1
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 31, 1999
AMONG
INAMED CORPORATION,
INAMED ACQUISITION CORPORATION
AND
COLLAGEN AESTHETICS, INC.
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PAGE
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ARTICLE 1 - DEFINITIONS......................................................................1
SECTION 1.01. Definitions...........................................................1
ARTICLE 2 - THE OFFER........................................................................6
SECTION 2.01. The Offer.............................................................6
SECTION 2.02. Company Action........................................................7
SECTION 2.03. Directors.............................................................8
ARTICLE 3 - THE MERGER.......................................................................9
SECTION 3.01. The Merger............................................................9
SECTION 3.02. Conversion of Securities.............................................10
SECTION 3.03. Surrender and Payment................................................10
SECTION 3.04. Dissenting Shares....................................................11
SECTION 3.05. Stock Options........................................................12
SECTION 3.06. Employee Stock Purchase Plan.........................................12
SECTION 3.07. Withholding Rights...................................................13
SECTION 3.08. Lost Certificates....................................................13
ARTICLE 4 - THE SURVIVING CORPORATION.......................................................13
SECTION 4.01. Certificate of Incorporation.........................................13
SECTION 4.02. Bylaws...............................................................13
SECTION 4.03. Directors and Officers...............................................13
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................14
SECTION 5.01. Corporate Existence and Power........................................14
SECTION 5.02. Corporate Authorization..............................................14
SECTION 5.03. Governmental Authorization...........................................14
SECTION 5.04. FDA and Other Regulatory Compliance; Compliance with Laws............14
SECTION 5.05. Non-contravention....................................................15
SECTION 5.06. Capitalization.......................................................16
SECTION 5.07. Subsidiaries.........................................................16
SECTION 5.08. SEC Filings..........................................................17
SECTION 5.09. Financial Statements.................................................18
SECTION 5.10. Disclosure Documents.................................................18
SECTION 5.11. Absence of Certain Changes...........................................19
SECTION 5.12. No Undisclosed Material Liabilities..................................20
SECTION 5.13. Litigation...........................................................20
SECTION 5.14. Material Contracts...................................................20
SECTION 5.15. Environmental Matters................................................21
SECTION 5.16. Taxes................................................................21
SECTION 5.17. Employee Benefit Plans...............................................23
SECTION 5.18. Termination Benefits.................................................24
SECTION 5.19. Patents and Other Proprietary Rights.................................25
SECTION 5.20. Year 2000............................................................26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 5.21. Products Liability Insurance.........................................26
SECTION 5.22. Rights Agreement.....................................................26
SECTION 5.23. Section 203..........................................................27
SECTION 5.24. Finders' Fees........................................................27
SECTION 5.25. Opinion of Financial Advisor.........................................27
SECTION 5.26. Transaction Expenses.................................................27
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT........................................27
SECTION 6.01. Corporate Existence and Power........................................27
SECTION 6.02. Corporate Authorization..............................................28
SECTION 6.03. Governmental Authorization...........................................28
SECTION 6.04. Non-contravention....................................................28
SECTION 6.05. Disclosure Documents.................................................29
SECTION 6.06. Finders' Fees........................................................29
SECTION 6.07. Financing............................................................29
SECTION 6.08. Surviving Corporation After the Merger...............................29
ARTICLE 7 - COVENANTS OF THE COMPANY........................................................30
SECTION 7.01. Conduct of the Company...............................................30
SECTION 7.02. Stockholder Meeting; Proxy Material..................................31
SECTION 7.03. Access to Information................................................31
SECTION 7.04. No Solicitation; Other Offers........................................32
SECTION 7.05. Notices of Certain Events............................................33
SECTION 7.06. Company Rights Agreement.............................................34
SECTION 7.07. Third Party Standstill Agreements....................................34
ARTICLE 8 - COVENANTS OF PARENT.............................................................34
SECTION 8.01. Obligations of Purchaser.............................................34
SECTION 8.02. Voting of Shares.....................................................34
SECTION 8.03. Director and Officer Liability.......................................35
SECTION 8.04. Employee Matters.....................................................35
SECTION 8.05. Products Liability Insurance.........................................36
ARTICLE 9 - COVENANTS OF PARENT AND THE COMPANY.............................................36
SECTION 9.01. Actions of Parent and the Company....................................36
SECTION 9.02. Certain Filings......................................................37
SECTION 9.03. Public Announcements.................................................37
SECTION 9.04. Further Assurances...................................................37
SECTION 9.05. Merger without Meeting of Stockholders...............................38
ARTICLE 10 - CONDITIONS TO THE MERGER.......................................................38
SECTION 10.01. Conditions to Obligations of Each Party.............................38
ARTICLE 11 - TERMINATION....................................................................38
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 11.01. Termination.........................................................38
SECTION 11.02. Effect of Termination...............................................40
ARTICLE 12 - MISCELLANEOUS..................................................................41
SECTION 12.01. Notices.............................................................41
SECTION 12.02. Survival of Representations and Warranties..........................42
SECTION 12.03. Amendments; No Waivers..............................................42
SECTION 12.04. Expenses............................................................42
SECTION 12.05. Successors and Assigns; Mergers.....................................42
SECTION 12.06. Governing Law.......................................................43
SECTION 12.07. Counterparts; Effectiveness; Benefit................................43
SECTION 12.08. Entire Agreement....................................................43
SECTION 12.09. Captions............................................................43
SECTION 12.10. Severability........................................................43
SECTION 12.11. Specific Performance................................................43
SECTION 12.12. Interpretation......................................................43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 31, 1999 (the
"Agreement"), by and among Inamed Corporation, a Delaware corporation
("Parent"), Inamed Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser") and Collagen Aesthetics, Inc., a Delaware
corporation (the "Company"). Certain capitalized terms used in this Agreement
have the meanings ascribed to them in Article I hereof.
WHEREAS, the Boards of Directors of each of Parent, Purchaser and the
Company have approved and deem it advisable and in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser make a cash tender offer, as described in Section 2.01 hereof, to
acquire all of the outstanding common stock, par value $.01 per share, of the
Company (the "Company Common Stock" or "Shares") at a price of $16.25 per
Share, net to each seller in cash, upon the terms and conditions of this
Agreement;
WHEREAS, the Boards of Directors of each of Parent and the Company have
approved this Agreement and the Merger, following the consummation of the
Offer, of Purchaser with and into the Company in accordance with the Delaware
General Corporation Law and upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each Share in the Offer and the Merger is fair
to the holders of such Shares, (ii) approved the making of the Offer and (iii)
resolved and agreed to recommend that holders of such Shares tender their
Shares pursuant to the Offer and approve this Agreement and each of the
Transactions (as defined in Section 1.01 hereof) upon the terms and subject to
the conditions set forth herein and therein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following events involving the Company or any of its
Subsidiaries: (w) any merger, consolidation, share exchange, share purchase,
recapitalization, business combination or other similar transaction, (x) any
sale, lease, exchange, transfer or other disposition of all or substantially
all the assets of the Company and its Subsidiaries, taken as a whole, in a
single
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transaction or series of related transactions, (y) any tender offer or
exchange offer for 20 percent or more of the outstanding Shares or the filing
of a registration statement under the 1933 Act in connection therewith, or (z)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing; provided that an
"Acquisition Proposal" shall not be deemed to include any inquiry, offer or
proposal (or sale) regarding the Company's LipoMatrix Business or the
liabilities or assets associated therewith (the "LipoMatrix Sale").
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. As used in this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Antitrust Law" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
"Balance Sheet Date" means March 31, 1999.
"Board of Directors of the Company" means the board of directors
of the Company.
"Certificate of Merger" means the certificate of merger, in form
and substance mutually satisfactory to Parent and the Company, filed with the
Secretary of State of the State of Delaware pursuant to Section 3.01 hereof.
"Closing Date" means the date on which the Effective Time
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Balance Sheet" means the consolidated balance sheet of
the Company as of June 30, 1998 and the footnotes thereto set forth in the
Company 10-K.
"Company 10-K" means the Company's annual report on Form 10-K,
as amended, for the fiscal year ended June 30, 1998.
"Delaware Law" means the General Corporation Law of the State of
Delaware.
"Environmental Laws" means any federal, state, local or foreign
law (including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety, the environment
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or to pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" of any entity means any other entity that,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976.
"knowledge" of any Person that is not an individual means the
actual knowledge of such Person's executive officers (which, in the case of the
Company, shall mean the knowledge of Messrs. Petersmeyer, Bates, Yamamoto, and
Dimmer and ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇).
"LipoMatrix Business" means all business carried on by the
Company's former subsidiary LipoMatrix, Inc., and all business related to
Trilucent breast implant as well as the liabilities or assets associated
therewith.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other adverse
claim of any kind in respect of such property or asset.
"Market Disruption" shall be deemed to occur as long as any of
the following situations exist (i) any general suspension of trading in, or
limitation on prices for, debt securities on any United States national
securities exchange or in the over-the-counter market, (ii) the yield on
30-year U.S. Treasury Bond exceeds 8.11%, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory); (iv) any limitation (whether or not
mandatory) by any U.S. federal or state governmental or regulatory authority on
the extension of credit by banks or other financial institutions; or (v) war or
armed hostilities or other national or international crisis directly or
indirectly involving the United States having a significant adverse effect on
the functionality of the financial markets in the United States.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of such Person and its Subsidiaries, taken as a
whole; provided, however, that in determining whether there has been a Material
Adverse Effect with respect to any Person, any adverse effect attributable to
or resulting from the following shall be disregarded: (i) changes in general
economic conditions or changes affecting the industry generally in which such
Person operates, (ii) the effect of the public announcement or pendency of the
transactions contemplated hereby on current or prospective customers or
revenues of the Person, (iii) stockholder class action
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litigation arising out of this Agreement or the transactions contemplated
hereby, and (iv) any factor relating to the Company's LipoMatrix Business.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Rights" means the rights issued pursuant to the Rights
Agreement.
"Rights Agreement" means the Amended and Restated Preferred
Share Rights Agreement dated as of May 6, 1999 between the Company and The Bank
of New York, a New York banking corporation.
"SEC" means the Securities and Exchange Commission.
"Specified Compensation and Benefit Programs" means all
employment agreements, change in control agreements, severance or special
termination agreements, severance plans, pension, retirement or deferred
compensation plans for non-employee directors, supplemental executive
retirement programs, tax indemnification agreements, outplacement programs,
cash bonus programs, stock appreciation rights, phantom stock or stock unit
plans, and health, life, disability and other contractual insurance or welfare
plans or other contractual arrangements, in each case, created by contract
rather than by operation of law, but shall not include any tax-qualified
pension, profit-sharing or employee stock ownership plan, employee stock
purchase plan or any stock option plan.
"Subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such Person.
"Superior Proposal" means any bona fide, unsolicited written
Acquisition Proposal on terms that the Board of Directors of the Company
determines in good faith by a majority vote is more favorable and provides
greater value to all the Company's stockholders than is provided hereunder,
which decision takes into account the advice of a financial advisor of
nationally recognized reputation and all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to closing.
"Transactions" means the transactions contemplated by this
Agreement, including the Offer and the Merger.
Any reference in this Agreement to a statute shall be to such
statute, as amended from time to time, and to the rules and regulations
promulgated thereunder.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Agreement Recitals
Antitrust Law 9.01(b)
Certificates 3.03(a)
Closing 3.01(d)
Commencement Date 2.01(a)
Commitment Letter 6.07
Company Recitals
Company Common Stock Recitals
Company Disclosure Documents 5.10(a)
Company Employees 8.04
Company Material Contract 5.14
Company Proxy Statement 5.10(a)
Company SEC Document 5.08(a)
Company Securities 5.06(b)
Company Subsidiary Securities 5.07(b)
Company Stockholder Meeting 7.02
Compensation Options 3.05(a)
Confidentiality Agreement 7.03(a)
Continuing Director 2.03(a)
DOJ 9.01(b)
Effective Time 3.01(b)
Employee Plans 5.17(a)
ESPP 3.06(a)
Exchange Agent 3.03(a)
FTC 9.01(b)
GAAP 5.09
Indemnified Person 8.03(a)
Intellectual Property 5.18(b)
LipoMatrix Policies 5.21
LipoMatrix Sale 1.01(a)
▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ Sheet 5.12
Merger 3.01(a)
Merger Consideration 3.02(a)
Minimum Condition 2.01(a)
Offer 2.01(a)
Offer Price 2.01(a)
Offer Documents 2.01(b)
Option 3.02(d)
Option Amount 3.05
Parent Recitals
Pre-Closing Tax Period 5.16(e)
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Press Release 5.09
Products Liability Policies 5.21
Purchaser Recitals
Returns 5.16(a)
Schedule 14D-1 2.01(b)
Schedule 14D-9 2.02(b)
Shares Recitals
Stock Option Plan 3.02(d)
Surviving Corporation 3.01(a)
Tax 5.16(e)
Tax Asset 5.16(e)
Taxing Authority 5.16(e)
Transaction Expenses 5.27
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer.
(a) Provided that nothing shall have occurred and be continuing that
would result in a failure to satisfy any of the conditions set forth in Annex I
hereto, as promptly as practicable after the date hereof, but in no event later
than five business days following the public announcement of this Agreement,
Purchaser shall commence an offer (within the meaning of Rule 14d-2 promulgated
under the Exchange Act) (the "Offer") to purchase all of the outstanding Shares
and the associated Rights at a price of $16.25 per Share (and associated
Right), net to each seller in cash (the "Offer Price"). The date on which the
Offer shall actually commence is referred to herein as the "Commencement Date."
The Offer shall be subject to the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration
date of the Offer and not withdrawn, a number of Shares that, together with the
Shares then owned by Parent and Purchaser, represents at least a majority of
the Shares outstanding on a fully diluted basis, assuming exercise of all
Options with an exercise price below $18.00 per share (the "Minimum Condition")
and to the other conditions set forth in Annex I hereto. Purchaser expressly
reserves the right to waive any of the conditions to the Offer and to make any
change in the terms or conditions of the Offer, provided that, no change or
waiver may be made that, without the prior written consent of the Company,
waives the Minimum Condition, changes the form of consideration to be paid,
decreases the price per Share or the number of Shares sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex I, or
is otherwise adverse to the holders of the Shares. Notwithstanding the
foregoing, without the consent of the Company, Purchaser shall have the right
to extend the Offer (i) from time to time if, at the scheduled or extended
expiration date of the Offer, any of the conditions to the Offer shall not have
been satisfied or waived, until such conditions are satisfied or waived or (ii)
for any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer or any period required by
applicable law or (iii) for a period of not more than 10 business days in order
to finalize Purchaser's financing arrangements for the purchase of Shares
pursuant to the Offer and the Merger, or (iv) during the pendency of a Market
Disruption
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until December 31, 1999, or (v) on one or more occasions for an aggregate
period of not more than 15 business days beyond the latest expiration date that
would otherwise be permitted under clause (i), (ii), (iii) or (iv) of this
sentence, if on such expiration date there shall not have been tendered at
least 90% of the outstanding Shares. If all of the conditions to the Offer are
not satisfied or waived on any scheduled expiration date of the Offer,
Purchaser shall extend the Offer from time to time until such conditions are
satisfied or waived, provided that Purchaser shall not be required to extend
the Offer beyond December 31, 1999; and provided further, that Purchaser shall
not be obligated to extend the Offer hereunder beyond October 29, 1999 in the
event the Minimum Condition or any of the conditions to the Offer contained in
subclause (c) and (h) of clause (iii) of Annex I hereto has not been satisfied
or waived on or before such date. Subject to the foregoing and to the terms and
conditions of the Offer, Purchaser shall, and Parent shall cause it to, accept
for payment and pay for, as promptly as practicable after the expiration of the
Offer, all Shares properly tendered and not withdrawn pursuant to the Offer.
The Offer shall have an initial scheduled expiration date 20 business days
following commencement thereof.
(b) As soon as practicable on the date of commencement of the Offer,
Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") with respect to the Offer, which will contain the offer
to purchase and form of the related letter of transmittal and summary
advertisement (such Schedule 14D-1 and such documents included therein pursuant
to which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). Parent and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect. Purchaser agrees to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be 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 an opportunity to review and comment on
the Offer Documents prior to their being filed with or sent to the SEC or
disseminated to the holders of Shares. Parent and Purchaser agree to provide
the Company and its counsel any comments Parent, Purchaser or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Purchaser on a
timely basis, the funds necessary to purchase the Shares that Purchaser becomes
obligated to purchase pursuant to the Offer.
SECTION 2.02. Company Action.
(a) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held has:
(i) determined that this Agreement, including the Offer and the
Merger, are fair to and in the best interests of the Company's stockholders,
(ii) approved and adopted this Agreement and the Transactions,
including the Offer and the Merger, in accordance with the requirements of the
Delaware Law,
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(iii) subject to Section 7.04(c), resolved to recommend acceptance
of the Offer and approval and adoption of this Agreement and the Merger by its
stockholders, and
(iv) taken the actions referred to in Section 5.22 and 5.23
hereof.
The Company will cause its transfer agent to promptly furnish Parent with a
list of the Company's stockholders, mailing labels and any available listing or
computer file containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock depositories
and to provide to Parent such additional information (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably
request in communicating to record and beneficial owners of Shares in
connection with the Offer. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer or the Merger, Parent and
Purchaser shall (i) hold in confidence the information contained in such
labels, listings and files, (ii) use such information only in connection with
the Offer and the Merger and (iii) if this Agreement is terminated in
accordance with Article 11, upon request of the Company, deliver or cause to be
delivered to the Company all copies of such information then in their
possession or the possession of its agents or representatives.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company and Parent each agree promptly to 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. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 prior
to its being filed with the SEC or disseminated to the holders of Shares. The
Company agrees to provide Parent and its counsel any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
SECTION 2.03. Directors.
(a) Effective upon the purchase pursuant to the Offer of a number of
Shares that satisfies the Minimum Condition, Parent shall be entitled to
designate the number of directors, rounded up to the next whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors (giving effect to the election of
any additional directors pursuant to this Section) and (ii) the percentage that
the number of Shares beneficially owned by Parent (including Shares accepted
for payment) bears to the total number of Shares outstanding; and the Company
shall take all action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including, without limitation,
increasing the number of directors, and seeking and accepting resignations of
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incumbent directors. At such time, if requested by Parent, the Company will
also use its best efforts to cause individual directors designated by Parent to
constitute the same percentage (rounded up to the next whole number) as such
individuals represent on the Company's Board of Directors of (i) each committee
of the Board other than any committee of the Board established to take action
under this Agreement and (ii) each board of directors of each Subsidiary of the
Company (and each committee thereof). Notwithstanding the foregoing, the
Company shall use its reasonable best efforts to ensure that at least one
member of the Board of Directors as of the date hereof who is not an employee
of the Company (the "Continuing Director") shall remain a member of the Board
of Directors until the Effective Time.
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors, as Section 14(f) and Rule 14f-1 require
in order to fulfill its obligations under this Section. Parent shall supply to
the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of the
Continuing Director shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other
action on the part of the Company, including any action by any other director
of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, any amendment of the certificate of incorporation or
bylaws of the Company, any extension of time for performance of any obligation
or action hereunder by Parent or Purchaser, any waiver of compliance with any
of the agreements or conditions contained herein for the benefit of the
Company, and the exercise of any of the Company's rights, remedies or benefits
hereunder.
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Delaware Law, at the Effective Time,
Purchaser shall be merged (the "Merger") with and into the Company, whereupon
(i) the separate existence of Purchaser shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation"), (ii) the Company shall
succeed to and assume all the rights of Purchaser in accordance with Delaware
Law, and (iii) the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger.
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Purchaser will file the Certificate of Merger with the Secretary of State of
the State of Delaware and make all other filings or
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recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time (the "Effective Time") as the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware or
at such later time as is specified in the Certificate of Merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Purchaser, all as provided under Delaware Law.
(d) Unless this Agreement has been terminated and the transactions
herein contemplated have been abandoned pursuant to Article 11 and subject to
the satisfaction or waiver of the conditions set forth in Article 10, the
closing of the Merger (the "Closing") will take place at 10:00 AM (PDT) as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article 10, at the
offices of Venture Law Group, A Professional Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date, time or place is agreed to in
writing by the parties hereto.
SECTION 3.02. Conversion of Securities. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04,
each Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive $16.25 in cash or any higher price paid for
each Share in the Offer, without interest (the "Merger Consideration");
(b) each Share owned by Parent or any of its Subsidiaries immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto;
(c) each share of common stock of Purchaser outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
(d) all options to purchase Company Common Stock pursuant to any
arrangement (a "Stock Option Plan") adopted by the Board of Directors of the
Company to provide options, warrants or other rights to purchase capital stock
of the Company (in any such case, an "Option") then outstanding shall be
subject to the provisions of Section 3.05 hereof.
SECTION 3.03. Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates representing
Shares (the "Certificates") for the Merger Consideration. Parent or Purchaser
will make available to the Exchange Agent, as needed, the Merger Consideration
to be paid in respect of the Shares. Promptly after the Effective Time, Parent
will send, or will cause the Exchange Agent to send, to each holder of Shares
at the Effective Time (i) a letter of transmittal and instructions (which shall
specify that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates
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to the Exchange Agent) for use in such exchange, and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration payable for each Share represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 3.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares twelve months
after the Effective Time shall be returned to Parent, upon demand, and any such
holder who has not exchanged them for the Merger Consideration in accordance
with this Section prior to that time shall thereafter look only to the
Surviving Corporation for payment of the Merger Consideration in respect of
such Shares without any interest thereon. Notwithstanding the foregoing, the
Surviving Corporation shall not be liable to any holder of Shares for any
amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become property of any
governmental authority) shall become, to the extent permitted by applicable
law, the property of Parent and the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
SECTION 3.04. Dissenting Shares. Notwithstanding Section 3.02, 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 demanded appraisal for such Shares in accordance with Delaware Law (if
Delaware Law provides for appraisal rights for such Shares in the Merger) shall
not be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect, withdraws or otherwise loses its right to appraisal.
If, after the Effective Time, such holder fails to perfect, withdraws or loses
its right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
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Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall not
make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.05. Stock Options.
(a) Schedule 3.05 lists, as of June 30, 1999 each holder of an Option,
the number of such shares subject to Options held by each such holder, and the
vesting schedule, exercise price and expiration date of each such Option, and
since June 30, 1999 no material amount of Options have been issued. At the
Effective Time, each Option outstanding under any Stock Option Plan, whether
vested or not vested (the "Compensation Options"), shall be changed into an
amount in cash in respect of each share of Company Common Stock subject to such
Option equal to the Merger Consideration less the purchase price thereof
pursuant to the Stock Option Plan and the applicable stock option agreements to
the extent such number is a positive number (the "Option Amount").
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any option plan or
arrangement or obtaining all necessary consents or releases from optionees or
otherwise) that are necessary to give effect to the transactions contemplated
by Sections 3.05(a). Upon receipt by any Option holder of the Option Amount,
each Compensation Option held by such holder shall be canceled and the
surrender of a Compensation Option to the Company in exchange for the Option
Amount shall be deemed a release of any and all rights such holder had or may
have had in respect of such Compensation Option. Except as otherwise agreed to
by the parties herein: (i) each Stock Option Plan shall terminate as of the
Effective Time and the provisions in 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 Subsidiary thereof, shall be canceled as
of the Effective Time; and (ii) no participant in any Stock Option Plan or
other plans, programs or arrangements, shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and the Company will terminate all such plans as of the
Effective Time.
SECTION 3.06. Employee Stock Purchase Plan.
(a) After the date hereof, no new offering period shall commence under
the Company's 1998 Employee Stock Purchase Plan (the "ESPP"), and no Person who
was not an employee on the offering date with respect to the current offering
period, as those terms are used in the ESPP, shall be entitled to purchase
shares under the ESPP. As of the Effective Time, the ESPP shall be terminated.
The Company shall pay each participant in any current offering period under
such Plan in cash at the Effective Time, in cancellation of all rights under
such Plan, an amount determined by multiplying (i) the Merger Consideration per
Share by (ii) the number of Shares such participant could have purchased under
the ESPP based on his or her account balance under such Plan immediately prior
to the Effective Time (treating, for such purpose, the option price per Share
as equal to the lesser of 85% of the fair market value of a Share on the
offering date with respect to such offering period and 85% of the Merger
Consideration) (such
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payment to be net of applicable withholding taxes); provided that with respect
to any fractional shares, the foregoing shall not apply and the balance of each
account attributable to such fractional shares shall be returned to the
participant in cash.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the ESPP or obtaining
participant consents) that are necessary to give effect to the transactions
contemplated by Section 3.06(a).
SECTION 3.07. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, or local tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent,
as the case may be, made such deduction and withholding.
SECTION 3.08. 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 the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article.
ARTICLE 4
THE SURVIVING CORPORATION
SECTION 4.01. Certificate of Incorporation. The certificate of
incorporation of Purchaser in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article
First of such certificate of incorporation shall be amended to read as follows:
"The name of the corporation is Collagen Aesthetic, Inc.."
SECTION 4.02. Bylaws. The bylaws of Purchaser in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 4.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of Purchaser at the Effective
Time shall be the directors of the Surviving Corporation and (b) the officers
of the Company at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except as set forth
in the Company Disclosure Schedule:
SECTION 5.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company has heretofore delivered to Parent true and complete copies of the
certificate of incorporation and bylaws of the Company as currently in effect.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. This Agreement constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, require no action by or in respect of, or filing
with, any governmental body, agency, official or authority, domestic or
foreign, other than (a) the filing of the Certificate of Merger with respect to
the Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified to
do business, (b) compliance with any applicable requirements of the HSR Act,
(c) compliance with any applicable requirements of the 1933 Act, the 1934 Act
and any other applicable securities or takeover laws, whether state or foreign,
and (d) any actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company or materially to impair the ability of the Company to consummate
the Transactions.
SECTION 5.04. FDA and Other Regulatory Compliance; Compliance with Laws.
Except for failures to comply or violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company (a) to its
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knowledge, the Company is in compliance with all federal, state or local laws,
ordinances, governmental rules or regulations relating to medical device
manufacturers and distributors or otherwise applicable to its business and has
no reason believe that any of the consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it has
received or made to operate its business are invalid or have been or are being
suspended, cancelled, revoked or questioned; and (b) there is no investigation
or inquiry to which the Company is a party or, to the Company's knowledge,
pending or threatened relating to the operations of the Company's business and
its compliance with applicable federal, state or local laws, ordinances,
governmental rules or regulations.
SECTION 5.05. Non-contravention. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the Transactions, do not and will not (a) contravene, conflict with,
or result in any violation or breach of any provision of the certificate of
incorporation or bylaws of the Company, (b) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with, or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree, (c) require any
consent or other action by any Person under, constitute a default, or an event
that, with notice or lapse of time or both, would become a default, under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries or (d) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except for such
contraventions, conflicts and violations referred to in clause (b) and for such
failures to obtain any such consent or other action, defaults, terminations,
cancellations, accelerations, changes, losses or Liens referred to in clauses
(c) and (d) that would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or materially to impair
the ability of the Company to consummate the Transactions.
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SECTION 5.06. Capitalization.
(a) The authorized capital stock of the Company consists of 28,950,000
shares of Common Stock, par value $0.01 per share and 5,000,000 shares of
Preferred Stock, par value $0.01 per share. As of June 30, 1999, (i) 8,592,359
shares of Company Common Stock were issued and outstanding, (ii) no shares of
preferred stock were issued or outstanding, (iii) 2,454,000 Shares were held in
the treasury of the Company, and (iv) 1,656,600 Shares were issuable under
outstanding Options. Assuming that the Effective Time occurs on December 31,
1999, the number of additional shares of Company Common Stock that shall be
purchased pursuant to the ESPP referred to in Section 3.06 will be
approximately 20,000. All outstanding shares of capital stock of the Company
have been, and all shares that may be issued upon exercise of Options will be,
when issued in accordance with the respective terms thereof, duly authorized
and validly issued and will be fully paid and nonassessable. Schedule 5.06(a)
identifies (i) the holders of each of the Options, (ii) the number of Options
vested, for each holder, (iii) the option plan under which each Option was
issued, (iv) the number of Options held by such holder and (v) the exercise
price of each of the Options.
(b) Except for changes since June 30, 1999 resulting from the exercise
of Options issued by the Company outstanding on such date and other than as
described in Section 5.06(a) above, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company or other obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i), (ii) and (iii)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Securities.
SECTION 5.07. Subsidiaries.
(a) Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. Each such Subsidiary
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. All
Subsidiaries of the Company and their respective jurisdictions of incorporation
are identified in the Company 10-K.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, each Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests. There are no
outstanding
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(i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or other
rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital
stock or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, any Subsidiary of the Company (the items
in clauses (i) and (ii) being referred to collectively as the "Company
Subsidiary Securities"). There are no outstanding obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
Company Subsidiary Securities.
(c) To the Company's knowledge, each partnership, limited liability
company or similar entity in which the Company directly or indirectly owns an
interest entitling it to 10% or more of the voting interests therein, and each
limited partnership, limited liability company or similar entity for which the
Company or a Subsidiary is general partner or manager, as applicable, has been
duly organized and is in good standing under the laws of its jurisdiction of
organization and has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and
is duly qualified to do business and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where failure to have such material governmental licenses, authorizations,
consents and approvals or to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company has
previously delivered to Parent a list of all such partnerships, limited
liability companies and similar entities.
SECTION 5.08. SEC Filings.
(a) The Company has delivered to Parent (i) the Company's annual report
on Form 10-K for its fiscal year ended June 30, 1998, (ii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since June 30, 1998, and (iii)
all of the other reports, statements, schedules and registration statements
filed by the Company with the SEC since June 30, 1998 (the documents referred
to in this Section 5.08(a), collectively, the "Company SEC Documents").
(b) As of the filing date, each Company SEC Document complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such later filing), each Company SEC
Document filed pursuant to the 1934 Act did not, and each such Company SEC
Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
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(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
SECTION 5.09. Financial Statements.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the
Company SEC Documents fairly present, in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto and except that the unaudited financial
statements do not contain footnotes), the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
(b) To the best of the Company's knowledge, the unaudited income
statement and balance sheet attached hereto as Exhibit 5.09 fairly present the
consolidated financial position of the Company and its consolidated
Subsidiaries as of June 30, 1999 and their consolidated results of operations
for the period then ending.
(c) As of the date hereof the Company has, and as of the date of the
acceptance for payment by Purchaser of Shares pursuant to the Offer the Company
shall have, an aggregate amount of cash, cash equivalents and/or short term
liquid investments at least equal to $17 million, after giving effect to the
payment of all Transaction Expenses (as defined in Section 5.27), including the
fees and disbursements to ▇▇▇▇▇▇ Brothers and Venture Law Group, a Professional
Corporation.
SECTION 5.10. Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated to the Company's
stockholders in connection with the Transactions (the "Company Disclosure
Documents"), including, without limitation, the Schedule 14D-9, the proxy or
information statement of the Company (the "Company Proxy Statement"), if any,
to be filed with the SEC in connection with the Merger, and any amendments or
supplements thereto, when filed, distributed or disseminated, as applicable,
will comply as to form in all material respects with the applicable
requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of
the filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to
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make the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties contained in
this Section 5.10(b) will not apply to statements or omissions included in the
Company Disclosure Documents based upon information furnished to the Company in
writing by Parent specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent in writing specifically for
use in the Offer Documents, at the time of the filing thereof, at the time of
any distribution or dissemination thereof and at the time of the consummation
of the Offer, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 5.11. Absence of Certain Changes. Since the Balance Sheet Date,
the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and, except as disclosed in the
Company SEC Documents or in Schedule 5.11, there has not been:
(a) any change, event or development having, or that could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;
(b) any amendments or changes in the Certificate of Incorporation or
bylaws of the Company;
(c) any material damage to, destruction or loss of any assets of the
Company (whether or not covered by insurance);
(d) any change by the Company in its accounting methods, principles or
practices;
(e) any revaluation by the Company of any of its assets, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(f) any sale of a material amount of assets of the Company, except for
the sale of inventory in the ordinary course of business,
(g) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities;
(h) any entry by the Company into any commitment or transaction
material to the Company, including, without limitation, any long-term supply
agreements or partnership, joint venture or other similar arrangements;
(i) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension , profit sharing, stock option
(including without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
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purchase or other employee benefit plan, or any increase in the compensation
payable to any officers or key employees of the Company except in the ordinary
course of business consistent with past practice, and except for a plan or
arrangement that calls for payment of between six and twelve months of base and
scheduled cash incentive compensation with respect to certain of the Company's
key employees (exclusive of executive officers) in the event of termination as
listed (by each such employee) on schedule 5.11(i);
(j) any issuance, delivery, or sale of, or authorization of the
issuance, delivery or sale of, any share of capital stock or any Option with
respect thereto, other than the issuance of Company Common Stock pursuant to
the Company Stock Option Plan or the ESPP outstanding on the date of this
Agreement, or modification or amendment of any right of any holder of
outstanding shares of capital stock or Options with respect thereto; or
(k) any incurring of (which shall be deemed to include entering into
credit agreements, line of credit or similar arrangements until borrowings are
made under such arrangements) any indebtedness for borrowed money or guarantee
of any such indebtedness other than in the ordinary course of business
consistent with past practice.
SECTION 5.12. No Undisclosed Material Liabilities. Except as is
disclosed in the Company SEC Reports, or to the extent the existence of such
liability would not have a Material Adverse Effect, neither the Company nor any
of its Subsidiaries has any liabilities of the type that are required to be
disclosed in financial statements, including the notes thereto, prepared in
accordance with GAAP which are, in the aggregate, material to the business,
operations or financial condition of the Company and its subsidiaries taken as
a whole, except liabilities, (a) adequately provided for or referred to in the
Company's balance sheet and the related notes thereto as of March 31, 1999
included in the Company's Form 10-Q for the quarter ended March 31, 1999 (which
is part of the Company SEC Reports) (the "March 31, 1999 Balance Sheet"), (b)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the March 31, 1999 Balance Sheet, (c) any liability relating to
the Company's LipoMatrix Business; or (d) incurred since March 31, 1999 in the
ordinary course of business and consistent with past practice.
SECTION 5.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof and except with respect to the
LipoMatrix Business, there is no action, suit, investigation or proceeding
pending against, or, to the knowledge of the Company, threatened against or
affecting, the Company, any of its Subsidiaries, or any of their respective
properties before any court or arbitrator or before or by any governmental
body, agency or official, domestic or foreign, that, if determined or resolved
adversely in accordance with the plaintiff's demands, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
either (i) on the Company or (ii) on the ability of the Company to consummate
the Transactions contemplated by this Agreement, including the Offer and the
Merger.
SECTION 5.14. Material Contracts. Each contract listed as an exhibit to
the Company 10-K (each, a "Company Material Contract") is a valid, binding and
enforceable obligation of the
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Company or its Subsidiary, as the case may be, and, to the knowledge of the
Company, of each other party thereto, and is in full force and effect, except
where the failure to be valid, binding and enforceable and in full force and
effect would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. None of the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any other party
thereto, is in breach, default or violation of any term, condition or provision
of any Company Material Contract, except for any breaches, defaults or
violations that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
SECTION 5.15. Environmental Matters.
(a) Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company: (i) no notice,
notification, demand, request for information, citation, summons or order has
been received, no complaint has been filed, no penalty has been assessed, and
no investigation, action, claim, suit, proceeding or review is pending or, to
the knowledge of the Company, is threatened by any governmental entity or other
Person relating to or arising out of any Environmental Law; (ii) the Company is
in compliance with all Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise arising under or relating to any
Environmental Law, and there are no facts, conditions, situations or set of
circumstances that would reasonably be expected to result in any such
liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or any previous business of the Company or any of its
Subsidiaries or any property or facility now owned or leased by the Company or
any of its Subsidiaries that has not been delivered to Parent at least five
days prior to the date hereof.
SECTION 5.16. Taxes.
(a) Filing and Payment. Except with respect to items which are not
material in the aggregate, (i) all Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority with respect to any Pre-Closing Tax Period by
or on behalf of the Company or any Subsidiary (collectively, the "Returns")
have, to the extent required to be filed on or before the date hereof (taking
into account extensions), been filed when due in accordance with all applicable
laws; (ii) as of the time of filing, the Returns were true and complete; and
(iii) all Taxes shown thereon have been timely paid, or withheld and remitted
to the appropriate Taxing Authority or such person or entity, respectively or
have been appropriately reflected on the Company Balance Sheet.
(b) Financial Records. (i) The charges, accruals and reserves for Taxes
with respect to the Company and each of its Subsidiaries for any Pre-Closing
Tax Period (including any Pre-Closing Tax Period for which no Return has yet
been filed) reflected on the books of the Company and its Subsidiaries
(excluding any provision for deferred income taxes reflecting either
differences between the treatment of items for accounting and income tax
purposes or
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carryforwards) are adequate in all material respects to cover Tax liabilities
accruing through the end of the last period for which the Company and its
Subsidiaries ordinarily record items on their respective books; (ii) since the
end of the last period for which the Company and its Subsidiaries ordinarily
record items on their respective books, neither the Company nor any of its
Subsidiaries has engaged in any transaction, or taken any other action, other
than in the ordinary course of business; and (iii) all information set forth in
the Company Balance Sheet (including notes thereto) relating to Tax matters is
true and complete in all material respects.
(c) Procedure and Compliance. (i) All Returns of the Company and its
Subsidiaries through the Tax year ended June 30, 1996 have been examined and
closed or are Returns with respect to which the applicable period for
assessment under applicable law, after giving effect to extensions or waivers,
has expired; (ii) neither the Company nor any Subsidiary is delinquent in the
payment of any Tax or has requested any extension of time within which to file
any Return and has not yet filed such Return; (iii) neither the Company nor any
Subsidiary has granted any extension or waiver of the statute of limitations
period applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired; (iv) there is no claim, audit,
action, suit, proceeding, or investigation now pending or, to the Company's
knowledge, threatened against or with respect to the Company, any Subsidiary in
respect of any Tax or Tax Asset; (v) there are no requests for rulings or
determinations in respect of any Tax or Tax Asset pending between the Company
or any Subsidiary and any Taxing Authority; (vi) there are no liens or
encumbrances for Taxes upon the assets of the Company or any Subsidiary except
liens for current Taxes not yet due; and (vii) the Company has filed all claims
or requests for refunds of Taxes to which it is entitled, other than as may be
reflected in the Returns made available to Parent.
(d) Certain Agreements and Arrangements. None of the Company or any of
its Subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group other than one of which the Company was the common parent, or
made any election or participated in any arrangement whereby any Tax liability
or any Tax Asset of the Company or any Subsidiary was determined or taken into
account for Tax purposes with reference to or in conjunction with any Tax
liability or any Tax Asset of any other person; and the Company is not a party
to, or bound by, any tax indemnity, tax sharing or tax allocation agreement or
arrangement.
(e) Definitions. The following terms, as used herein, have the
following meanings: "Pre-Closing Tax Period" means any Tax period ending on or
before the Closing Date; and, with respect to a Tax period that begins on or
before the Closing Date and ends thereafter, the portion of such Tax period
ending on the Closing Date. "Tax" means (i) any tax, governmental fee or other
like assessment or charge of any kind whatsoever (including, but not limited
to, withholding on amounts paid to or by any Person), together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority (a "Taxing Authority") responsible for the imposition of
any such tax (domestic or foreign), (ii) in the case of the Company or any
Subsidiary, liability for the payment of any amount of the type described in
clause (i) as a result of being or having been before the Closing Date a member
of an affiliated, consolidated, combined or unitary group, or a party to any
agreement or arrangement, as a result of which liability of the Company or any
Subsidiary to a Taxing Authority is determined or taken into account with
reference to the liability of any other Person, and (iii) liability of the
Company
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or any Subsidiary for the payment of any amount as a result of being party to
any tax sharing agreement or with respect to the payment of any amount of the
type described in (i) or (ii) as a result of any existing express or implied
obligation (including, but not limited to, an indemnification obligation). "Tax
Asset" means any net operating loss, net capital loss, investment tax credit,
foreign tax credit, charitable deduction or any other credit or tax attribute
that could be carried forward or back to reduce Taxes (including without
limitation deductions and credits related to alternative minimum Taxes).
SECTION 5.17. Employee Benefit Plans.
(a) Schedule 5.17(a) contains a correct and complete list identifying
each material "employee benefit plan," as defined in Section 3(3) of ERISA,
each employment, severance or similar contract, plan, arrangement or policy and
each other plan or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
(including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, severance benefits or post- employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any ERISA Affiliate and covers any employee or former employee of
the Company or any of its ERISA Affiliates, or with respect to which the
Company or any of its ERISA Affiliates has any liability. Copies of such plans
(and, if applicable, related trust or funding agreements or insurance policies)
and all amendments thereto and written interpretations thereof have been made
available to Parent together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan or trust. Such plans are referred to collectively herein as the
"Employee Plans".
(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has in the past sponsored,
maintained or contributed to, any Employee Plan subject to Title IV of ERISA,
including a "multiemployer plan," as defined in Section 3(37) of ERISA.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has
pending or has time remaining in which to file, an application for such
determination from the Internal Revenue Service, and the Company is not aware
of any reason why any such determination letter should be revoked. The Company
has made available to Parent copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. Each Employee Plan has
been maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, which are applicable to such Employee
Plan. No material events have occurred with respect to any Employee Plan that
could result in payment or assessment by or against the Company of any material
excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E
or 5000 of the Code.
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(d) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee
or independent contractor of the Company or any of its Affiliates to severance
pay or accelerate the time of payment or vesting or trigger any payment of
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Employee Plan. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any
Affiliate that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Sections
162(m) or 280G of the Code.
(e) Neither the Company nor any of its Affiliates has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Affiliates except as
required to avoid excise tax under Section 4980B of the Code, or except as
required under COBRA.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its ERISA
Affiliates relating to, or change in employee participation or coverage under,
an Employee Plan which would increase materially the expense of maintaining
such Employee Plan above the level of the expense incurred in respect thereof
for the fiscal year ended June 30, 1998.
(g) Neither the Company nor any of its Affiliates is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or labor organization.
(h) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Company Balance Sheet.
(i) There is no action, suit, investigation, audit or proceeding
pending against or involving or, to the knowledge of the Company, threatened
against or involving, any Employee Plan before any court or arbitrator or any
state, federal or local governmental body, agency or official.
SECTION 5.18. Termination Benefits.
Schedule 5.18 contains the Company's good faith estimate of the
monetary amounts that would become payable (including tax indemnification
payments in respect of income and/or excise taxes), and identifying the in-kind
benefits that would become due as a result of the consummation of the Merger
under the Specified Compensation and Benefit Programs (but not pursuant to any
other right at law or otherwise which such employee may have) and the
subsequent termination of employment of each non-manufacturing employee of the
Company or any of its Subsidiaries (including, without limitation, employees
located outside of the United States). For purposes of preparing the Schedule,
it shall be assumed that: (i) a change of control of the Company occurs on
September 1, 1999 and that each person entitled to benefits under the
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Specified Compensation and Benefit Programs is discharged as of December 31,
1999; (ii) all compensation levels remain constant; (iii) each such employee's
employment is terminated in a manner so as to trigger the maximum amounts
payable to such employee under the Specified Compensation and Benefit Programs;
and (iv) all accrued benefits under all tax qualified plans are 100% vested.
SECTION 5.19. Patents and Other Proprietary Rights
(a) The Company and its Subsidiaries have not granted or promised to
grant any exclusive licenses or any material non-exclusive licenses or
covenants not to ▇▇▇ thereunder to any third party in respect of any
Intellectual Property (as defined below) used in or necessary for the conduct
of its business as currently conducted or as proposed to be conducted as
reflected in the Company's existing business plans (other than (A) to Parent or
its Subsidiaries, (B) trademark or service ▇▇▇▇ licenses entered into in the
ordinary course of business under distribution and supply agreements and (C)
technology transfer and technology access agreements substantially on the terms
of the Company's standard form agreements). The patents owned by the Company
and its Subsidiaries are valid and enforceable and any patent issuing from
patent applications of the Company and its Subsidiaries will be valid and
enforceable for the duration of its term other than any such lack of validity
or enforceability which, individually or in the aggregate. would not reasonably
be expected to have a Material Adverse Effect.
(b) To the best of the knowledge of the Company, and except as would
not have a Material Adverse Effect,
(i) the Company and each of its Subsidiaries owns, or is licensed
to use or otherwise possesses the legal right to use (in each case, free and
clear of any Liens (other than Liens arising out of payment obligations in
respect of such Intellectual Property) in respect of the Company's or any of
its Subsidiaries' interests therein) all Intellectual Property used in or
necessary for the conduct of its business as currently conducted;
(ii) the use of any Intellectual Property by the Company and its
Subsidiaries does not infringe on or otherwise violate the rights of any
Person;
(iii) no product (or component thereof or process) used, sold or
manufactured by the Company or any of its Subsidiaries infringes or otherwise
violates the Intellectual Property of any other Person; and
(iv) no Person is challenging, infringing on or otherwise violating
any right of the Company or any of its Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to the Company and its
Subsidiaries.
For purposes of this Agreement "Intellectual Property" shall mean
trademarks, service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries
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and ideas, whether patentable or not in any jurisdiction; manufacturing
know-how; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part, reissuances, reexaminations,
extensions and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registration or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; or any similar intellectual property or proprietary rights.
(c) Except as disclosed in writing to Parent prior to the date hereof,
none of the processes, techniques and formulae, research and development
results and other know-how relating to the business of the Company and its
Subsidiaries, the value of which to the Company is contingent upon maintenance
of the confidentiality thereof has been disclosed by the Company or any
Affiliate thereof to any Person other than Persons who are bound to hold such
information in confidence pursuant to confidentiality agreements or by
operation of law, other than any such disclosure which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 5.20. Year 2000. The Company and its Subsidiaries have put into
effect practices and programs which the Company believes will enable all
material software, hardware and equipment (including microprocessors) that are
owned or utilized by the Company or any of its Subsidiaries in the operations
of its or their respective business to be capable, by December 31, 1999, of
accounting for all calculations using a century and date sensitive algorithm
for the year 2000 and the fact that the year 2000 is a leap year and to
otherwise continue to function without any interruption caused by the
occurrence of the year 2000, except for those failures that would not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 5.21. Products Liability Insurance. Schedule 5.21 contains a
true and complete list (including the names and addresses of the insurers, the
names of the Persons to whom such insurance policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof,
whether each is a "claims made" or an "occurrence" policy and a brief
description of the interest insured thereby) of all material insurance policies
that are in effect as of the date hereof and as of the date hereof are expected
to provide insurance at least through the Closing Date against any claims that
have been or may be asserted against the Company or any of its Subsidiaries
arising out of or relating to products liability (the "Products Liability
Policies"). None of the Products Liability Policies will terminate or lapse by
reason of the Transactions, including the Offer and the Merger. As of the date
hereof, (i) each Products Liability Policy is valid and binding and in full
force and effect, (ii) no premiums due thereunder have not been paid and (iii)
the Company has not received any written notice of cancellation or termination
in respect of any such policy or that it is in default thereunder. All claims
previously made under the Products Liability Policies complied with the
applicable notice provisions under such policies.
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SECTION 5.22. Rights Agreement. As of the date hereof and after giving
effect to the execution and delivery of this Agreement, each Right is
represented by the certificate representing the associated Share and is not
exercisable or transferable apart from the associated Share, and the Company
has taken all action necessary to render the Rights inapplicable to this
Agreement, the Offer, the Merger and any other Transaction.
SECTION 5.23. Section 203 of Delaware Law Not Applicable. The Company
has taken all necessary actions so that the provisions of Section 203 of
Delaware Law will not, before the termination of this Agreement, apply to this
Agreement or the Transactions, including the Offer and the Merger.
SECTION 5.24. Finders' Fees. Except for ▇▇▇▇▇▇ Brothers, a copy of
whose engagement agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who might
be entitled to any fee or commission from the Company or any of its Affiliates
in connection with the Transactions.
SECTION 5.25. Opinion of Financial Advisor. The Company has received
the opinion of ▇▇▇▇▇▇ Brothers, dated the date hereof, to the effect that, as
of the date hereof, the consideration to be received in the Offer and the
Merger by the stockholders of the Company is fair from a financial point of
view to the stockholders of the Company, and a true and complete copy of such
opinion has been delivered to Parent prior to the execution of this Agreement.
SECTION 5.26. Transaction Expenses. Schedule 5.26 sets forth the
Company's good faith estimate of all material transaction expenses incurred and
to be incurred by the Company and its Subsidiaries in connection with the
Transactions, including, but not limited to, all material fees and expenses
paid or payable by or on behalf of the Company or any of its Subsidiaries to
any financial advisor, lawyer, accountant or other specialist (the "Transaction
Expenses").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Purchaser each hereby represent and warrant to the Company
that:
SECTION 6.01. Corporate Existence and Power. Each of Parent and
Purchaser is a corporation (or other entity) duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power and authority and is in possession of all
approvals necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being
conducted, except where the
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failure to be so organized, existing and in good standing or to have such
power, authority and approvals would not have a Material Adverse Effect. Each
of Parent and Purchaser is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not reasonably be expected to have a Material Adverse Effect.
SECTION 6.02. Corporate Authorization. Each of Parent and Purchaser has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser and the consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Purchaser, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes a legal, valid and binding obligation of
Parent and Purchaser, enforceable against Parent and Purchaser in accordance
with their respective terms.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and the consummation by
Parent and Purchaser of the Transactions, require no action by or in respect
of, or filing with, any governmental body, agency, official or authority,
domestic or foreign, other than (i) the filing of the Delaware Merger Agreement
with respect to the Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Parent is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act, (iii) compliance with any applicable requirements of the 1933 Act,
the 1934 Act and any other applicable securities or takeover laws, whether
state or foreign, and (iv) any actions or filings the absence of which would
not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or materially to impair the ability of Parent
and Purchaser to consummate the Transactions.
SECTION 6.04. Non-contravention. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and the consummation by
Parent and Purchaser of the Transactions, do not and will not (a) contravene,
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of Parent or Purchaser, (b) assuming
compliance with the matters referred to in Section 6.03, contravene, conflict
with, or result in any violation or breach of any provision of any applicable
law, statute, ordinance, rule, regulation, judgment, injunction, order or
decree, (c) require any consent or other action by any Person under, constitute
a default, or an event that, with or without notice or lapse of time or both,
would become a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which Parent or Purchaser is entitled under any
provision of any agreement or other instrument binding upon Parent or Purchaser
or any license, franchise, permit, certificate, approval or other similar
authorization
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affecting, or relating in any way to, the assets or business of Parent or
Purchaser or (d) result in the creation or imposition of any Lien on any asset
of Parent or Purchaser, except for such contraventions, conflicts and
violations referred to in clause (b) and for such failures to obtain consent or
other action, defaults, terminations, cancellations, accelerations, changes,
losses or Liens referred to in clauses (c) and (d) that would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent or materially to impair the ability of Parent and Purchaser to
consummate the Transactions.
SECTION 6.05. Disclosure Documents
(a) The information with respect to Parent and its Subsidiaries that
Parent furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading (i) in the case of the Company Proxy Statement, at the time the
Company Proxy Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time the stockholders vote on
adoption of this Agreement (if applicable), and (ii) in the case of any Company
Disclosure Document other than the Company Proxy Statement at the time of the
filing thereof, at the time of any distribution thereof, and at the time of
consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the 1934 Act and will not
at the time of the filing thereof, at the time of any distribution thereof or
at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, provided, that this representation and warranty will
not apply to statements or omissions in the Offer Documents based upon
information furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
SECTION 6.06. Finders' Fees. Except for ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, whose
fees will be paid by Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Parent who might be entitled to any fee or commission from the Company or
any of its Affiliates upon consummation of the Transactions.
SECTION 6.07. Financing. Concurrent with the execution and delivery of
this Agreement, Parent has delivered to the Company a true and complete copy of
a binding commitment letter and all binding amendments thereto (including any
such amendments, the "Commitment Letter") from Cerberus Capital Management,
L.P. to provide financing in accordance with the terms and subject to the
conditions thereof in an amount not less than $155 million to provide Parent
and Purchaser with the funds necessary to consummate the transactions,
including the Offer and the Merger. Parent represents that such amount,
together with its other sources of working capital, is sufficient to allow it
to close both the Offer and the Merger and to operate both its and the
Company's businesses immediately following the closing of the Offer and the
Merger in the ordinary course of business. Nothing contained in the Commitment
Letter shall affect Parent's obligation to close the Offer and the Merger in
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accordance with the terms of this Agreement. Purchaser has or will have, prior
to the expiration of the Offer and the Effective Time of the Merger, sufficient
cash or cash-equivalent funds available to purchase all of the Shares
outstanding in the Offer and the Merger, to provide adequate working capital
for the Company following the Effective Time and to pay all related fees and
expenses incurred in connection with the Offer and the Merger.
Section 6.08. Surviving Corporation After the Merger. At the Effective
Time and after giving effect to any changes in the Surviving Corporation's
assets and liabilities as a result of the Merger and after giving effect to the
financing contemplated by the Commitment Letter, the Surviving Corporation will
not (i) be insolvent (either because its financial condition is such that the
sum of its debts is greater than the fair value of its assets or because the
present fair saleable value of its assets will be less than the amount required
to pay its probable liability on its debts as they become absolute and
matured), (ii) have unreasonably small capital with which to engage in its
business or (iii) have incurred or plan to incur debts beyond its ability to
pay as they become absolute and matured.
ARTICLE 7
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 7.01. Conduct of the Company. Except as expressly permitted by
this Agreement, from the date hereof until the Effective Time, the Company and
its Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their reasonable best efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time:
(a) the Company will not adopt or propose any change to its certificate
of incorporation or bylaws;
(b) the Company will not, and will not permit any of its Subsidiaries
to, merge or consolidate with any other Person or acquire a material amount of
stock or assets of any other Person;
(c) the Company will not, and will not permit any of its Subsidiaries
to, sell, lease, license or otherwise dispose of any material Subsidiary or
material amount of assets, securities or property except (i) pursuant to
existing contracts or commitments, or (ii) dispositions of obsolete or
worthless assets;
(d) the Company will not, and will not permit any of its Subsidiaries
to, (i) take any action that would make any representation and warranty of the
Company hereunder inaccurate in any material respect at, or as of any time
prior to, the Effective Time or (ii) omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in any
material respect at any such time;
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(e) the Company will not, and will not permit any of its Affiliates to
(i) adopt or amend any Employee Plan and/or related trust or fund (except as
required to maintain the qualified status of such Plan, trust or fund), (ii)
increase in any manner the compensation or fringe benefits of any director,
officer or employee (except for (x) increases in accordance with the Company's
normal officers and employees focal review previously disclosed to Parent or
(y) other normal increases in the ordinary course of business that are
consistent with past practice and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company), or (iii)
pay any benefit not required by any currently existing Employee Plan
(including, without limitation, grant stock options or stock appreciation
rights or remove existing restrictions in any benefit plans or agreements);
(f) the Company will not, and will not permit any of its Subsidiaries
to, declare, set aside or pay any dividend or distribution in respect of any
capital stock of the Company or redeem, purchase or make any other acquisition
of any of its securities;
(g) the Company will not, and will not permit any of its Subsidiaries
to, enter into any commitment or transaction material to the Company or its
Subsidiaries, including, without limitation, any long-term supply agreements or
partnership, joint venture or other similar arrangements;
(h) the Company will not, and will not permit any of its Subsidiaries
to, issue, deliver or sell, or authorize the issuance, delivery or sale of, any
share of capital stock or any Option with respect thereto, other than the
issuance of Company Common Stock upon the exercise of Options outstanding on
the date of this Agreement, or pursuant to the ESPP, or modify or amend any
right of any holder of outstanding shares of capital stock or Options with
respect thereto;
(i) the Company will not, and will not permit any of its Subsidiaries
to, incur (which shall be deemed to include entering into credit agreements,
line of credit or similar arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of business consistent with past
practice; or
(j) the Company will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
SECTION 7.02. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable after consummation of
the Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger, unless Delaware Law does not require a vote of
stockholders of the Company for consummation of the Merger. Subject to the
terms of Section 7.04(c), the Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
stockholders. In connection with such meeting, the Company will (i) promptly
prepare and file with the SEC, will use its best efforts to have cleared by the
SEC and will thereafter mail to its stockholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting, (ii)
use its best efforts to obtain the necessary approvals by its stockholders of
this Agreement and the
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Transactions and (iii) otherwise comply with all legal requirements applicable
to such meeting. The Company shall give Parent and its counsel the opportunity
to review the Company Proxy Statement and all responses to requests for
additional information by and replies to comments of the SEC before their being
filed with, or sent to, the SEC.
SECTION 7.03. Access to Information.
(a) From the date hereof until the Effective Time and subject to
applicable law and the Non-Disclosure Agreement dated as of April 23, 1999
between the Company and Parent (the "Confidentiality Agreement"), the Company
shall (i) give Parent, its counsel, financial advisors, auditors and other
authorized representatives full access to the offices, properties, books and
records of the Company and the Subsidiaries, (ii) furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such Persons may
reasonably request and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives of the Company and its
Subsidiaries to cooperate with Parent in its investigation of the Company and
its Subsidiaries. Any investigation pursuant to this Section shall be conducted
in such manner as not to interfere unreasonably with the conduct of the
business of the Company and its Subsidiaries. No information or knowledge
obtained by Parent in any investigation pursuant to this Section shall affect
or be deemed to modify any representation or warranty made by the Company
hereunder.
(b) The Company shall not be required to permit any inspection or to
disclose any information, which in the reasonable judgment of the Company,
would result in the disclosure of any trade secrets of third parties or violate
any obligation of the Company with respect to confidentiality if the Company
shall have used reasonable efforts to obtain the consent of such third party
for such inspection or disclosure. All requests for information pursuant to
this Section 7.03 shall be directed to an executive officer of the Company or
such person as may be designated by any such executive officer. Upon
termination of this Agreement, Parent will collect and deliver to the Company
all such documents obtained by it or its representatives then in its possession
and any copies thereof.
SECTION 7.04. No Solicitation; Other Offers.
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(a) From the date hereof until the termination hereof, the Company will
not, and will cause its Subsidiaries and the officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors of the Company and its Subsidiaries not to, directly or indirectly,
(i) take any action to solicit, initiate, facilitate or encourage the
submission of any Acquisition Proposal, (ii) engage in discussions or
negotiations with, or disclose any nonpublic information relating to the
Company or any of its Subsidiaries or afford access to the properties, books or
records of the Company or any of its Subsidiaries to, any Person who the
Company has reason to believe may be considering making, or has made, an
Acquisition Proposal, or (iii) grant any waiver or release under any standstill
or similar agreement with respect to any class of equity securities of the
Company. The Company will notify Parent promptly after receipt by the Company
(or any of its advisors) of any Acquisition Proposal or any request for
nonpublic information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by any Person who the Company has reason to believe may be
considering making, or has made, an Acquisition Proposal. The Company shall,
and shall cause its Subsidiaries and the directors, employees and other agents
of the Company and its Subsidiaries to, cease immediately and cause to be
terminated all activities, discussions and negotiations, if any, with any
Persons conducted prior to the date hereof with respect to any Acquisition
Proposal. Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from complying with Rule 14d-9 or Rule 14e-2 under the
1934 Act with respect to any Acquisition Proposal.
(b) Notwithstanding the foregoing, the Company may negotiate or
otherwise engage in substantive discussions with, and furnish nonpublic
information to, any Person who delivers a written Acquisition Proposal if (i)
two (2) business days prior to furnishing such information to, or entering into
discussions or negotiations with, such Person, the Company provides written
notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such Person, which notice shall
identify such Person in reasonable detail, (ii) the Company keeps Parent
reasonably informed of the status of any such discussion or negotiations, (iii)
the Board of Directors of the Company determines in good faith by a majority
vote, on the basis of advice from its outside legal counsel, that, consistent
with its fiduciary duties under applicable law, it must take such action, (iv)
such Person executes a confidentiality agreement with terms no less favorable
to the Company than those contained in the Confidentiality Agreement, (v) such
Acquisition Proposal is reasonably expected to be all cash and not explicitly
subject to any financing contingency, and that in the event that such
Acquisition Proposal is in the form of a tender offer or exchange offer, such
tender offer or exchange offer is for 50% or more of the outstanding Shares,
and (vi) the Board of Directors has concluded in good faith that the Person
making such Acquisition Proposal is reasonably expected to have adequate
sources of financing to consummate such Acquisition Proposal and is reasonably
expected not to encounter significant regulatory obstacles to consummating the
Transactions on a timely basis. Parent will not disclose any information
received from the Company pursuant to this Section 7.04 to any other Person,
except for disclosures to Parent's financial, legal and other advisors or
Persons considering providing financing to Parent in connection with the
Transactions, including the Offer and the Merger, and except for such
disclosures required in order that Parent not be in violation of or default
under any applicable law, regulation or governmental order. Nothing in this
Section 7.04(b) shall (x) permit the
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Company to terminate this Agreement (except as specifically provided in Section
11.01), (y) permit the Company to enter into any written agreement with respect
to an Acquisition Proposal for so long as this Agreement remains in effect (it
being agreed that for so long as this Agreement remains in effect, the Company
shall not enter into any written agreement with any Person that provides for,
or in any way facilitates, an Acquisition Proposal (other than a
confidentiality agreement under the circumstances described above)), or (z)
affect any other obligation of the Company under this Agreement.
(c) The Board of Directors of the Company shall be permitted to
withdraw, or modify in a manner adverse to Parent, its recommendation to its
stockholders referred to in Sections 2.01 and 7.02 hereof, but only if (i) the
Company has complied with the terms of this Section 7.04, including, without
limitation, the requirements in clauses (i), (ii) and (iv) of Section 7.04(b)
and the requirement in Section 7.04(a) that it notify Parent promptly after its
receipt of any Acquisition Proposal, (ii) a Superior Proposal consistent with
the conditions of clauses (v) and (vi) of Section 7.04(b) is pending at the
time the Board of Directors determines to take any such action, and (iii) the
Board of Directors determines in good faith by a majority vote, on the basis of
the advice of its outside legal counsel, that, consistent with its fiduciary
duties under applicable law, it must take such action.
SECTION 7.05. Notices of Certain Events. The Company shall promptly
notify Parent of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
Transactions;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Transactions;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 5.12, 5.13, 5.16 or 5.19, as the case may be, or that relate to the
consummation of the Transactions; and
(d) any notice or other communication from any Person including without
limitation any claim or threatened claim, or other event or development with
respect to the LipoMatrix Business.
SECTION 7.06. Company Rights Agreement. Except to the extent required
by applicable law or to the extent that the Board of Directors of the Company
determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties imposed by law, prior to the
Effective Time, without the prior written consent of Parent, the Company will
not take any action with respect to, or make any determination under, or amend
the Company Rights Agreement, including a redemption of the Rights in a manner
that would adversely affect the Transaction.
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SECTION 7.07. Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company nor
any of its Subsidiaries shall terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which it is a party. During
such period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not
limited to, by obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court
having jurisdiction.
ARTICLE 8
COVENANTS OF PARENT
Parent agrees that:
SECTION 8.01. Obligations of Purchaser. Parent will take all action
necessary to cause Purchaser to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 8.02. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 8.03. Director and Officer Liability. Parent shall, and shall
cause the Surviving Corporation to, do the following:
(a) For six years after the Effective Time, Parent shall indemnify and
hold harmless the present and former officers and directors of the Company
(each an "Indemnified Person") in respect of acts or omissions occurring at or
prior to the Effective Time to the fullest extent permitted by Delaware Law or
any other applicable laws or provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof, provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall use commercially reasonable efforts to provide officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 8.03(b)
more than an amount per year equal to 150% of current annual premiums paid by
the Company for such insurance (which premiums the Company represents and
warrants to be approximately $120,000 per year in the aggregate).
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or
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substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 8.03.
(d) The rights of each Indemnified Person under this Section 8.03 shall
be in addition to any rights such Person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
Delaware Law or any other applicable laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be
enforceable by, each Indemnified Person as an intended third party beneficiary.
SECTION 8.04. Employee Matters.
(a) Following the Closing Date, subject to the next succeeding
sentence, Parent shall cause employees of the Company ("Company Employees") to
be covered under employee benefit plans that are substantially comparable, in
the aggregate, to the employee benefit plans of the Company under which such
Company Employees were covered immediately prior to the Closing Date and which
are disclosed on Schedule 5.17(a). Notwithstanding anything to the contrary
contained in the previous sentence, Parent will not be obligated to provide
benefits to the Company Employees that are more favorable than the employee
benefit plans under which employees of Parent or any of its Subsidiaries are
covered. Parent shall cause service with the Company to be recognized as
service for purposes of all employee benefit and compensation plans and
arrangements applicable to Company Employees after the Closing Date, to the
extent such service was credited under comparable plans and arrangements of the
Company prior to the Closing Date; provided, that nothing herein shall be
construed to require service with the Company to be taken into account for
purposes of benefit accrual under any defined benefit retirement or retiree
medical plan. Nothing in this paragraph shall be construed to require Parent to
continue any particular Company employee benefit plan or to provide for the
continued employment of any Company Employees. Persons employed by the Company
immediately prior to the Effective Time shall be eligible to participate in the
employment severance programs provided by Parent or the Surviving Corporation
from time to time, and such persons shall receive credit under such programs
for services with the Company prior to the Effective Date. In the absence of a
formal severance policy, such Persons shall receive severance benefits
comparable to those provided by Parent in its prior restructuring practices.
(b) Prior to acceptance for payment by Purchaser of Shares pursuant to
the Offer, Purchaser and Parent shall enter into agreements with the seven
Company employees listed on Schedule 8.04(b) providing for (i) termination of
employment on the Closing Date, payment of lump sum severance in accordance
with existing employment or change of control agreements and engagement as a
consultant from the Closing Date through the date which is six months after the
Closing Date during which time, such Person's compensation and benefits shall
continue at the same level as before the Closing Date, and (ii) payment of
1,000 shares of Parent stock as a bonus upon completion of such six month
period.
(c) Following acceptance for payment by Purchaser of Shares pursuant to
the Offer, Parent will grant Company employees who are currently at the
director level or above who
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continue to be employees of the Company, Parent or an Affiliate of Parent,
stock options according to its current stock option matrix with an exercise
price equal to Parent's stock price on the day prior to the announcement of the
Transactions, or will provide an equivalent long term benefit to such
employees. On the first anniversary of the Closing Date, Parent will pay
bonuses in the amounts and to the Persons listed on Schedule 8.04(c), to the
extent such Persons are still employed by any Affiliate of Parent on such date.
SECTION 8.05. Products Liability Insurance. For six years after the
Effective Time, the Surviving Corporation shall use commercially reasonable
efforts to maintain in force products liability insurance in respect of claims
made with respect to events occurring prior to the Effective Time on terms with
respect to coverage and amount no less favorable than those of the Products
Liability Policies set forth on Schedule 5.21.
ARTICLE 9
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 9.01. Actions of Parent and the Company.
(a) Subject to the terms and conditions of this Agreement, Company and
Parent shall take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Transactions, including to (i) obtain all
consents, approvals or actions of, make all filings with and give all notices
to, any governmental or regulatory authorities or any other public or private
third parties required of Parent, the Company or any of their Subsidiaries to
consummate the Offer, the Merger and the other Transactions contemplated hereby
and (ii) provide any information and communications to such other third parties
as any such other third party may reasonably request in connection therewith.
In furtherance and not in limitation of the foregoing, each of Parent and
Company agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten business days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the Transactions under
the HSR Act or any other Antitrust Law, each of Parent and Company shall (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) keep the other party informed
in all material respects of any material communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other
governmental authority and of any material communication received or
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given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby and (iii) permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other governmental authority or, in connection with any proceeding
by a private party, with any other Person
SECTION 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the Transactions and (c) in taking such
actions or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 9.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the Transactions and, except as may be
required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
SECTION 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
SECTION 9.05. Merger without Meeting of Stockholders. If Parent,
Purchaser or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto
agree, subject to satisfaction or (to the extent permitted hereunder) waiver of
all conditions to the Merger, to take all necessary and appropriate action to
cause the Merger to be effective as soon as practicable after the acceptance
for payment and purchase of Shares pursuant to the Offer without a meeting of
stockholders of the Company in accordance with Delaware Law.
ARTICLE 10
CONDITIONS TO THE MERGER
SECTION 10.01. Conditions to Obligations of Each Party. The
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following conditions:
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(a) if required by Delaware Law, this Agreement and the Merger shall
have been approved and adopted by the stockholders of the Company in accordance
with such Law;
(b) any applicable waiting period under the HSR Act relating to the
Transactions shall have expired or been terminated;
(c) no provision of any applicable law or regulation of the United
States (or any U.S. state) and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger; and
(d) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE 11
TERMINATION
SECTION 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if: (i) the Offer has not been
consummated on or before December 31, 1999, provided that the right to
terminate this Agreement pursuant to this Section 11.01(b)(i) shall not be
available to any party whose breach of any provision of this Agreement results
in the failure of the Offer to be consummated by such time; or (ii) there shall
be any law or regulation that makes acceptance for payment of, and payment for,
the Shares pursuant to the Offer or consummation of the Merger illegal or
otherwise prohibited or any judgment, injunction, order or decree of any court
or governmental body having competent jurisdiction enjoining Purchaser from
accepting for payment of, and paying for, the Shares pursuant to the Offer or
Company or Parent from consummating the Merger and such judgment, injunction,
order or decree shall have become final and nonappealable, (iii) there has been
a material breach of any representation, warranty covenant or agreement on the
part of the non-terminating party set forth in this Agreement, which breach is
not curable or, if curable, has not been cured within thirty (30) days
following receipt by the non-terminating party of notice of such breach from
the terminating party; or (iv) the Offer shall have terminated or expired in
accordance with its terms without Purchaser having been required to accept for
payment any shares of the Company Common Stock pursuant to the Offer; provided,
however, that Parent may not terminate this Agreement pursuant to this Section
11.01(b)(iv) if Purchaser's failure to accept for payment or pay for any shares
of the Company Common Stock tendered pursuant to the Offer does not follow the
occurrence, or failure to occur, as the case may be, of any condition to the
Offer set forth in Annex I hereto (which occurrence or failure to occur is
continuing) or is otherwise in breach of the terms of the Offer or this
Agreement;
(c) by Parent, if, prior to the acceptance for payment of the Shares
under the Offer, (i) any person or group shall have entered into a definitive
agreement or an agreement in principle with the Company, regarding an
Acquisition Proposal; (ii) the Board of Directors of the
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Company shall have withdrawn, or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Parent, its approval or recommendation
of this Agreement, the Offer or the Merger, shall have recommended, or publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to an Acquisition Proposal or shall have failed to
publicly affirm its approval or recommendation of this Agreement, the Offer and
the Merger within ten (10) business days following a public announcement of an
Acquisition Proposal from a third party (or shall have resolved to do any of
the foregoing); or (iii) the Company shall have amended, taken any action with
respect to or made any determination under, the Company Rights Agreement which
could reasonably be expected to be adverse to Parent, the Surviving Corporation
or any of their respective Subsidiaries or on the ability of the Company,
Parent or Purchaser to consummate the Transactions;
(d) by the Company, if prior to the purchase of any Shares pursuant to
the Offer, and subject to compliance with Section 7.04(c), the Board of
Directors of the Company shall have withdrawn or modified in a manner adverse
to Parent its approval or recommendation of this Agreement or the Merger and
shall have recommended a Superior Proposal satisfying the conditions of clauses
(v) and (vi) of Section 7.04(b); provided, that prior to any such termination,
the Company shall, and shall cause its respective financial and legal advisors
to, negotiate with Parent to make such adjustments in terms and conditions of
this Agreement as would enable the Company to proceed with the Transactions,
including the Offer and the Merger, on such adjusted terms; and provided,
further, that the Company's ability to terminate this Agreement pursuant to
this paragraph (d) is conditioned upon the prior payment by the Company to
Parent of any amounts owed by it pursuant to Section 11.02(b).
The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such termination
to the other party.
SECTION 11.02. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 11.01, this
Agreement shall become void and of no effect with no liability on the part of
any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party hereto except as provided
in paragraph (b) below, provided that, if such termination shall result from
the willful (a) failure of either party to fulfill a condition to the
performance of the obligations of the other party, (b) failure of either party
to perform a covenant hereof or (c) material breach by either party hereto of
any representation or warranty or agreement contained herein, such party shall
be fully liable for any and all liabilities and damages incurred or suffered by
the other party as a result of such failure or breach. The provisions of
Sections 9.03, 11.02, 12.04, 12.06 and 12.07 shall survive any termination
hereof pursuant to Section 11.01.
(b) In the event that: (i) this Agreement is terminated by the Company
pursuant to Section 11.01(d) or by Parent pursuant to Section 11.01(c); or (ii)
any Person shall have made an Acquisition Proposal and thereafter this
Agreement is terminated by Parent pursuant to Section 11.01(b)(i), (iii) or
(iv) (other than as a result of the failure of any of the conditions contained
in paragraphs (a), (b) and (i) of Annex I hereto to be satisfied) and any
Person and the Company enter into a definitive agreement with respect to an
Acquisition Proposal within one year of such
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termination at a price per Share in excess of the Merger Consideration, then
the Company shall pay to Parent, by wire transfer of same day funds, within two
(2) business days after such amount becomes due, (x) a termination fee of
$7,000,000 and (y) an amount, up to $2,500,000, equal to all documented
out-of-pocket expenses and fees actually paid or payable by Parent and
Purchaser (including without limitation, the expenses and fees of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ LLC, Cerberus Capital Management, L.P. and U.S. Bancorp Libra) and not
refundable.
(c) In the event that this Agreement is terminated by the Company or
Parent pursuant to Section 11.01(b)(i) due solely to the failure of Parent and
Purchaser to obtain the funds necessary to purchase all Shares outstanding in
the Offer and the Merger (determined without reference to whether the Minimum
Condition has been satisfied) at the time when all of the conditions contained
in Annex I hereto (other than the Minimum Condition) have been satisfied); then
Parent shall pay to the Company, by wire transfer of same day funds, two (2)
business days after such amount becomes due, a termination fee of $5,000,000.
The amount payable pursuant to this Section 11.02(c) constitutes liquidated
damages and not a penalty, and, assuming such amount is actually paid when due,
is the sole and exclusive remedy of the Company with respect to events giving
rise to an obligation to make such payment, and the Company shall not be
entitled to any direct or indirect damages, including without limitation any
incidental, special, exemplary or consequential damages, in connection with any
such event if such amount is paid when due.
Each of the Company and Parent acknowledges that the agreements
contained in this Section 11.02(b) and (c) hereof are an integral part of the
transactions contemplated in this Agreement, and that, without these
agreements, neither Parent and Purchaser, on the one hand, nor the Company on
the other would enter into this Agreement; accordingly, in the event that the
Company or Parent, as the case may be, shall fail to pay the termination fee
or, in the case of the Company, any expenses, when due, the term "expenses"
under paragraph (b) above and the amount due to the Company under paragraph (c)
above, shall be deemed to include the costs and expenses actually incurred or
accrued by Parent and Purchaser on the one hand, or the Company, on the other
(including, without limitation, fees and expenses of counsel) in connection
with the collection under and enforcement of this Section 11.02 (b)and (c)
hereof, together with interest on such unpaid fee and, in the case of the
Company, such expenses, commencing on the date that the termination fee or such
expenses became due, at a rate equal to the rate of interest publicly announced
by Citibank, N.A., from time to time, in the City of New York, as such bank's
base rate plus 2.00%, and without regard to the $2,500,000 limitation on such
expenses.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given, if to Parent or Purchaser, to:
Inamed Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.,
Senior Vice President and General Counsel
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
if to the Company, to:
Collagen Aesthetics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
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47
SECTION 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Sections 8.03. 8.04 and 8.05 (each only after the Effective Time),
and Sections 9.03, 11.02, 12.04, 12.06 and 12.07.
SECTION 12.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by each party against whom the waiver is to be effective,
provided that, after the adoption of this Agreement by the stockholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in
exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.04. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 12.05. Successors and Assigns; Mergers. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto, except that Parent or
Purchaser may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent
or Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer. Parent and Purchaser may, with the
consent of Company, which consent shall not be unreasonably withheld,
restructure the Merger in the form of a forward subsidiary merger of the
Company into Purchaser, with Purchaser being the surviving corporation, as a
merger of the Company into Parent, with Parent being the surviving corporation,
or as a series of mergers involving the Company and one or more of Parent's
Affiliates. In such event, this Agreement shall be deemed appropriately
modified to reflect such form of merger.
SECTION 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard
to the conflicts of law rules of such state.
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48
SECTION 12.07. Counterparts; Effectiveness; Benefit. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.03, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 12.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 12.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent
possible.
SECTION 12.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof,
in addition to any other remedy to which they are entitled at law or in equity.
SECTION 12.12. Interpretation. Each party to this Agreement and its
legal counsel have reviewed and revised this Agreement. The rule of
construction that ambiguities are to be resolved against the drafting party or
in favor of the party receiving a particular benefit under an agreement may not
be employed in the interpretation of this Agreement or any amendment to this
Agreement.
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49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
INAMED CORPORATION
By:
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
INAMED ACQUISITION CORPORATION
By:
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
COLLAGEN AESTHETICS, INC.
By:
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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50
ANNEX I
Notwithstanding any other provision of the Offer, Parent and Purchaser
shall not be required to accept for payment or pay for any Shares, and may
subject to any applicable rules and regulations of the SEC, delay the
acceptance for payment of any tendered shares of Company Common Stock, and may
(except as provided in the Agreement) amend or terminate the Offer as to any
shares of Company Common Stock not then paid for, if (i) the Minimum Condition
(as defined in the Merger Agreement) has not been satisfied (pursuant to the
Merger Agreement ) by the scheduled expiration date, (ii) the applicable
waiting period under the HSR Act shall not have expired or been terminated by
the expiration date of the Offer, (iii) at any time on or after the
Commencement Date and prior to the expiration date of the Offer, any of the
following conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign, before
any court or governmental authority or agency, domestic or foreign, which would
reasonably be expected to (1) prohibit the acquisition by Parent or Purchaser
of any Shares under the Offer, to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or to require the Company, Parent
or Purchaser to pay any damages that will have a Material Adverse Effect on the
Company or Parent, (2) impose material limitations on the ability of Purchaser,
or to render Purchaser unable to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (3) restrain or
prohibit Parent's ownership or operation (or that of its respective
Subsidiaries or Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, or compel Parent or any of its Subsidiaries
or Affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (4) impose material limitations
on the ability of Parent, Purchaser or any of Parent's other Subsidiaries or
Affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned
by Parent, Purchaser or any of Parent's other Subsidiaries or Affiliates on all
matters properly presented to the Company's stockholders, or (5) require
divestiture by Parent, Purchaser or any of Parent's other Subsidiaries or
Affiliates of any Shares; or
(b) there shall have been any statute, rule, regulation, injunction,
order or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by any court, government or governmental
authority or agency, domestic or foreign, other than the application of the
waiting period provisions of the HSR Act to the Offer or the Merger, that would
reasonably be expected, directly or indirectly, to result in any of the
consequences referred to in clauses (1) through (5) of paragraph (a) above; or
(c) there shall have been any event, occurrence, development or state
of circumstances or facts that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company; or
51
(d) any Person shall have entered into a definitive agreement or an
agreement in principle with the Company, regarding an Acquisition Proposal; or
(e) the Board of Directors of the Company shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of the
Merger Agreement, the Offer or the Merger, or shall have recommended or
publicly announced its intention to enter into, a definitive agreement or an
agreement in principle with respect to an Acquisition Proposal or shall have
failed to affirm publicly its approval or recommendation of this Agreement, the
Offer and the Merger within ten (10) business days following a public
announcement of an Acquisition Proposal from a third party (or shall have
resolved to do any of the foregoing); or
(f) the Company shall have breached or failed to perform in all
material respects any of obligations under the Merger Agreement, or any of the
representations and warranties of the Company contained in the Merger Agreement
shall not be true when made or as of the scheduled expiration of the Offer as
if made at and as of such time, except for such inaccuracies which, when taken
together (in each case without regard to any qualifications as to materiality
or Material Adverse Effect contained in the applicable representations and
warranties) would not reasonably be expected to have a Material Adverse Effect
on the Company; or
(g) the Company shall have amended, taken any other action with respect
to, or made any determination under, the Company Rights Agreement which could
reasonably be expected to be adverse to Parent, the Surviving Corporation or
any of their respective Subsidiaries or on the ability of the Company, Parent
or Purchaser to consummate the Offer; or
(h) the Company shall not have delivered to Parent and Purchaser, at
least three business days prior to the scheduled expiration date of the Offer,
a copy of the Company's audited consolidated financial statements as of and for
the fiscal year ended June 30, 1999, together with the report thereon of the
Company's independent auditors, Ernst & Young LLP, or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may, subject to the terms of the Merger Agreement, be waived by
Parent and Purchaser in whole or in part at any time and from time to time in
their discretion. 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, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances,
and each such right shall be deemed an ongoing right that may be asserted at
any time and from time to time prior to the Effective Time.
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