaries have complied in a timely
manner and in all material respects, with all laws, statutes, regulations,
rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any
court or Governmental Entity (collectively, "LAWS") relating to any of the
property owned, leased or used by them, or applicable to their business,
including, but not limited to, (i) the Foreign Corrupt Practices Act of 1977 and
any other Laws regarding use of funds for political activity or commercial
bribery and (ii) laws relating to equal employment opportunity, discrimination,
occupational safety and health, environmental, interstate commerce,
anti-kickback, healthcare and antitrust, except where such failure to comply
would not reasonably be likely to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole.
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(c) The Company and its Subsidiaries are not in violation of any
Federal, state, local or foreign law, ordinance or regulation, including without
limitation the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and any rules and regulations
promulgated thereunder, or any order, judgment, injunction, decree or other
requirement of any court, arbitrator or governmental or regulatory body,
relating to the operation of clinical testing laboratories, labor and employment
practices, health and safety, zoning, pollution or protection of the environment
except for violations of or liabilities under any of the foregoing which would
not reasonably be likely to have a Material Adverse Effect on the Company or its
Subsidiaries taken as a whole.
(d) To the Knowledge of the Company, each product and product
candidate subject to the United States Food and Drug Administration (the "FDA")
jurisdiction under the Federal Food, Drug and Cosmetic Act ("FDCA"), the Public
Health Service Act ("PHS") or similar foreign Governmental Entity or Law that is
manufactured, tested, distributed, held, and/or marketed by the Company or any
of its Subsidiaries is being manufactured, tested, distributed, held and
marketed in compliance in all material respects with all applicable requirements
under the FDCA or such similar Law of any foreign jurisdiction including, but
not limited to, those relating to investigational use, premarket clearance, good
manufacturing practices, labeling, advertising, promotional activities, record
keeping, filing of reports and security.
(e) To the Knowledge of the Company, the Company has, prior to the
execution of this Agreement, provided to Parent copies of all documents in their
respective or any of its Subsidiaries' possession material to assessing
compliance with the FDCA and its implementing regulations and the PHS, 483s and
untitled letters, including, but not limited to, copies of (i) all warning
letters, notices of adverse findings and similar correspondence received in the
last two years, (ii) all audit reports performed during the last two years, and
(iii) any document concerning any significant oral or written communication
received from the FDA in the last two years.
(f) To the Knowledge of the Company, the Company and its
Subsidiaries are not, and have not been, in violation of the Federal
Anti-Kickback Act, any Federal conspiracy statutes, the Prescription Drug
Marketing Act, Federal False Claims Act, Federal ▇▇▇▇▇ Law or any other Federal
or state statute related to sales and marketing practices of pharmaceutical
manufacturers and others involved in the purchase and sale of pharmaceutical
products.
(g) To the Knowledge of the Company, the Company and its
Subsidiaries have at all times complied with their respective obligations to
report accurate pricing information for its pharmaceutical products to the
government and to pricing services relied upon by the government and other
payors for pharmaceutical products, including without limitation its obligation
to report accurate "Fees and Price" under the Medicaid Rebate Statute and
accurate Average Wholesale Price.
(h) To the Knowledge of the Company, neither the Company nor any of
its Subsidiaries has engaged in an unlawful or unauthorized practice of medicine
or other professionally licensed activities through any web sites sponsored or
operated, or formerly sponsored or operated, by the Company or any of its
Subsidiaries.
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3.9 TITLE TO PROPERTY. The Company and each of its Subsidiaries have all
assets, properties, rights and contracts necessary to permit the Company and its
Subsidiaries to conduct their business as it is currently being conducted,
except where the failure to have such assets, properties, rights and contracts
would not be reasonably likely to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole. The Company and each of its Subsidiaries
has good and marketable title to all of its properties, interests in properties
and assets, real and personal, reflected in the Company Balance Sheet (except
properties, interests in properties and assets sold or otherwise disposed of
since the Company Balance Sheet Date in the ordinary course of business
consistent with past practice), or with respect to leased properties and assets,
valid leasehold interests in, free and clear of all Liens, except (i) Liens for
current taxes not yet due and payable, (ii) such imperfections of title, Liens
and easements as do not and will not materially detract from or interfere with
the use or value of the properties subject thereto or affected thereby, or
otherwise materially impair business operations involving such properties and
(iii) Liens securing debt which are reflected on the Company Balance Sheet;
provided, however, that no representation is made in this section with respect
to infringement of third party Intellectual Property Rights. The property and
equipment of the Company and each of its Subsidiaries that are used in the
operations of business are (taken as a whole) in good operating condition and
repair, subject to normal wear and tear.
3.10 TECHNOLOGY AND INTELLECTUAL PROPERTY.
(a) DEFINITIONS. The following terms shall have the meanings set
forth below.
"COMPANY INTELLECTUAL PROPERTY RIGHTS" means all rights in the
Significant Company IP and the Company's Trade Secrets and all other material
intellectual property rights in the Company Technology, Company Copyrights and
Company Trademarks, other than third party Intellectual Property Rights.
"COMPANY TECHNOLOGY" means all Technology acquired by, or developed
by or for, the Company, and used in the business of the Company as currently
conducted.
"COMPANY TRADEMARKS" means all Trademarks owned by the Company and
used in the business of the Company as currently conducted.
"COMPUTER SOFTWARE" means all computer programs (whether in source
code or object code form), databases, compilations and documentation (including,
without limitation, user, operator, and training manuals) related to the
foregoing.
"COPYRIGHTS" means U.S. and foreign copyrights (whether registered
or unregistered).
"INTELLECTUAL PROPERTY RIGHTS" means all rights under Copyrights,
Patents, Trade Secrets, and Trademarks.
"LICENSE AGREEMENTS" means all agreements to which the Company is a
party or otherwise bound, under which the Company is granting or is granted any
Intellectual Property Right.
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"PATENTS" means all U.S. and foreign patents and patent
applications.
"SIGNIFICANT COMPANY IP" means all: (i) Patents, (ii) registered
Copyrights and Copyright applications, and (iii) registered Trademarks and
Trademark applications, in which the Company has an ownership interest.
"TECHNOLOGY" means all processes, formulae, algorithms, data,
models, plans, methodologies, theories, ideas, techniques, discoveries,
disclosures, inventions, Computer Software, information or know-how.
"TRADEMARKS" means all U.S. and foreign trademarks, service marks,
trade names, designs, logos, slogans, internet domain names and general
intangibles of like nature (whether registered or unregistered).
"TRADE SECRETS" means trade secrets as defined in the Uniform Trade
Secrets Act.
(b) Section 3.10(b) of the Company Disclosure Letter is a list of
the material Significant Company IP (including for each, the applicable
jurisdiction, registration number (or application number) and date issued (or
date filed)) and the Company or a Subsidiary thereof is listed in the records of
the appropriate U.S. or foreign agency as the sole owner of record for each such
item of Significant Company IP.
(c) To the Knowledge of the Company, the Company (i) owns all right,
title and interest in and to the material Significant Company IP and (ii) owns
all other material intellectual property rights in the Company Technology and
the Company's Copyrights, in each case free and clear of all Liens. To the
Knowledge of the Company, all employees or consultants who contributed to the
conception, discovery or development of any of the Company's Intellectual
Property Rights did so either (a) within the scope of his or her employment such
that, in accordance with applicable law, all Intellectual Property Rights
arising therefrom became the exclusive property of the Company, or (b) pursuant
to written agreements assigning all such Intellectual Property Rights to the
Company.
(d) The Significant Company IP is subsisting, in full force and
effect, and has not been cancelled, expired or abandoned, except where any such
cancellation, expiration or abandonment, or any other failure to maintain in
force, resulted from the exercise of sound business judgment by the Company. To
the Knowledge of the Company, the Company Intellectual Property Rights are valid
and enforceable.
(e) Section 3.10(e) of the Company Disclosure Letter sets forth a
true and complete list of all material License Agreements, other than end-user
license agreements for software applications that are commercially available.
(f) Except as set forth in the Company SEC Reports, (i) to the
Knowledge of the Company, the conduct of the business of the Company or its
Subsidiaries as currently conducted or planned to be conducted does not infringe
any third party Intellectual Property Rights and (ii) the Company has no
Knowledge that any third party is infringing, diluting or violating any Company
Intellectual Property Rights and the Company has not brought any claims, suits,
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arbitrations or other adversarial proceedings related to the foregoing against
any third party, except as set forth in the Company SEC Reports.
(g) Except as set forth in the Company SEC Reports, there is no
pending or, to the Knowledge of the Company, threatened claim, suit, arbitration
or other adversarial proceeding before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction: (i) involving the Company
Intellectual Property Rights; (ii) alleging that the conduct of the business of
the Company or any of its Subsidiaries infringes any Intellectual Property
Rights of a third party; or (iii) challenging the ownership, use, validity,
enforceability or registrability of any Company Intellectual Property Rights.
(h) Except as set forth in the Company SEC Reports, there are no
settlements, forbearances to ▇▇▇, consents, judgments, or orders, other than the
License Agreements, that: (i) restrict any Company Intellectual Property Rights
in any material respect or; (ii) restrict the conduct of the business of the
Company in any material respect; or (iii) grant third parties any material
rights under Company Intellectual Property Rights.
(i) To the Knowledge of the Company, no material Trade Secret of the
Company has been disclosed or authorized to be disclosed to any third party in
violation of confidentiality obligations to the Company, or its Subsidiaries
taken as a whole, and no party to a nondisclosure agreement with the Company is
in breach or default thereof. The Company has taken reasonable measures,
consistent with customary industry practice, to protect and preserve its Trade
Secrets.
(j) No current or former director, officer, consultant or employee
of the Company will, after giving effect to the Transactions, own any of the
Company Intellectual Property Rights.
(k) The execution of, the delivery of, the consummation of the
Transactions contemplated by, and the performance of the Company's obligations
under this Agreement will not result in any material loss or material impairment
of the Company Intellectual Property Rights or any material Intellectual
Property Rights licensed to the Company.
3.11 ENVIRONMENTAL MATTERS. To the Knowledge of the Company, (a) the
Company and its Subsidiaries are in compliance in all material respects with
Federal, state, local and foreign laws and regulations governing pollution or
protection of human health or the environment, including laws and regulations
governing emissions, discharges, releases or threatened releases of toxic or
hazardous substances, materials or wastes, petroleum and petroleum products,
asbestos or asbestos-containing materials, radioactive materials,
polychlorinated biphenyls, radon, or lead or lead-based paints or materials
("MATERIALS OF ENVIRONMENTAL CONCERN"), or otherwise governing the generation,
storage, containment (whether above ground or underground), disposal, transport
or handling of Materials of Environmental Concern (collectively, "ENVIRONMENTAL
LAWS"), and including compliance with any permits or other governmental
authorizations or the terms and conditions thereof; (b) neither the Company nor
any of its Subsidiaries has received any written communication or notice, from a
Governmental Authority, alleging any violation of or noncompliance with any
Environmental Laws by the Company or any of its Subsidiaries and there is no
pending or threatened written claim, action, investigation or notice
(collectively, "ENVIRONMENTAL CLAIMS"), by any third party
20
alleging liability for investigatory, cleanup or governmental response costs, or
natural resources or property damages, or personal injuries, attorney's fees or
penalties arising from (i) the presence, or release into the environment, of any
Materials of Environmental Concern at any location owned, leased or operated by
the Company or its Subsidiaries, or (ii) any violation, or alleged violation, of
any Environmental Law; and (c) neither the Company nor any of its Subsidiaries
has caused any "release" of a Material of Environmental Concern, as that term is
defined in the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 ET SEQ., in a reportable quantity on any real
property owned or leased by the Company or any of its Subsidiaries. To the
Knowledge of the Company, the Company has made available to Parent all material
environmental site assessments, reports, results of investigations or audits
that are in the possession of the Company regarding environmental matters
pertaining to the environmental condition of the business of the Company and its
Subsidiaries, or the compliance (or noncompliance) by the Company or its
Subsidiaries with any Environmental Laws.
3.12 TAXES.
(a) The Company and each of its Subsidiaries has timely
filed (or has had timely filed on its behalf) with the appropriate Tax
Authorities all material Tax Returns required to be filed by the Company and
each of its Subsidiaries, and such Tax Returns are complete in all material
respects.
(b) The Company and each of its Subsidiaries has paid, or
where payment is not yet due, has established an adequate accrual in accordance
with GAAP for the payment of, all material Taxes for all periods ending through
the date hereof. The Company and each of its Subsidiaries has deducted, withheld
or timely paid (or had deducted, withheld or timely paid on its behalf) to the
appropriate governmental authority all material amounts required to be deducted,
withheld or paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or any other third party.
(c) There are no Liens for Taxes upon any property or assets
of the Company or any of its Subsidiaries, except for Taxes not yet due or for
which adequate reserves (excluding any "deferred taxes" or similar items that
reflect timing differences between tax and financial accounting principals) have
been established in accordance with GAAP.
(d) No Federal, state, local or foreign Audits are presently
pending with regard to any Taxes or Tax Returns of the Company and its
Subsidiaries and to the Knowledge of the Company, no such Audit is threatened.
(e) There are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any of its
Subsidiaries, and no power of attorney granted by the Company or any of its
Subsidiaries with respect to any Taxes is currently in force.
(f) Neither the Company nor any of its Subsidiaries is a
party to any agreement providing for the allocation, indemnification, or sharing
of Taxes that shall remain in force following the Effective Time.
21
(g) Neither the Company nor any of its Subsidiaries is or
has been a U.S. real property holding company (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(h) Neither the Company nor any of its Subsidiaries has been
a member of any "affiliated group" (as defined in Section 1504(a) of the Code)
(other than a group the common parent of which was the Company) and neither the
Company nor any of its Subsidiaries is liable for the Taxes of another person
(other than the Company or any of its Subsidiaries) under Treas. Reg. 1.1502-6,
as a transferee or successor, by contract or otherwise, for any period.
(i) Neither the Company nor any of its Subsidiaries has
distributed stock of another corporation, or has had its stock distributed by
another corporation, in a transaction that was governed, or purported or
intended to be governed, in whole or in part, by Code Section 355 or 361.
(j) Neither the Company nor any of its Subsidiaries has
undergone, or will undergo prior to the Closing Date a change in its method of
accounting resulting in an adjustment to its taxable income or loss pursuant to
Section 481 of the Code.
(k) The United States Federal and state "net operating loss"
of the Company and its Subsidiaries through the date of the last filed
applicable Tax Return is set forth on Section 3.12(k) of the Company Disclosure
Letter.
(l) Within ten (10) business days of the date hereof, the
Company will make available to Parent: (i) complete and correct copies of all
United States Federal and state income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company or any
of its Subsidiaries with respect to the prior four (4) taxable years filed; and
(ii) a written schedule of foreign countries in which the Company and its
Subsidiaries has or has had since 1998 a permanent establishment, as defined in
any applicable Tax treaty or convention between the United States and such
foreign country.
(m) "AUDIT" means any audit, assessment, or other
examination relating to Taxes by any Tax Authority or any judicial or
administrative proceedings relating to Taxes. "TAX" or "TAXES" means all
Federal, state, local, and foreign taxes (including without limitation any
provincial income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, alternative or add-on minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty or governmental fee), and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto, imposed by any Tax Authority. "TAX AUTHORITY" means the IRS and any
other domestic or foreign governmental authority responsible for the
administration of any Taxes. "TAX RETURNS" mean all Federal, state, local, and
foreign tax returns, declarations, statements, reports, schedules, forms, and
information returns and any amendments thereto.
3.13 EMPLOYEE BENEFIT PLANS.
(a) Section 3.13(a) of the Company Disclosure Letter
contains a list of the material employment, bonus, deferred compensation,
incentive compensation, stock purchase, stock option, stock appreciation right
or other stock-based incentive, severance,
22
change-in-control, or termination pay, hospitalization or other medical,
disability, life or other insurance, supplemental unemployment benefits,
profit-sharing, welfare, pension, or retirement plan, program, agreement or
arrangement (whether or not reduced to writing) and each other employee benefit
plan, program, agreement or arrangement which is maintained by the Company or
any of its Subsidiaries, or by any trade or business, whether or not
incorporated (an "ERISA AFFILIATE"), that together with the Company or any of
its Subsidiaries would be deemed a "single employer" within the meaning of
Section 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for the benefit of any current or former employee of, or
consultant or advisor to, the Company or any of its Subsidiaries (the "COMPANY
EMPLOYEE PLANS").
(b) The Company has made available to Parent a copy of each
of the Company Employee Plans that has been reduced to writing, and a completed
and accurate summary of all material terms of each Company Employee Plan that
has not been reduced to writing, and related plan documents, together with all
amendments, (including trust documents, insurance policies or contracts,
employee booklets, summary plan descriptions and other authorizing documents,
and any material employee communications relating thereto) and has, with respect
to each Company Employee Plan which is subject to ERISA reporting requirements,
made available copies of the Form 5500 reports filed for the last three (3) plan
years. Any Company Employee Plan intended to be qualified under Section 401(a)
or 501(c)(9) of the Code has a currently valid favorable determination letter
from the IRS as to its qualified status or is within the remedial amendment
period for making any changes or has been established under a standardized
prototype plan for which a currently valid IRS opinion letter has been obtained
by the plan sponsor. The Company has also made available to Parent the most
recent IRS determination, notification, advisory, or opinion letter issued with
respect to each such Company Employee Plan. Each Company Employee Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and
each trust that is intended to be exempt under Section 501(a)(9) of the Code is
so exempt. All Form 5500 reports required to be filed have been timely filed and
to the Company's Knowledge, there are no unresolved disputes related thereto.
(c) There has been no "prohibited transaction," as such term
is defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, except "prohibited transactions" that would not
result in a material liability of the Company under the Code. Each Company
Employee Plan has been administered in all material respects in accordance with
its terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code). The Company and
each of its Subsidiaries or ERISA Affiliates have timely and properly performed
all obligations required to be performed by them under, are not in any material
respect in default under or violation of, and have no Knowledge of any material
default or violation by any other party to, any of the Company Employee Plans.
All contributions and premiums required to be made or paid by the Company or any
of its Subsidiaries to any Company Employee Plan have been made or paid on or
before their due dates. No suit, administrative proceeding, action or other
litigation has been brought, or to the Knowledge of the Company is threatened,
against or with respect to any such Company Employee Plan, including any audit
or inquiry by the Internal Revenue Service (the "IRS") or United States
Department of Labor other than requests for payments in the ordinary course or
requests for qualified domestic relations orders. No Lien has been imposed under
23
Section 412(n) of the Code or Section 302(f) of ERISA on the assets of the
Company or any of its Subsidiaries.
(d) No Company Employee Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of the Company, its Subsidiaries or any
ERISA Affiliate after retirement or other termination of service (other than (i)
coverage mandated by applicable laws, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3(2) of
ERISA or (iii) deferred compensation benefits accrued as liabilities on the
books of the Company, any of its Subsidiaries or an ERISA Affiliate).
(e) Neither the Company nor any of its Subsidiaries or any
ERISA Affiliate currently maintains, sponsors, participates in or contributes
to, or has ever maintained, sponsored, participated in or contributed to any
pension plan (within the meaning of Section 3(2) of ERISA) which is subject to
Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of
the Code.
(f) Neither the Company nor any of its Subsidiaries or any
ERISA Affiliate is, or has ever been, a party to or contributes to or has ever
been required to contribute to any "multi-employer plan" as defined in Section
3(37) of ERISA or any plan that has two or more contributing sponsors at least
two of whom are not under common control, within the meaning of Section 4063(a)
of ERISA.
(g) Neither the Company nor any of its Subsidiaries or any
ERISA Affiliate maintains, sponsors, participates in or contributes to any (i)
Multiple Employer Welfare Arrangements, (ii) any Voluntary Employee Beneficiary
Associations within the meaning of Section 501(c)(9) of the Code or (iii) any
welfare benefit funds within the meaning of Section 419(e) of the Code.
(h) Except for restrictions imposed by applicable law and
contractual undertakings set forth in the Company Employee Plan documents to the
extent they mirror such restrictions, each United States Company Employee Plan
and, to the Knowledge of the Company, each foreign Company Employee Plan may be
terminated or amended at any time without the consent of any participant, former
participant, or beneficiary. Neither the Company nor any of its Subsidiaries has
made any payments, or has been or is a party to any agreement, contract,
arrangement or plan that could result in it making payments, that have resulted
or would result, separately or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Code Section 280G or in the imposition
of an excise Tax under Code Section 4999 (or any corresponding provisions of
state, local or foreign Tax law) or that were not or would not be deductible
under Code Sections 162 or 404.
(i) Except as provided in this Agreement, no employee of,
consultant to, or other provider of services to the Company or any of its ERISA
Affiliates will be entitled to any additional benefit or the acceleration of the
payment or vesting of any benefit under any Company Employee Plan by reason of
the transactions contemplated by this Agreement.
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(j) Neither the Company nor any of its Subsidiaries has any
"leased employees" within the meaning of Section 414(m) of the Code or any
independent contractors or other individuals who provide employee-type services
but who are not recognized by the Company as employees of the Company.
3.14 LABOR MATTERS. Each of the Company and its Subsidiaries is in
compliance in all material respects with all currently applicable laws and
regulations respecting, terms and conditions of employment, wages, hours and
occupational safety and health and employment practices, and, to the Knowledge
of the Company, is not engaged in any unfair labor practice. As of the date
hereof, neither the Company nor any of its Subsidiaries has received written
notice of any charge or complaint against the Company or any of its Subsidiaries
pending before the Equal Employment Opportunity Commission, the National Labor
Relations Board, or any other Governmental Entity regarding an unlawful
employment practice. To the Knowledge of the Company as of the date hereof, no
Governmental Entity responsible for the enforcement of labor or employment laws
intends to conduct an investigation with respect to or relating to the Company
or any of its Subsidiaries and no such investigation is in progress. Each of the
Company and its Subsidiaries has in all material respects withheld all amounts
required by law or by agreement to be withheld from the wages, salaries, and
other payments to employees and, to the Knowledge of the Company, is not liable
for any material arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing. To the Knowledge of the Company, as of the
date hereof, there are no complaints, lawsuits, arbitrations or other actions
pending or threatened in writing between the Company or any of its Subsidiaries
and any of their respective employees or former employees. Neither the Company
nor any of its Subsidiaries is a party to any collective bargaining agreement or
other labor union contract nor does the Company know of any activities or
proceedings of any labor union to organize any such employees. There is no labor
strike, slowdown or stoppage actually pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries.
The Company and each of its Subsidiaries are and have been in substantial
compliance with all notice and other requirements of the Worker Adjustment and
Retaining Notification Act (the "WARN ACT") and any similar state or local
statute. No employee of the Company or any Subsidiary has suffered an
"employment loss" (as defined in the WARN Act) during the ninety (90)-day period
prior to the execution of this Agreement.
3.15 INSURANCE. Section 3.15 of the Company Disclosure Letter contains a
complete list of the material policies and contracts of insurance maintained by
the Company and each of its Subsidiaries. There is no material claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable to date under all such policies and bonds have been paid and the
Company and each of its Subsidiaries is otherwise in compliance in all material
respects with the terms of such policies and bonds. The Company has not been
notified of any threatened termination of, or material premium increase with
respect to, any of such policies.
3.16 COMPLIANCE WITH LAWS. Except as disclosed in the Company SEC
Reports, each of the Company and its Subsidiaries has complied in all material
respects with, is not in violation of, and has not received any notices of
violation with respect to, any material federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business.
25
3.17 BROKERS' AND FINDERS' FEES. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finders' fee or any other commission or similar fee from the Company in
connection with any of the Transactions except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc.,
whose fees and expenses will be paid by the Company in accordance with its
agreement with such firm. The Company has previously provided Parent with a copy
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc.'s engagement letter.
3.18 STATE TAKEOVER STATUTES. The action taken by the Company Board of
Directors constitutes approval of the Transactions by the Company Board of
Directors under Section 203 of the DGCL, and, no "fair price," "control share
acquisition," "business combination" or other similar state takeover statute is
applicable to the Transactions or the execution, delivery or performance of this
Agreement.
3.19 BOARD APPROVAL. The Company's Board of Directors, at a meeting duly
called and held at which all directors were present, has (i) duly and validly
approved and taken all corporate action required to be taken by the Company
Board of Directors to authorize this Agreement and the consummation of the
Transactions, (ii) resolved that the Transactions are advisable and in the best
interests of the stockholders of the Company and that the consideration to be
paid for each Share in the Offer and the Merger is fair to the holders of such
Shares, (iii) subject to the other terms and conditions of this Agreement,
resolved to recommend that the stockholders of the Company accept the Offer,
tender their Shares to the Purchaser pursuant to the Offer, and approve and
adopt this Agreement and each of the Transactions, and (iv) resolved that the
foregoing resolutions are sufficient to prevent Section 11(a) of any Indemnity
Agreement (as defined in Section 3.19) from becoming applicable to the Agreement
or the Transactions and that the creation of any trust upon the request of any
Agent (as defined in the Indemnity Agreement) pursuant to Section 11(b) of any
Indemnity Agreement would not be in the best interests of the Company and that
no such trust has been created, and none of the aforesaid actions by the Company
Board of Directors has been amended, rescinded or modified
3.20 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock is the only vote of the holders
of any of the Company Capital Stock necessary to approve this Agreement and the
Transactions and is only necessary in the event that the number of shares of
Company Common Stock tendered pursuant to the Offer represents less than ninety
percent (90%) of the issued and outstanding shares of Company Common Stock.
3.21 MATERIAL CONTRACTS AND OTHER AGREEMENTS.
(a) Each of the Company and its Subsidiaries has in all material
respects performed the obligations required to be performed by it (except for
past breaches which have been cured or waived or for which the Company and its
Subsidiaries have no continuing obligations) and is entitled to all benefits
under, and to its Knowledge, is not alleged to be in default in respect of, any
Material Contract except for such non-performance or default as would not
reasonably be likely to have a Material Adverse Effect. Each of the Material
Contracts is valid, subsisting in full force and effect, binding upon the
Company or its applicable Subsidiary, and, to the Knowledge of the Company,
binding upon the other parties thereto in accordance with their terms, and the
Company and its Subsidiaries there exists no material default or event
26
of default or material event, occurrence, condition or act, with respect to the
Company or any of its Subsidiaries or, to the Knowledge of the Company with
respect to the other contracting party, which, with the giving of notice, the
lapse of time or the happening of any other event or conditions, would
reasonably be expected to become a default or event of default under the terms
of any Material Contract except for such defects, defaults, events, occurrences,
conditions or acts or other events as would not reasonably be likely to have a
Material Adverse Effect. Section 3.21 of the Company Disclosure Letter contains
a list of any person who is party to an Indemnity Agreement with the Company
entered into during the two (2) years preceding the date hereof in substantially
the form of Exhibit 10.2 of the Company's Form 10-K for the fiscal year ended
December 31, 2002 (each an "INDEMNITY AGREEMENT") or similar agreement.
(b) Other than those contracts disclosed in the Company SEC Reports
filed prior to the date of this Agreement, neither the Company nor any of its
Subsidiaries is a party to any agreement that materially limits or restricts the
Company, any of its Subsidiaries or any of their affiliates or successors in
competing or engaging in any line of business, in any therapeutic area, in any
geographic area or with any person.
(c) Other than those contracts disclosed in the Company SEC Reports
filed prior to the date of this Agreement, neither the Company nor any of its
Subsidiaries is a party to any agreement involving a personal loan to a director
or officer;
(d) Neither the Company nor any of its Subsidiaries is a party to
any agreement obligating the Company to file a registration statement under the
Securities Act which filing has not yet been made.
(e) To the Knowledge of the Company, no executive officer or
director of the Company has (whether directly or indirectly through another
entity in which such person has a material interest, other than as the holder of
less than 2% of a class of securities of a publicly traded company) any material
interest in any property or assets of the Company (except as a stockholder) or
any of its Subsidiaries, any competitor, customer, supplier or agent of the
Company or any of its Subsidiaries or any person that is currently a party to
any Material Contract or agreement with the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries is a party to
any interest rate, equity or other swap or derivative instrument.
3.22 INFORMATION IN THE PROXY STATEMENT. The Proxy Statement if any (and
any amendment thereof and supplement thereto) at the date mailed to the
Company's stockholders and at the time of any meeting of Company stockholders to
be held in connection with the Merger, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or Purchaser expressly for
inclusion in the Proxy Statement. The Proxy Statement, as to information
supplied by the Company for inclusion therein, will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
27
3.23 INFORMATION IN THE OFFER DOCUMENTS AND THE SCHEDULE 14D-9. The
information supplied by the Company expressly for inclusion or incorporation by
reference in the Offer Documents or the Schedule 14D-9 will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's stockholders, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that the Company makes no representation or
warranty with respect to statements made in the Schedule 14D-9 based on
information furnished by Parent or Purchaser expressly for inclusion therein.
3.24 OPINION OF FINANCIAL ADVISOR. The Company has received the written
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc. dated the date hereof, to the effect that,
as of such date, the consideration to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders from a
financial point of view, a signed copy of which has been delivered to the
Company.
3.25 RIGHTS PLAN. The Company Board of Directors has taken such action as
is necessary with respect to the Company Rights Agreement such that the
execution and delivery of this Agreement and the consummation of the
Transactions will not (i) result in Parent becoming an "Acquiring Person" under
the Rights Agreement, or (ii) result in the grant of any rights to any person
under the Rights Agreement or enable or require the preferred stock purchase
rights under the Rights Agreement to be exercised, distributed or triggered.
3.26 NO DEFAULT. The business of the Company and each of its Subsidiaries
has not been and is not being conducted in default or violation of any term,
condition or provision of (i) its respective certificate of incorporation or
bylaws or similar organizational documents, or (ii) any Federal, state, local or
foreign law, statute, regulation, rule, ordinance, judgment, decree, order,
writ, injunction, concession, grant, franchise, permit or license or other
governmental authorization or approval applicable to the Company or any of its
Subsidiaries or relating to any of the property owned, leased or used by them,
or applicable to their business, excluding, with respect to clause (ii),
defaults or violations that, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or materially impair the ability of the Company to
consummate the Transactions. No investigation or review by any Governmental
Entity or other entity with respect to the Company or any of its Subsidiaries is
pending or, to the Knowledge of the Company, threatened, nor has any
Governmental Entity or other entity indicated an intention to conduct such an
investigation or review, other than those that individually or in the aggregate
would not be reasonably likely to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole.
3.27 PRODUCT LIABILITY. There are not presently pending or, to the
Knowledge of the Company, threatened any civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged defect
in design, manufacture, materials or workmanship, including
28
any failure to warn or alleged breach of express or implied warranty or
representation, relating to any product manufactured, distributed or sold by or
on behalf of the Company and its Subsidiaries, which if adversely determined,
would or would not be reasonably likely to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
3.28 COMMERCIAL RELATIONSHIPS. Since the Company Balance Sheet Date, none
of the Company's or its Subsidiaries' material suppliers, collaborators,
distributors, manufacturers, licensors and licensees has canceled or otherwise
terminated its relationship with the Company or any of its Subsidiaries or
altered its relationship with the Company or any of its Subsidiaries, except
where such cancellation or termination or alteration would not be reasonably
likely to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole. Since the Balance Sheet Date, to the Knowledge of the Company,
the Company has not received any written threat or notice from any such entity,
to terminate, cancel or otherwise materially modify its relationship with the
Company or any of its Subsidiaries, except where such cancellation, termination
or modification would not be reasonably likely to have a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole.
3.29 THERAPEUTIC HUMAN POLYCLONALS, INC.. To the Company's Knowledge,
except as set forth in the disclosure schedule to the Therapeutic Human
Polyclonals, Inc., Series A-2 and Series B Preferred Stock Purchase Agreement,
dated November 8, 2002, by and among Therapeutic Human Polyclonals, Inc.,
SangStat Medical Corporation and Research Corporation Technologies, Inc. (the
"THP AGREEMENT") as of the date hereof: (i) THP owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
necessary for its business as conducted; (ii) THP has all franchises, permits,
licenses and any similar governmental or quasi-governmental authority necessary
for the conduct of its business as conducted, the lack of which could materially
and adversely affect the business properties, prospects or financial condition
of THP; and (iii) THP is, and has at all times since its inception been, in
compliance with all applicable laws, except where a failure to comply with such
laws has not had and is not reasonably expected to have, a Material Adverse
Effect on THP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company
as follows:
4.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Each of Parent and Purchaser has the
corporate power to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on such party. Neither Parent nor Purchaser is in
violation of any of the provisions of its Articles of Organization or Bylaws.
29
4.2 AUTHORITY; NONCONTRAVENTION. Each of Parent and Purchaser has all
requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement and
the consummation of the Transactions have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser. This Agreement has been
duly executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes the valid and binding obligation of the other parties
hereto, constitutes the valid and binding obligation of each of Parent and
Purchaser enforceable against each of them in accordance with its terms, except
to the extent that enforceability may be limited by the effect, if any, of (i)
any applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally, and (ii) general
principles of equity, regardless of whether such enforceability is considered in
a proceeding at law or in equity. The execution and delivery of this Agreement
does not, and the consummation of the Transactions will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under any provision of the
Articles of Organization or Bylaws of Parent or Purchaser. Except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) any filing
pursuant to the DGCL, (iii) the filing or deemed filing with the SEC and/or
Nasdaq of (A) the Schedule TO, (B) the Proxy Statement, if stockholder approval
is required by law and (C) such reports under Section 13(a), 13(d) and Section
16 of the Exchange Act as may be required in connection with this Agreement and
the Transactions, (iv) such filings and approvals as may be required by any
applicable state securities, blue sky or takeover laws, (v) filings, clearances,
permits, authorizations, consents and approvals as may be required under the HSR
Act and any comparable provisions under any applicable pre-merger notification
laws or regulations of foreign jurisdictions, and (vi) such other consents,
authorizations, filings, approvals and registrations which are obtained prior to
Closing or if not obtained or made would not be material to Parent or Purchaser
or have a material effect on the ability of the parties hereto to consummate the
Merger, no notice to, filing with, and no permit, authorization, consent or
approval of, any Governmental Entity or any private third party is necessary for
the consummation by Parent and Purchaser of the Transactions.
4.3 INFORMATION IN THE OFFER DOCUMENTS. The information supplied by
either of Parent or Purchaser expressly for inclusion or incorporation by
reference in the Offer Documents or the Schedule TO will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
Schedule TO will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's stockholders, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that neither of Parent or Purchaser makes any
representation or warranty with respect to statements made in the Schedule TO
based on information furnished by the Company expressly for inclusion therein.
4.4 INFORMATION IN THE PROXY STATEMENT. The Proxy Statement, if any (and
any amendment thereof and supplement thereto), at the date mailed to the
Company's stockholders and at the time of any meeting of Company stockholders to
be held in connection with the
30
Merger, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by either of Parent
or Purchaser other than with respect to statements made therein based on
information supplied by the Company expressly for inclusion in the Proxy
Statement. The Proxy Statement, as to information supplied by either of Parent
or Purchaser for inclusion therein, will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
4.5 FINANCING. Purchaser has, and will have available to it upon the
consummation of the Offer, sufficient funds to consummate the Transactions
contemplated by this Agreement, including payment in full for all Shares validly
tendered into the Offer or outstanding at the Effective Time (and all related
fees and expenses), subject to the terms and conditions of the Offer and this
Agreement.
4.6 OWNERSHIP OF COMPANY STOCK. On the date hereof, Parent and Purchaser
own no shares of Company Common Stock, and (other than as specifically provided
herein) own no additional rights to purchase Company Common Stock through any
option from any other person.
4.7 LITIGATION. Except as set forth in the reports and documents
required to be filed by Parent with the SEC since January 1, 2003, there is no
judgment, decree or order against Parent or Purchaser, or any of their
respective subsidiaries or, to the knowledge of Parent or Purchaser, any of
their directors or officers (in their capacities as such), that would reasonably
be expected to prevent, enjoin or materially alter or delay any of the
Transactions.
4.8 BROKERS' AND FINDERS' FEES. No agent, broker, investment banker,
financial advisor or other firm or person other than Credit Suisse First Boston
LLC is or will be entitled to any brokers' or finder's fee or any other
commission or similar fee from Parent in connection with any of the transactions
contemplated by this Agreement.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing and except as otherwise expressly provided in this Agreement or in
Section 5.1 of the Company Disclosure Letter, carry on its business in the
usual, regular and ordinary course, substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable laws
and regulations, pay its debts and Taxes when due subject to good faith disputes
over such debts, and pay or perform other material obligations when due.
Without limiting the generality of the foregoing, without the prior
written consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of
31
the termination of this Agreement pursuant to its terms or the Effective Time,
the Company shall not do any of the following and shall not permit its
subsidiaries to do any of the following, except as may be expressly contemplated
or specifically permitted by this Agreement or as set forth in Section 5.1 of
the Company Disclosure Letter:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than the Merger);
(c) Grant any severance or termination pay to any officer, director
or employee except pursuant to written agreements in effect, or policies
existing, on the date hereof or adopt any new or amend any existing severance,
retention or change in control plan;
(d) Transfer or license to any person or entity or otherwise extend,
amend, modify, permit to lapse or fail to preserve any of the Company
Intellectual Property Rights material to the Company's business as presently
conducted or planned to be conducted, other than nonexclusive licenses in the
ordinary course of business consistent with past practice or disclose to any
person who has not entered into a confidentiality agreement any Trade Secrets;
(e) Declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of the Company or its subsidiaries, or any
instrument or security that consists of a right to acquire such shares, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(g) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into or exchangeable
for shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into
exchangeable for shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than the issuance, delivery and/or sale of shares
of the Company Common Stock pursuant to the exercise of stock options or
warrants therefor outstanding as of the date hereof in accordance with their
present terms;
(h) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(i) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any
32
business or any corporation, partnership, association or other business
organization or division thereof; or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business of
the Company; or enter into or amend any material joint ventures, strategic
partnerships or alliances;
(j) Sell, transfer, lease, license, mortgage, pledge, encumber or
otherwise dispose of any properties or assets which are material, individually
or in the aggregate, to the business of the Company;
(k) Incur or assume any indebtedness for borrowed money or guarantee
or otherwise become liable or responsible for (whether directly, contingently or
otherwise) any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of the Company other than (i) in connection with the financing of
ordinary course trade payables consistent with past practice or (ii) pursuant to
existing credit facilities as in effect on the date hereof in the ordinary
course of business;
(l) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into or amend any employment
contract, consulting agreement or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice and as may be required by applicable
Law), pay any special bonus or special remuneration to any director, officer or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers or employees
other than to non-officer employees in the ordinary course of business
consistent with past practice, or make any loans to any of its directors,
officers or employees, agents or consultants, or make any change in its existing
borrowing or lending arrangements for or on behalf of any of such persons
pursuant to an employee benefit plan or otherwise;
(m) Pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any director or officer or pay or agree to pay
or make any accrual or arrangement for payment to any officers or directors of
the Company or any of its subsidiaries of any amount relating to unused vacation
days; adopt or pay, grant, issue, accelerate or accrue salary or other payments
or benefits pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any Company or Company subsidiary director
or officer, whether past or present, or amend in any material respect any such
existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(n) Modify, amend or terminate any Material Contract or agreement to
which the Company or any subsidiary thereof is a party, including any joint
venture agreement, or cancel any material debts or waive, release or assign any
material rights or claims thereunder;
(o) Pay, discharge or satisfy any claims, liabilities or obligations
(whether absolute, accrued, contingent or otherwise), other than the payment,
discharge or satisfaction of
33
any such claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its subsidiaries;
(p) Enter into any leases (including any amendments, extensions or
replacements of leases existing as of the date hereof) or any purchase,
acquisition licensing, distribution, collaboration, sponsorship, advertising or
other similar contracts, agreements, or obligations material to the Company;
(q) Permit any material insurance policy naming it as a beneficiary
or a loss payee to be cancelled or terminated;
(r) Revalue any of its assets or make any change in accounting
methods, principles or practices, except as required by GAAP;
(s) Make or change any election relating to Taxes, adopt or change
any accounting method relating to Taxes, enter into any closing agreement
relating to Taxes, file any amended Tax Return, settle or consent to any claim
or assessment relating to Taxes, incur any obligation to make any payment of, or
in respect of, any Taxes, or agree to extend or waive the statutory period of
limitations for the assessment or collection of Taxes; or
(t) Fail to notify and consult with Parent promptly (i) after
receipt of any material communication from the FDA and before giving any
material submission to the FDA, and (ii) prior to making any material change to
a study protocol, the addition of new trials, or a material change to the
development timeline for any of its product candidates or programs;
(u) Authorize any single capital expenditure in excess of $200,000
or capital expenditure which in the aggregate exceed $500,000;
(v) Make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly-owned subsidiaries of the
Company or customary advances to employees for travel and business expenses in
the ordinary course of business);
(w) Settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions contemplated
hereby;
(x) Effectuate a "plant closing" or "mass layoff," as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988, or
effectuate any similar action under any foreign Law;
(y) Modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement or
non-competition Agreement to which Company is a party;
(z) Commence any litigation or arbitration other than in accordance
with past practice or settle any litigation or arbitration for money damages or
other relief in excess of $100,000, or if as part of such settlement the Company
or any of its subsidiaries would agree to any restrictions on its operations, or
which relates to this Agreement or the Transactions; or
34
(aa) Enter into any written agreement, contract, commitment or
arrangement to do any of the foregoing, or authorize, recommend, propose or
agree, in writing or otherwise, or announce an intention to do any of the
foregoing.
5.2 NO SOLICITATION.
(a) Each of the Company and its Representatives (as defined below)
has ceased and caused to be terminated all existing solicitations, initiations,
encouragements, discussions, negotiations and communications with any persons or
entities with respect to any offer or proposal or potential offer or proposal
relating to any transaction or proposed transaction or series of related
transactions, other than the Transactions, involving: (A) any acquisition or
purchase from the Company by any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) of more than
a twenty percent (20%) interest in the total outstanding voting securities of
the Company or any of its Subsidiaries or any tender offer or exchange offer
that if consummated would result in any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
beneficially owning twenty percent (20%) or more of the total outstanding voting
securities of the Company or any of its Subsidiaries or any merger, (B) any
consolidation, business combination, merger or similar transaction involving the
Company; (C) any sale, lease (other than in the ordinary course of business),
exchange, transfer, license (other than in the ordinary course of business),
acquisition or disposition of assets of the Company or its Subsidiaries
(including for this purpose the outstanding equity securities of the Company's
Subsidiaries) for consideration equal to twenty percent (20%) or more of the
fair market value of all of the outstanding shares of Company Common Stock on
the date prior to the date hereof; or (D) any recapitalization, restructuring,
liquidation or dissolution of the Company (each of clauses (A)-(D), an
"ACQUISITION PROPOSAL"). Except as provided in Section 5.2(b) or (c), from the
date of this Agreement until the earlier of termination of this Agreement or the
Effective Time, the Company shall not and shall not authorize or permit its
officers, directors, employees, investment bankers, attorneys, accountants or
other agents or those of its subsidiaries (collectively, "REPRESENTATIVES") to
directly or indirectly (i) initiate, solicit or knowingly encourage, or
knowingly take any action to facilitate the making of, any offer or proposal
which constitutes or is reasonably likely to lead to any Acquisition Proposal,
(ii) enter into any agreement with respect to any Acquisition Proposal, or (iii)
engage in negotiations or discussions with, or provide any information or data
to, any person (other than Parent or any of its affiliates or representatives)
relating to any Acquisition Proposal or grant any waiver or release under any
standstill or other agreement. Notwithstanding the foregoing, nothing contained
in this Section 5.2 or any other provision hereof shall prohibit the Company or
the Company Board of Directors from (x) taking and disclosing to the Company's
stockholders its position with respect to any tender or exchange offer by a
third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act, or (y) making such disclosure to the Company's stockholders as in the good
faith judgment of the Company Board of Directors, after receipt of advice from
outside legal counsel, is required under applicable law and that the failure to
make such disclosure is reasonably likely to cause the Company Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to
35
any person pursuant to a confidentiality agreement with terms no less favorable
to the Company than those contained in the confidentiality agreement, dated June
12, 2003 entered into between Parent and the Company (as amended by Section
9.5(b) of this Agreement, the "CONFIDENTIALITY AGREEMENT"), and may negotiate
and participate in discussions and negotiations with such person concerning an
Acquisition Proposal if, but only if, (x) such Acquisition Proposal provides for
consideration to be received by the holders of all, but not less than all, of
the issued and outstanding Shares (a "TAKEOVER PROPOSAL"); (y) such person has,
in the absence of any violation of this Section 5.2 by the Company, submitted a
bona fide written proposal to the Company relating to any such Takeover Proposal
which the Board of Directors determines in good faith involves consideration to
the holders of the Shares that is superior to the consideration offered pursuant
to the Offer, otherwise represents a superior transaction to the Offer and the
Merger, is reasonably capable of being consummated by the Termination Date (as
defined in Section 8.1(b)) and which is not conditioned upon obtaining
additional financing, or any regulatory approvals beyond or in addition to those
regulatory approvals specifically referenced in Section 7.1(d), and (z) in the
good faith opinion of the Company Board of Directors, after receipt of advice
from outside legal counsel, providing such information or access or engaging in
such discussions or negotiations is in the best interests of the Company and its
stockholders and the failure to provide such information or access or to engage
in such discussions or negotiations is reasonably likely to cause the Company
Board of Directors to violate its fiduciary duties to the Company's stockholders
(a Takeover Proposal which satisfies clauses (x), (y) and (z) being referred to
herein as a "SUPERIOR PROPOSAL"). The Company shall promptly (and in any case
within 24 hours) notify Parent (i) of such Superior Proposal, which notice shall
include a copy of such Superior Proposal and (ii) upon receipt of any inquiries,
proposals or offers received by, any request for information from, or any
discussions or negotiations sought to be initiated or continued with, either the
Company, or of its Subsidiaries or Representatives concerning an Acquisition
Proposal or that would reasonably be expected to lead to an Acquisition Proposal
and disclose the identity of the other party and the material terms of such
inquiry, offer, proposal or request and, in the case of written materials,
provide copies of such materials. The Company will keep Parent informed on a
reasonably prompt basis (and, in any case, within 24 hours of any significant
development) of the status and details (including amendments and proposed
amendments) of any such Superior Proposal or other inquiry, offer, proposal or
request. The Company shall promptly, following a determination by the Company
Board of Directors that a Takeover Proposal is a Superior Proposal, notify
Parent of such determination.
(c) Except as set forth herein, neither the Company Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to the Transactions contemplated by this
Agreement to Parent or Purchaser, the approval or recommendation by the Company
Board of Directors or any such committee of the Offer, this Agreement or the
Merger, (ii) approve or recommend or propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, prior to the time of
acceptance for payment of Shares in the Offer, the Company Board of Directors
may (subject to the terms of this and the following two sentences) withdraw or
modify its approval or recommendation of the Offer, this Agreement or the
Merger, or recommend a Superior Proposal, in either case at any time after (x),
it has concluded in good faith, after receipt of advice from outside legal
counsel, that the failure to take such action is reasonably likely to result in
a breach of its fiduciary duties to the Company's stockholders and (y) the fifth
(5th) business day following the Company's delivery to Parent of
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written notice advising Parent that the Company Board of Directors has received
a Superior Proposal (which notice shall include a copy of such Superior
Proposal) and identify the Person making such Superior Proposal and advising
Parent that the Company intends to withdraw or modify its recommendation of the
Offer, this Agreement or the Merger or recommend a Superior Proposal (specifying
which course of action the Company intends to take) (a "SUBSEQUENT
DETERMINATION"). After providing such notice, the Company shall provide to
Parent two (2) business days from the date of such notice to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with its original recommendation to stockholders without
making a Subsequent Determination; provided, however, that any such adjustments
shall be at the discretion of the parties at such time. Any such withdrawal,
modification or change of the recommendation of the Company Board of Directors,
or recommendation or proposed recommendation of any Superior Proposal shall not
change the approval of the Company Board of Directors for purposes of causing
any state takeover statute or other state law to be inapplicable to the
Transactions contemplated by this Agreement, including each of the Offer and the
Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT. If required by the Exchange Act, the Company shall
prepare and file with the SEC, as promptly as practicable after the consummation
of the Offer, and shall use its reasonable efforts to respond promptly to any
comments made by the SEC, and promptly thereafter shall mail to stockholders,
the Proxy Statement. In such event, subject to the terms and conditions of this
Agreement, the Proxy Statement shall contain the recommendation of the Company
Board of Directors in favor of the Merger.
6.2 MEETING OF STOCKHOLDERS OF THE COMPANY. In connection with the
Special Meeting, if any, the Company shall, subject to the terms and conditions
of this Agreement, use its reasonable efforts to solicit from stockholders of
the Company proxies in favor of the Merger, and shall take all other action
necessary or, in the reasonable opinion of Purchaser, advisable to secure any
vote or consent of such stockholders required by the DGCL and the Company's
Certificate of Incorporation to effect the Merger. Purchaser agrees that it
shall vote, or cause to be voted, in favor of the Merger all Shares directly or
indirectly beneficially owned by it.
6.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that the Company and Parent have
previously executed the Confidentiality Agreement. Unless otherwise required by
law or regulation or pursuant to the terms and provisions of the Confidentiality
Agreement, Parent and the Purchaser will hold any information which is
non-public in confidence in accordance with the terms of the Confidentiality
Agreement and, in the event this Agreement is terminated for any reason, Parent
or the Purchaser shall promptly return or destroy such information in accordance
with the Confidentiality Agreement.
(b) The Company will afford Parent and its Representatives
reasonable access during normal business hours to the properties, books,
analysis, projections, plans, systems,
37
contracts, commitments, records, personnel offices and other facilities of the
Company and its subsidiaries during the period prior to the Effective Time to
obtain information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of the
Company and use commercially reasonable efforts to make available at reasonable
times during normal business hours to Parent and its Representatives, the
appropriate individuals (including management personnel, attorneys, accountants
and other professionals) for discussion of the Company's business, properties,
prospects and personnel as Parent may reasonably request.
6.4 PUBLIC DISCLOSURE. The initial press release concerning the Offer
and the Merger shall be a joint press release and, thereafter, so long as this
Agreement is in effect, neither Parent, Purchaser nor the Company will
disseminate any press release or other announcement concerning the Merger, the
Offer or this Agreement or the other Transactions contemplated by this Agreement
to any third party, except as may be required by law or by any listing agreement
with the Nasdaq National Market, without the prior consent of each of the other
parties hereto, which consent shall not be unreasonably withheld. The parties
have agreed to the text of the joint press release announcing the execution of
this Agreement. Notwithstanding the foregoing, without prior consent of the
other party, each party (a) may communicate information that is not confidential
to the other party with financial analysts, investors and media representatives
in a manner consistent with its past practice in compliance with applicable Law
and (b) may disseminate material substantially similar to material included in a
press release or other document previously approved for external distribution by
the other party. Each party agrees to promptly make available to the other party
copies of any written communications made without prior consultation with the
other party.
6.5 REGULATORY FILINGS; REASONABLE EFFORTS.
(a) As promptly as practicable after the date hereof, each of
Parent, Purchaser and the Company shall make all filings, notices, petitions,
statements, registrations, submissions of information, application or submission
of other documents required by any Governmental Entity in connection with the
Merger and the other Transactions, including, without limitation: (i)
Notification and Report Forms with the United States Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice ("DOJ") as required by the HSR Act, (ii) filings required by the merger
notification or control laws of any applicable jurisdiction, as agreed by the
parties hereto, and (iv) any filings required under the Securities Act, the
Exchange Act, any applicable state or securities or "blue sky" laws and the
securities laws of any foreign country, or any other applicable laws or rules
and regulations of any Governmental Entity relating to the Merger. Each of
Parent and the Company will cause all documents that it is responsible for
filing with any Governmental Entity under this Section 6.5(a) to comply in all
material respects with all applicable laws and rules and regulations of any
Governmental Entity.
(b) Each of Parent, Purchaser, and the Company shall promptly supply
the other with any information which may be required in order to effectuate any
filings or application pursuant to Section 6.5(a). Except where prohibited by
applicable laws and rules and regulations of any Governmental Entity, and
subject to the Confidentiality Agreement, each of the Company and Parent shall
consult with the other prior to taking a position with respect to any such
filing,
38
shall permit the other to review and discuss in advance, and consider in good
faith the views of the other in connection with any analyses, appearances,
presentations, memoranda, briefs, white papers, arguments, opinions and
proposals before making or submitting any of the foregoing to any Governmental
Entity by or on behalf of any party hereto in connection with any investigations
or proceedings in connection with this Agreement or the transactions
contemplated hereby (including under any antitrust or fair trade laws),
coordinate with the other in preparing and exchanging such information and
promptly provide the other (or its counsel) with copies of all filings,
presentations or submissions (and a summary of any oral presentations) made by
such party with any Governmental Entity in connection with this Agreement or the
transactions contemplated hereby, provided that with respect to any such filing,
presentation or submission, each of Parent and the Company need not supply the
other (or its counsel) with copies (or in case of oral presentations, a summary)
to the extent that any law, treaty, rule or regulation of any Governmental
Entity applicable to such party requires such party or its Subsidiaries to
restrict or prohibit access to any such properties or information.
(c) Each of Parent, Purchaser and the Company will notify the others
promptly upon the receipt of: (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant hereto and (ii)
any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply
in all material respects with, any applicable laws and rules and regulations of
any Governmental Entity. Whenever any event occurs that is required to be set
forth in an amendment or supplement to any filing made pursuant to Section
6.5(a), Parent, Purchaser or the Company, as the case may be, will promptly
inform the others of such occurrence and cooperate in filing with the applicable
Governmental Entity such amendment or supplement.
(d) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions, including complying in all
material respects with all applicable laws and with all rules and regulations of
any Governmental Entity and using its reasonable efforts to accomplish the
following: (i) the taking of its reasonable acts necessary to cause all the
conditions set forth in Article VII and in Annex I hereto to be satisfied and to
consummate and make effective the Merger and the other Transactions, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, clearances,
approvals, orders and authorizations from Governmental Entities and the making
of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution or delivery of any additional
instruments necessary to consummate the Transactions, and to carry out fully the
purposes of, this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors
39
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any of the other
Transactions, use all reasonable efforts to ensure that the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement and the other Transactions.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company, Parent and Purchaser shall use all reasonable efforts
to take, or cause to be taken, all such necessary actions. Parent shall cause
Purchaser to fulfill all Purchaser's obligations under, and pursuant to, this
Agreement. Nothing in this Agreement shall require Parent, Purchaser or any
other subsidiary of Parent to sell, hold separate, license or otherwise dispose
of or conduct their business in a specified manner, or agree to sell, hold
separate, license or otherwise dispose of or conduct their business in a
specified manner, or permit the sale, holding separate, licensing or other
disposition of, any assets of Parent, Purchaser or any other subsidiary of
Parent, whether as a condition to obtaining any approval from a Governmental
Entity or any other person or for any other reason. Until this Agreement is
terminated in accordance with Section 8.1, Parent shall have the right to
participate in the defense of any action, suit or proceeding instituted against
the Company (or any of its directors or officers) before any court or
governmental or regulatory body or threatened by any governmental or regulatory
body, to restrain, modify or prevent the consummation of the Transactions, or to
seek damages or a discovery order in connection with such Transactions.
6.6 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other parties of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
made by such party in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time, (ii) any
condition set forth in Annex I that is unsatisfied in any material respect at
any time from the date hereof to the date the Purchaser purchases Shares
pursuant to the Offer (except to the extent it refers to a specific date), and
(iii) any material failure of such party or any of its representatives to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties,
the conditions to the obligations of the parties under this Agreement or the
remedies available to the party receiving such notification.
6.7 INDEMNIFICATION.
(a) Parent agrees that at all times after the Effective Time, it
shall indemnify, or shall cause the Surviving Corporation and its subsidiaries
to indemnify, each person who is now, or has been at any time prior to the date
hereof, a director or officer of the Company or of any of the Company's
subsidiaries, successors and assigns (individually an "INDEMNIFIED PARTY" and
collectively the "Indemnified Parties"), to the same extent and in the same
manner as is now provided in the respective Certificates of Incorporation or
Bylaws of the Company and such subsidiaries and any Indemnity Agreement
currently in effect, with respect to any claim, liability, loss, damage, cost or
expense (whenever asserted or claimed) ("INDEMNIFIED LIABILITY") based in whole
or in part on, or arising in whole or in part out of, any matter existing or
occurring at or prior to the Effective Time. Parent understands and agrees that,
prior to the Effective Time, the Company intends to obtain a six year "tail"
insurance policy that provides coverage substantially
40
similar to the coverage provided under the Company's directors and officers
insurance policy in effect on the date of this Agreement for the individuals who
are directors and officers of the Company on the date of this Agreement for
events occurring prior to the Effective Time; provided, however, without
Parent's prior written consent (which consent shall not be unreasonably withheld
or delayed), the Company shall not pay more than $3,500,000 to purchase such
policy; provided, however, that prior to purchasing such policy, the Company
shall afford Parent the opportunity to purchase a substitute policy on terms not
materially less favorable to the Company and the Indemnified Parties.
(b) This Section 6.7 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified Parties and their heirs and personal
representatives and shall be binding on Parent and Surviving Corporation and its
successors and assigns. In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation honor the indemnification obligations set forth in this Section 6.7.
(c) The Company Board of Directors shall take all action necessary
to prevent Section 11(a) of any Indemnity Agreement from becoming applicable to
the Agreement or the Transactions and to determine that the creation of any
trust pursuant to Section 11(b) of any Indemnity Agreement would not be in the
best interests of the Company.
6.8 EMPLOYEE BENEFITS.
(a) Following the Merger, Parent shall cause the Surviving
Corporation to provide that the employees of the Surviving Corporation are
covered under Parent's then-current benefits plans, programs, policies and
arrangements applicable to similarly situated employees of Parent. Years of
service with the Company and its subsidiaries prior to the Effective Time shall
be treated as service with the Surviving Corporation or Parent for all
eligibility and vesting purposes and for purposes of vacation and severance pay
accruals, except to the extent such treatment will result in a duplication of
benefits.
(b) Following the Merger, Parent shall take commercially reasonable
efforts to cause to be waived all limitations as to preexisting condition
limitations, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the employees of the Company and its
subsidiaries under any medical or dental benefit plans that such employees are
eligible to participate in after the Effective Time, other than limitations,
exclusions or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time under any
medical or dental plan maintained for such employees immediately prior to the
Effective Time. If and only if requested by Parent, the Company shall terminate
its 401(k) plan and its Nonqualifed Deferred Compensation Plan at least one day
before the Closing Date.
6.9 CONSENTS AND APPROVALS. Each of the Company, Parent and Purchaser
will take all reasonable actions necessary to (i) comply promptly with all legal
requirements which may be
41
imposed on it with respect to this Agreement and the Transactions, (ii) promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their subsidiaries in connection
with this Agreement and the Transactions contemplated hereby and thereby and
(iii) take and cause its respective subsidiaries to, take all reasonable actions
necessary to obtain any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Purchaser the Company or any of their
subsidiaries in connection with the Offer or the Merger or the taking of any
action contemplated thereby or by this Agreement (collectively, the "REQUISITE
REGULATORY APPROVALS").
6.10 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, whether under applicable laws and
regulations or otherwise, or to remove any injunctions or other impediments or
delays, legal or otherwise, to satisfy the conditions to the Offer and make
effective the Merger and the other transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company and Parent shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions.
6.11 DIRECTORS.
(a) Promptly upon the first acceptance for payment of, and payment
by Purchaser for, any Shares which represent at least a majority of Fully
Diluted Shares pursuant to the Offer, Parent shall be entitled to designate such
number of directors on the Company Board of Directors as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Company Board of Directors equal to at least that number of directors,
rounded up to the next whole number, which is the product of (x) the total
number of directors on the Company Board of Directors (giving effect to the
directors elected pursuant to this sentence) multiplied by (y) the percentage
that (I) such number of Shares so accepted for payment and paid for by Purchaser
plus the number of Shares otherwise owned by Parent, Purchaser or any other
subsidiary of Parent bears to (II) the number of such Shares outstanding, and
the Company shall, at such time, cause Parent's designees to be so elected;
provided, however, that in the event that Parent's designees are appointed or
elected to the Company Board of Directors, until the Effective Time the Company
Board of Directors shall have at least three directors who are directors on the
date of this Agreement and who are not officers of the Company (the "INDEPENDENT
DIRECTORS"); and provided further that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
any remaining Independent Directors (or Independent Director, if there shall be
only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of this
Agreement or, if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who are not officers or
affiliates of the Company, Parent or Purchaser, and such persons shall be deemed
to be Independent Directors for purposes of this Agreement. At such time, the
Company shall, upon Parent's request, also cause persons elected or designated
by Parent to constitute the same percentage (rounded up to the next whole
number) as is on the Company Board of Directors of (i) each committee of the
Company Board of Directors of Directors, (ii) each board of directors (or
42
similar body) of each of the Company's Subsidiaries, and (iii) each committee
(or similar body) of each such board, in each case only to the extent permitted
by applicable law or the rules of any stock exchange on which the Company Common
Stock is listed. Subject to applicable Law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Purchaser shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Purchaser's designees). In connection with the foregoing, the Company
shall promptly, at the option of Purchaser, either increase the size of the
Company Board of Directors or obtain the resignation of such number of its
current directors, or both, as is necessary to enable Purchaser's designees to
be elected or appointed to the Company Board of Directors as provided above.
(b) Notwithstanding anything in this Agreement to the contrary, if
Parent's designees constitute a majority of the Company Board of Directors after
the acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, then the affirmative vote of a majority of the Independent
Directors (or if only one exists, then the vote of such Independent Director)
shall be required to (i) amend or terminate this Agreement by the Company, (ii)
exercise or waive any of the Company's rights, benefits or remedies hereunder,
if such action would materially and adversely affect holders of Shares other
than Parent or Purchaser, (iii) amend the Certificate of Incorporation or Bylaws
of the Company, or (iv) take any other action of the Company Board of Directors
under or in connection with this Agreement or the Transaction; provided,
however, that if there shall be no Independent Directors as a result of such
persons' deaths, disabilities or refusal to serve, then such actions may be
effected by majority vote of the entire Company Board of Directors.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or written waiver at or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the holders of the Shares, to
the extent required pursuant to the requirements of the Certificate of
Incorporation and the DGCL.
(b) Statutes; Court Orders. No statute, rule, executive order or
regulation shall have been enacted, issued, enforced or promulgated by any
Governmental Entity which prohibits the consummation of the Merger, and there
shall be no order or injunction of a court of competent jurisdiction in effect
preventing consummation of the Merger.
(c) Purchase of Shares in Offer. Purchaser shall have purchased, or
caused to be purchased, all Shares properly tendered pursuant to the Offer;
provided, however, that this condition shall be deemed to have been satisfied
with respect to the obligation of Parent and
43
Purchaser to effect the Merger even if Purchaser fails to accept for payment or
pay for Shares validly tendered pursuant to the Offer in violation of the terms
of the Offer or of this Agreement.
(d) HSR. The applicable waiting period under the HSR Act and any
comparable provisions under any applicable pre-merger notification laws or
regulations of foreign jurisdictions shall have expired or been terminated.
(e) Dissenting Shares. Fewer than ten percent (10%) of the
outstanding shares of Company Common Stock shall be Dissenting Shares.
7.2 ADDITIONAL CONDITION TO THE OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser to consummate and effect the Merger shall be
subject to the additional condition, which may be waived in whole or in part by
Parent or Purchaser to the extent permitted by applicable law, that all actions
contemplated by Section 2.4 and 2.5(b) shall have been taken.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated and the Transactions
may be abandoned at any time before the Effective Time, whether before or after
stockholder approval thereof:
(a) By mutual written consent of Parent and the Company duly
authorized by the Board of Directors of Parent (the "PARENT BOARD") and the
Company Board of Directors; or
(b) By either Parent or the Company: (i) if a court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling or taken any other action, or there shall exist any statute, rule or
regulation, in each case permanently restraining, enjoining or otherwise
prohibiting (collectively, ("RESTRAINTS") the consummation of any of the
Transactions contemplated by this Agreement or if any Governmental Entity that
must grant a Requisite Regulatory Approval has denied approval of the Mergers;
provided, however, that the party seeking to terminate this Agreement pursuant
to this Section 8.1(b)(i) shall have used all reasonable efforts to prevent the
entry of and to remove such Restraint or to obtain such Requisite Regulatory
Approval, as the case may be; or (ii) if the Merger has not been consummated by
January 31, 2004 (the "TERMINATION DATE") at any time following the Termination
Date unless such party has expressly restricted in writing its right to
terminate this Agreement pursuant to this Section 8.1(b)(ii); provided, however,
that the right to terminate this Agreement pursuant to this Section 8.1(b)(ii)
shall not be available to any party whose action or failure to fulfill any
obligation under this Agreement has been the principal cause of, or resulted in,
the failure of the Merger to be consummated by such date; or
(c) By Parent if (i) prior to the purchase of Shares pursuant to the
Offer, there has been a material breach by the Company of any representation,
warranty, covenant or agreement set forth in this Agreement, which breach has
resulted or is reasonably likely to result in any condition set forth in Annex I
not being satisfied (and such breach has not been cured or such condition has
not been satisfied within twenty (20) days after the receipt of notice thereof
or such
44
breach is not reasonably capable of being cured or such condition is not
reasonably capable of being satisfied within such period); or (ii) due to an
occurrence or circumstance that has resulted or would result in a failure to
satisfy any condition set forth in Annex I hereto, Purchaser shall have (x)
failed to commence the Offer within ten (10) business days following the date of
this Agreement, (y) terminated the Offer, or allowed the offer to terminate,
without having accepted any Shares for payment thereunder or (z) failed to
accept Shares for payment pursuant to the Offer prior to the Termination Date,
unless such action or inaction under clauses (x), (y) or (z) shall have been
caused by or resulted from the failure of Parent or Purchaser to perform, in any
material respect, any of their covenants or agreements contained in this
Agreement, or the material breach by Parent or Purchaser of any of their
representations or warranties contained in this Agreement; or
(d) By the Company if (i) prior to the purchase of Shares pursuant
to the Offer that would represent a majority of the Fully Diluted Shares, there
has been a material breach by Parent of any representation, warranty, covenant
or agreement set forth in this Agreement (and such breach has not been cured or
such condition has not been satisfied within thirty (30) days after the receipt
of notice thereof or such breach is not reasonably capable of being cured or
such condition is not reasonably capable of being satisfied within such period);
or (ii) other than due to an occurrence or circumstance that has resulted or
would result in a failure to satisfy any condition set forth in Annex I hereto,
Purchaser shall have (x) failed to commence the Offer within ten (10) business
days following the date of this Agreement, (y) terminated the Offer without
having accepted all Shares properly tendered for payment thereunder or (z)
failed to accept any Shares properly tendered for payment pursuant to the Offer
prior to the Termination Date, unless such action or inaction under clauses (x),
(y) or (z) shall have been caused by or resulted from the failure of the Company
to perform, in any material respect, any of its covenants or agreements
contained in this Agreement, or the material breach by the Company of any of its
representations or warranties contained in this Agreement; or
(e) By Parent, at any time prior to the purchase of the Shares
pursuant to the Offer, if (i) the Company Board of Directors shall have, in a
manner adverse to the Parent, (v) withdrawn, modified or changed its approval or
recommendation of this Agreement or the Offer, or publicly announced its
intention to do so or failed to recommend this Agreement or the Offer, (w)
recommended to the Company's stockholders any proposal other than by Parent or
Purchaser in respect of an Acquisition Proposal, or publicly announced its
intention to do so, (x) made a Subsequent Determination, (y) adopted resolutions
approving or otherwise authorizing or recommending an Acquisition Proposal that
remain in effect and have not been rescinded, or (z) failed to recommend
against, or taken a neutral position with respect to, a tender or exchange offer
related to an Acquisition Proposal in any position taken pursuant to Rules 14d-9
and 14e-2 under the Exchange Act or (iii) the Company shall have materially
violated or breached any of its obligations under Section 5.2 and such violation
or breach has not been cured; or
(f) By the Company, if the Company has received a Superior Proposal
and Parent has not terminated this Agreement by September 15, 2003; provided
that the Company has not materially breached Section 5.2 hereof; or
45
(g) By either Parent or the Company, if upon a vote at a duly held
meeting to obtain the Company Stockholder Approval, the Company Stockholder
Approval is not obtained; provided, however, that Parent may not terminate this
Agreement under this Section 8.1(g) if the Company Common Stock owned by Parent,
Purchaser or any of Parent's Subsidiaries shall not have been voted in favor or
obtaining the Company Stockholder Approval.
8.2 EFFECT OF TERMINATION
(a) Any termination of this Agreement under Section 8.1 hereof will
be effective immediately upon the delivery of a valid written notice of the
terminating party to the other party hereto and, if then due, payment of the
Termination Fee. In the event of termination of this Agreement as provided in
Section 8.1 hereof, this Agreement shall forthwith become null and void and be
of no further force or effect and there shall be no liability on the part of
Parent, Purchaser or the Company (or any of their respective directors,
officers, employees, stockholders, agents or representatives), except as set
forth in Section 6.3(a), Article VIII and Article IX, each of which shall remain
in full force and effect and survive any termination of this Agreement;
provided, however, that nothing herein shall relieve any party from liability
for fraud or the intentional and willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement. No termination
of this Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement.
(b) If Parent shall have terminated this Agreement pursuant to
Section 8.1(e), the Company shall promptly pay Parent a termination fee (the
"TERMINATION FEE") of $22,000,000. If the Company intends to terminate this
Agreement pursuant to Section 8.1(f), it shall, prior to and as a condition to
such termination, pay Parent the Termination Fee. If at any time when an
Alternative Proposal has been publicly announced or otherwise communicated to
the Company's Board of Directors and not withdrawn prior to the date of
termination, Parent shall have terminated this Agreement pursuant to (I) Section
8.1(b)(ii) or Section 8.1(c)(i) or (II) Section 8.1(c)(ii) as a result of the
failure to satisfy conditions (c) or (g) of Appendix A, and, in each case prior
to the first anniversary of this Agreement, the Company enters into a written
agreement, arrangement or understanding with respect to an Acquisition Proposal
with any party other than Parent or its affiliates and consummates a transaction
pursuant to such Acquisition Proposal, then the Company shall pay to Parent
promptly, but in no event later than ten (10) business days after the
consummation of such transaction, the Termination Fee. All amounts due hereunder
shall be payable by wire transfer in immediately available funds to such account
as Parent may designate in writing to the Company. In the event this Agreement
is properly terminated in accordance with its terms by either the Company or
Parent in a manner that requires the Company to pay Parent a Termination Fee,
and Parent has received the Termination Fee, neither Parent nor Purchaser shall
assert or pursue in any manner, directly or indirectly, (i) any claim or cause
of action based in whole or in part upon alleged tortious or other interference
with its rights under this Agreement against any entity or person submitting an
Acquisition Proposal, (ii) any claim or cause of action against the Company, its
affiliates or any of their respective officers, directors, employees,
stockholders, agents or representatives based in whole or in part upon a breach
of any representation, warranty or covenant in this Agreement, or (iii) any
claim or cause of action against the Company, its affiliates or any of their
respective officers, directors, employees, stockholders, agents or
representatives based in whole or in part upon its or their receipt,
46
consideration, recommendation or approval of an Acquisition Proposal for the
Company's exercise of its right of termination; provided, however, that the
foregoing shall not relieve any party from liability for fraud or the
intentional and willful breach of this Agreement. If the Company fails to
promptly make any payment required under this Section 8.2(b) and Parent
commences a suit to collect such payment, the Company shall indemnify Parent for
its fees and expenses (including attorneys fees and expenses) incurred in
connection with such suit and shall pay interest on the amount of the payment at
the prime rate of Fleet National Bank (or its successors or assigns) in effect
on the date the payment was payable pursuant to this Section 8.2(b).
8.3 FEES AND EXPENSES. Except as set forth in Section 8.2, all fees,
costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses whether or not
the Merger is consummated; provided, however, that Parent and the Company shall
share equally all fees and expenses, other than attorneys' and accountants fees
and expenses, incurred in relation to the printing and filing with the SEC and
mailing of the Offer Documents, 14D-9 and Proxy Statement (including any
preliminary materials related thereto) and any amendments or supplements
thereto, and the filing of any documents required under the HSR Act or any
comparable provisions under any applicable pre-merger notification laws or
regulations of foreign jurisdictions.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time and only the covenants that by their terms survive the Effective
Time and this Article IX shall survive the Effective Time.
9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
47
(a) if to Parent or Purchaser:
Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Vice President, Theraputics
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies at the same address to the attention of the
General Counsel and the Clerk and with a copy to:
Ropes & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
SangStat Medical Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy at the same address to ▇▇▇▇▇▇
▇▇▇▇▇, General Counsel, and with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 INTERPRETATION; CERTAIN DEFINED TERMS.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of 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 table of contents and headings
48
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to the "BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, "AFFILIATES" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
(c) For purposes of this Agreement, any reference to a "MATERIAL
ADVERSE EFFECT" with respect to any entity or group of entities means any event,
change, condition or effect, event occurrence, states of facts or developments
(any such item, an "EFFECT"), individually or together with other events,
changes, conditions, effects, events, occurrences or states of facts or
developments, that (x) is materially adverse, in the short term or the long
term, to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, business, operations or results of operations
of such entity and its subsidiaries, taken as a whole, or (y) would prevent or
materially alter or delay any of the Transactions; provided, however, that in no
event shall any of the following be taken into account in determining whether
there has been or will be a Material Adverse Effect on any entity: (A) any
Effect (other than litigation challenging the acquisition by Parent or Purchaser
of any Shares under the Offer, seeking to delay, restrain or prohibit the making
or consummation of the Offer or the Merger or the performance of any of the
other Transactions or seeking to obtain from the Company, Parent or Purchaser
any damages that are material in relation to the Company and the Company's
Subsidiaries taken as a whole) primarily resulting from compliance with the
terms and conditions of this Agreement; provided, that no inference may be drawn
hereby by any such litigation, (B) any Effect primarily resulting from the
announcement or pendency of the Transactions, (C) any change in such entity's
stock price or trading volume, (D) any Effect that results from changes
affecting the industry in which such entity operates generally or the United
States economy generally, without a disproportionate impact on such entity, (E)
any Effect that results from changes affecting general worldwide economic or
capital market conditions, without a disproportionate impact on such entity, or
(F) after September 30, 2003, any failure by such entity to meet published
revenue or earnings projections or any internal projections for any period
ending (or for which earnings are released) on or after the date of this
Agreement and prior to the Closing Date, provided that no inference may be drawn
hereby by any failure to meet a projection prior to September 30, 2003.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(e) For purposes of this Agreement, a "SUBSIDIARY" of a specified
entity shall mean a "significant subsidiary" of such entity as the term
"significant subsidiary" is defined in Rule 1-02(w) of Regulation S-X under the
Securities Act.
(f) For purposes of this Agreement, "TRANSACTIONS" shall mean all of
the transactions contemplated in this Agreement, including the Offer and the
Merger.
49
(g) For purposes of this Agreement, the term "KNOWLEDGE" means, with
respect to the Company, with respect to any matter in question, that any of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Dance, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ has actual knowledge of such matter. For
the purposes of the first sentence of Section 3.13(h) of this Agreement, the
term "Knowledge" means, with respect to the Company, with respect to any matter
in question that any of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Dance, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ has
actual knowledge of such matter.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by facsimile, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
9.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.
(a) This Agreement and the documents and instruments and other
agreements among the parties hereto as contemplated by or referred to herein,
including the Company Disclosure Letter (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, it being understood that the
provisions of this Agreement shall supersede any conflicting provisions of the
Confidentiality Agreement, as amended by Section 9.5(b) hereof; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 6.7.
(b) By the execution of this Agreement, the Confidentiality
Agreement shall be deemed to be amended to include the following sentence at the
end of Section 3 thereof: "Notwithstanding anything to the contrary contained in
this Agreement, each party and its Representatives may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the business combination contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are provided to each
party or its Representatives relating to such tax treatment and tax structure."
9.6 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction or other authority to be invalid, illegal, void, unenforceable or
against its regulatory policy, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
9.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions
50
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity. In
the event that any action shall be brought in equity to enforce the provisions
of the Agreement, neither party will allege, and each party hereby waives the
defense, that there is an adequate remedy at law.
9.8 GOVERNING LAW; VENUE. This Agreement and all actions arising under
or in connection therewith shall be governed by and construed in accordance with
the laws of the State of
Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof, provided,
however, that the laws of the respective jurisdictions of incorporation of each
of the parties shall govern the relative rights, obligations, powers, duties and
other internal affairs of such party and its board of directors. Each of the
parties hereto (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of
Delaware or any
Delaware state court in
the event any dispute arises out of this Agreement or any of the Transactions,
(b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it shall not bring any action relating to this Agreement or any of
the Transactions in any court other than a federal or state court sitting in the
State of Delaware.
9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 ASSIGNMENT. This Agreement shall not be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion and without the consent of any other party, any or all of
its rights, interests and obligations hereunder to (i) Parent, (ii) to Parent
and one or more direct or indirect wholly-owned subsidiaries of Parent, or (iii)
to one or more direct or indirect wholly-owned subsidiaries of Parent (each, an
"ASSIGNEE"). Any such Assignee may thereafter assign, in its sole discretion and
without the consent of any other party, any or all of its rights, interests and
obligations hereunder to one or more additional Assignees. Subject to the
preceding sentence, but without relieving any party hereto of any obligation
hereunder, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
9.11 AMENDMENT AND MODIFICATION. Subject to applicable law and as
otherwise provided in the Agreement, this Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
stockholders of the Company contemplated hereby, by written agreement of the
parties hereto, by action taken by their respective Boards of Directors or
equivalent governing bodies, but, after the purchase of Shares pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration and,
after the approval of this Agreement by the stockholders, no amendment shall be
made which by law requires further approval by such stockholders without
obtaining such further
51
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
9.12 NO 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. 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.
9.13 CONTROL OF COMPANY'S BUSINESS. Nothing contained in this Agreement
shall give Parent, directly or indirectly, the right to control or direct the
Company's operations prior to the consummation of the Offer. Prior to the
consummation of the Offer, the Company shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over its
operations.
9.14 WAIVER OF JURY TRIAL. EACH OF PARENT, THE COMPANY AND PURCHASER
HEREBY IRREVOCABLY WAIVES AND COVENANTS THAT THEY WILL NOT ASSERT THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION
RELATED HERETO OR THERETO.
*****
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized respective officers as of the date first
written above.
GENZYME CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
SWIFT STARBOARD CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
SANGSTAT MEDICAL CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
53
ANNEX I
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the
Merger Agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any validly tendered Shares if, there shall not have
been validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which, together with that number of Shares owned by
Parent, Purchaser and Parent's other subsidiaries, would represent a majority of
the Fully Diluted Shares (the "MINIMUM TENDER CONDITION"). The term "FULLY
DILUTED SHARES" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, assuming the
exercise or conversion of all vested options, rights and securities exercisable
or convertible into such voting securities. Furthermore, notwithstanding any
other provisions of the Offer, the Purchaser shall not be required to accept for
payment or pay for any validly tendered shares if, at the Expiration Date (i)
any applicable waiting periods under the HSR Act have not expired or terminated
prior to the termination of the Offer; (ii) and any clearances, permits,
authorizations, consents or approvals as may be required under any applicable
pre-merger notification laws or regulations of foreign jurisdictions have not
been obtained prior to termination of the Offer, or (iii) any of the following
events shall occur, or shall be deemed by Purchaser to have occurred, and be
continuing:
(a) there shall be threatened in writing or pending any suit, action
or proceeding by any Governmental Entity or any third party against Purchaser,
Parent, the Company or any Company Subsidiary (i) seeking to prohibit or impose
any material limitations on Parent's or Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or any
material portion of their or the Company's or the Company's Subsidiaries'
businesses or assets, taken as a whole, or to compel Parent or Purchaser or
their respective Subsidiaries or affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent or their
respective Subsidiaries, (ii) challenging the acquisition by Parent or Purchaser
of any Shares under the Offer, seeking to delay, restrain or prohibit the making
or consummation of the Offer or the Merger or the performance of any of the
other Transactions, or seeking to obtain from the Company, Parent or Purchaser
any damages that are material in relation to the Company and the Company's
Subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of Purchaser, or render Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer or the Merger,
(iv) seeking to impose material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's stockholders, or (v) seeking to
require divestiture by Parent or any of its Subsidiaries or affiliates of any
Shares;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer, the Merger or any other
54
Transaction, or any other action shall be taken by any Governmental Entity, that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) any of the representations and warranties of the Company
contained in this Agreement shall not be true and correct in all material
respects (other than representations and warranties qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) as of
the date of this Agreement and as of the date of any scheduled expiration of the
Offer, except for representations and warranties that relate to a specific date
or time (which need only be true and correct in all material respects as of such
date or time) and except for those representations and warranties set forth in
Section 3.2 (which shall be true and correct in all respects, other than DE
MINIMIS variations);
(d) since the date of this Agreement, there shall have occurred any
events or changes which have had, which are deemed to have had, or which are
reasonably likely to have or constitute, individually or in the aggregate, a
Material Adverse Effect on the Company;
(e) the Company Board of Directors or any committee thereof shall
have (i) withdrawn, or modified or changed in a manner adverse to the
Transactions, to Parent or to Purchaser (including by amendment of the Schedule
14D-9), its recommendation of the Offer, the
Merger Agreement, or the Merger or
shall have failed to make such favorable recommendation, (ii) approved or
recommended to its stockholders any Acquisition Proposal or entered into or
publicly announced its intention to enter into any agreement or agreement in
principle with respect to any Acquisition Proposal, (iii) resolved or publicly
proposed to do any of the foregoing or (iv) taken a neutral position or made no
recommendation with respect to an Acquisition Proposal (other than by Parent or
Purchaser) after a reasonable amount of time (and in no event more than five (5)
business days following receipt thereof) has elapsed for the Company Board of
Directors or any committee thereof to review and make a recommendation with
respect thereto;
(f) any person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent or any of its subsidiaries shall have become the
beneficial owner (defined in Rule 13(d)(3) promulgated under the Exchange Act)
of more than twenty percent (20%) of the outstanding Shares or shall have
acquired, directly or indirectly, more than twenty percent (20%) of the assets
of the Company and its Subsidiaries;
(g) the Company shall have breached or failed, in any material
respect, to perform or to comply with any material agreement, obligation or
covenant to be performed or complied with by it under this Agreement;
(h) Purchaser shall have failed to receive a certificate executed by
the Company's Chief Executive Officer or President on behalf of the Company,
dated as of the scheduled expiration of the Offer, to the effect that the
conditions set forth in paragraphs (c), (d), (e), (f) and (g) of this Annex I
have not occurred;
(i) the
Merger Agreement shall have been terminated in accordance
with its terms;
55
(j) all consents, permits and approvals of Governmental Authorities
listed in Section 3.3 of the Company Disclosure Letter shall not have been
obtained; or
(k) there shall have occurred and be continuing (i) a declaration by
a Governmental Entity of a banking moratorium or any suspension of payments in
respect of banks in the United States or (ii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, which precludes Parent's or Purchaser's
consummation of the Transactions.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to such condition, and may be waived by Parent or
Purchaser in whole or in part at any time and from time to time and in the sole
discretion of Parent or Purchaser, subject in each case to the terms of this
Agreement. The failure by Parent or Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and, each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
The capitalized terms used in this Annex I shall have the meanings
set forth in the Agreement to which it is annexed, except that the term "
MERGER
AGREEMENT" shall be deemed to refer to the Agreement to which this Annex I is
annexed.
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